log.india february issue

INDIA

AT HOME: Why India’s independent retailer should not fear multi-brand retail...18STEELY WONDER: Unraveling the fascinating layers of steel logistics...42

Maruti Suzuki GM (Supply Chain Division) R. Harikumar

leads a supply-chain monumental in expanse, numbers and ambition.

Page 26

Miles Ahead

February 2011 Vol. 4 — No.6 `100INDIA

TElEcom logisTics 20Movement of telecom network equipment opens a window of opportunity

NEglEcTEd waTErways 44India is ignoring inland waterways at its own peril

low adopTioN 24Why WMS still does not have enough takers in India

amit mukherjee, Vice-president (iT and supply chain) and group cio at rpg, has deployed exemplary supply-chain strategies at spencer‘s retail >> page 34

Method In Motion

October 2010 | Vol. 4 – No.2

IndIa’s LeadIng LOgIstIcs MagazIne

` 100

www.logisticsweek.com

SPOT OFF: Whatever happened to the GPS wave in India...50

THE RISE OF LCL 38A quick, engaging history of the evolution of LCL.

eDITORIAL >

5INDIA| February 2011 | www.logisticsweek.com

It was how I always imagined it would be. That night, as the clock struck ten, distinct silhouettes of trucks began to emerge against the moonlit horizon. One by one, they led themselves into a huge courtyard and

came to a stop in a single file, right outside a cavernous structure. Each truck rumbled softly as it stood, seemingly in anticipation of being the next one to empty crates of farm-yields into a hole-in-the-wall, or a dock as the ware-house people are calling it these days.

I was there, inside the warehouse, standing with a group of goggle-eyed professionals, listening in rapt attention as the warehouse manager held forth on how the retailer, which owns the Distribution Center (DC), does its supply-chain. And how the particular DC plays its vital role in the chain. With clockwork precision.

Yes, I was on a visit – courtesy the Council of Supply Chain Management Professionals (CSCMP) Mumbai – to a distribution center of this retail chain whose name I am not at liberty to disclose. Let’s just say that it is one of the biggest in the business and a leader in organized retailing of farm-fresh F&V (fruits and vegetables) in the country.

So according to the manager, this is how it happens. All the stores around the country are given a deadline of 2pm everyday, by when they have to place orders for F&V in line with the demand they expect two days later. So a store in, say, Dharwad places an order at 2pm on a Friday on the central IT system for, say, three crates of cabbages, to be delivered on Sunday morning. The order will be relayed to a collection center (Maharashtra has seven collection centers, I was told) in the district

of Beed, that is in touch with a cabbage farmer for the purpose. The center, upon procuring the cabbages, will dispatch it to the Mumbai DC, where it is checked for quality, sorted, bar-coded, cross-docked, and sent in the appropriate quantity to the respective retail store in Dharwad that placed the order. Obviously, this example is given for the sake of brevity, and the actual operation is far more complex, involving algorithms that involve a crisscross of orders and supplies for about 100 F&V SKUs for hundreds of stores.

As for the DC, it goes without saying that the facility was world-class, and the biggest enemy of Indian warehouses, the ubiquitous dust did not overwhelm us with its presence – a rare phenomenon for any place in the country where fruits and vegetables are stored.

So what were the takeaways? None, as far as the actual fruits and vegetables were concerned, though I must say I was very tempted when I spotted the sack loads of onions resting on the f loor. I even had a fellow groupie and a dear friend, Piyush Shah,

assistant professor, SP Jain Institute of Management, pose with the onions in a king-like fashion (yes, Piyush is the guy beaming as if he has struck oil, in the accompanying picture).

However, it did occur to me that in our country where about 30 percent of farm produce is lost in transit, the administrative machinery could do well to learn from the advanced supply-chains and DC facilities such as the one in question. By helping save some of the wastage, this could help put some check on food-price inflation that troubles us time and again.

Here’s a thought: How about organizing such tours for our friends from the food and civil supplies ministry?

Aanand [email protected]

www.twitter.com/logisisticsweek www.facebook.com/logisticsweek

Aanand PandeyEditor

If only wishes were gunnies.

The Original Green Supply-Chain

ContentsCover StoryLogistics With Gumption

upShotRecent Events Port Finance International organized port f inance event in Mumbai. Speakers convinced participants that there are many issues that needs to be set right at Indian ports.

ColumnHave No FearThe kiraana stores are firmly established in their customers psyche in terms of moderate prices, prompt delivery of goods and a long-term relationship. Do they still need to fear the MNC retailer?

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INDIA| February 2011 | www.logisticsweek.com6

38 Featurethe History of LCL-KindLess-than-container load came into being when small and medium sized companies sought out ways to export their goods. But the idea caught on.

The GM of Maruti Suzuki, R Harikumar, discusses his company's SCM strategies which have led to its preeminence in the Indian auto industry.

26

38

FeatureThe Fundamental TruthIgnoring the basics, as innocuous as it seems, is a trait responsible for a good component of logistics costs.

GueSt ColumnHandling Service LogisticsA well-designed service logistics operation ensures customer loyalty, growth and significant revenue generation.


FeBruary 2011

42

56

60

reGularSevents 62

FEBRUARY 2011

panorama

BaCK to BaSICS

Gall of steelThe supply-chain of steel companies move at a global level. While raw material has its own unique logistics, f inished steel products are another matter altogether.

Books, Journals, Blogs, Technology - a look at what's new in and for the supply chain industry.

We explore three terminologies - ABC Analysis, ERP and Bill of Lading.

ADVeRtIseR InDeXArham Logiparc ......................................................... 9

BLR ......................................................................... 53

DIESL 3rd Annual Supply Chain Event ......................15

DIESL ISC Award ......................................................13

DP World .................................................................BC

Drive India Enterprise Solutions ............................. IFC

Exide ....................................................................... 23

Ghandhi Automation .................................................11

Greenearth Translogistics ........................................ 37

India Supply Chain Cost Optimisation Summit ......... 41

Mahindra Naivistar ................................................. IBC

Man Force Trucks ...................................................... 3

PE, M&A in Transport Infrastructure & Logistics

Services .................................................................. 47

Port Handbook ........................................................ 45

Radhakrishna Foodland ........................................... 49

Safexpress .............................................................. 35

Shree Rajlaxmi Logistics .................................... 29,31

Subscription ad ....................................................... 61

Thomson & Thomson ...............................................14

Vijay Logistics ........................................................... 4

INDIA

AT CEMAT: The expo and the seminar. A ring-side view...20TOUGH LOVE: Pharma logistics is challenging yet rewarding...50

Ericsson India Director (Head-Supply) Tej Nirmal Singh leads the exciting task of managing supply chain for the company in these demand-crazy times.Page 40

Sonic Boom

January 2011 Vol. 4 — No.5 `100

INDIA





Method In Motion



` 100


ICE BUFFER: How cold-chain can help contain food prices...56

LEARNINGS 2010 26Critical lessons we learned from industry leaders.

26Critical lessons we learned

January 2010

news 08

42

every Move You MakeSupply-chain companies could do well to invest in technologies that help track consignment.

50

50

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INDIA| February 2011 | www.logisticsweek.com

Industry Looks At New Road Minister With Hope

In a move that has gone curi-ously under-reported by the media, the Ministry of Road

Transport and Highways saw a change of guard on January 20 with Kamal Nath passing on the baton to CP Joshi, who held charge of the Ministry for Ru-ral Development. Nipping all media speculation in the bud, Nath declared to journalists af-ter taking over the new charge that he sees the new appoint-ment as “not a promotion or a demotion”.

Nath started his term with announcing his dream of building on an average 20 kil-ometers of roads every day, but beset by an ineffi cient adminis-

trative machinery (something that Nath conceded to this magazine last year), and scams in the tendering process, the pace of road building had slackened lately, averaging 3-4 km towards the end of 2010.

CP Joshi, the new Road Trans-port and High-ways Minister, is a 60-year old academician who emerged on the national political scene in the December 2008 Rajasthan assembly elections when he,

Frost & Sullivan,

International Maritime

Organization ...................... 10

TVS Logistics, Universal

Freight Management,

Four Soft, DIESL,

Manufacturers Equipment

and Supply Company ......... 12

Siesta Logistics,

Reliance Retail, DHL,

Coca-Cola, Nokia,

UB Group, Videocon,

Fujitsu, Philips, Airbus,

Amway, Parle Agro ............ 14

oPerAtIVe INDeX*

*Key entities mentioned in the news section

On taking over as the new Minister for Road Transport and Highways, CP Joshi sent out some encouraging feelers to the industry. The industry watches in anticipation.

We reach out to more than 1 lakh retail outlets and up to 200

modern retail formats. It is our distribution network which makes foreign brands tie up with us.

— dilip dandekar, managing director,

camlin,

on its distribution tie-up with Japan’s Zebra.

TRAIN OF THOUGHT

We are easily looking at around one million new jobs directly linked to the telecom sector over the next 3-5 years, most of which will come from sales, retail and distribution.

— rajiv bawa, executive vp (corporate affairs),

uninor,

betting big on telecom becoming the single largest

employment creator in rural India.

India aims to invest 4̀.52 trillion by 2020 to build new ports and develop its shipping industry to

boost trade. The investment will likely more than triple India’s

annual port handling capacity to 3.2 billion tons.

— gk vasan shipping minister

at the time of unveiling the Maritime Agenda 2010-2020.

along with Rajas-than Chief Minis-ter Ashok Gehlot, helped the Con-gress turn tables on the BJP. Born and brought up in Rajasthan, Joshi holds a masters degree in phys-ics, a doctorate in psychology and a bachelor’s degree in law.

After taking over, Joshi, in his fi rst media ad-dress, promised quality roads and greater transparency in the functioning of his ministry. His talk of the use of new technol-

ogy for real-time monitoring for instant feedback seems to have enthused the industry about him.

Ajay Chopra, CEO, DIESL, seemed confi dent that the new minister will take a more ag-gressive target because of the backlog of work. “The new minister needs to look at a more focused and long-term perspective on the area of road development. We still seem to be very short sighted in our plans. One example here is that even now the new high-ways being planned are 4-or 6-lane structures, when the rest of world is at a much high-er level.”

CP Joshi, the new Minister for Road Transport and Highways.

10

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The All India Motor Trans-port Congress (AIMTC), a Delhi-based association of commercial vehicles, com-mented that while ministers may change, the policies continue to remain the same. Bal Malkit Singh, member (managing committee), said the organization is making a presentation to the new minister with regard to the

lack of transparency in toll charges. “We had requested the earlier honorable minis-ter to undertake an annual collection of toll charges for trucks plying under the Na-tional Permit. Also, the ab-sence of highway patrolmen is jeopardising the safety of drivers and goods.”

On the new development, Chitra Shinde, Chief Business

Chain Off icer, GATI Limited, says that the new minister needs to make roads safer so that transporters do not face the constant problem of shortage of drivers. “The min-istry should set up rest areas on highways for drivers that provide basic food and sleep-ing arrangement on hire. To-day no driver would want his son to continue in the profes-

sion. The life of a long haul driver, although adventurous, is very tough.”

If Joshi delivers on the commitment of making qual-ity roads it would mean huge savings for logistics com-panies, not to mention the smooth running of the high-powered trucks that are en-tering the running f leets in increasing numbers.

IndIan shIpbuIldIng Industry accounts for just 1 pc of the global market

Sector NewS

Demand For OSVs Will Drive India’s Shipbuilding Mumbai

A recent analysis from Frost & Sullivan, Strategic Analysis of

Shipbuilding and Repair Market in India, finds that the shipbuild-ing and repair market in India is poised to pick up momentum. The reason is the increasing penetration of Indian shipbuild-ing companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the build-ing and repair of OSVs, resulting in a spike in orders for such ves-sels from the industry. The lim-ited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are also resulting in diversion of orders to India, driving up the fortunes of the Indian shipbuild-ing and repair market.

Growth in multimodal transportation infrastructure and integrated logistics parks has led to significant logistics outsourcing opportunities. The aging fleet of shipping compa-nies in India is another factor energizing prospects for the shipbuilding and repair market in the country.

Frost & Sullivan has found

that the market earned rev-enues of $1.6 billion in 2010 and expects this to reach $3.5 billion in 2016.

The report adds that about 40 percent of the India-owned fleet is more than 20 years old, and Indian owners will need to spend about $4 billion to re-place these during 2010-2015. In addition, the International Maritime Organization (IMO) has mandated the phasing out of all single-hull vessels by 2010, and single hull tankers constitute about 16 percent of the total vessels owned by In-dian shipping companies.

The future of the Indian shipbuilding and repair market looks promising and is likely to double in size in the next five to six years. The growth potential is further enhanced with the Indian government aiming for the nation’s shipbuilding sec-tor to attain a 5 percent share in the global market by 2017.

Although the outlook for the market is bright, there are some challenges. India has a vast coastline, but there is an acute shortage of deep draft water

space along the coast. This re-stricts the type and size of ships that can be built or repaired in India, thereby curbing the full growth potential of the Indian shipbuilding and repair market. Shipbuilding and ship repair are both labor-intensive activities and fulfilling the requirements of this industry is proving to be a market bottleneck.

The government is encourag-ing greater private participation in the sector and a new world-class commercial shipyard is

being built on the eastern coast. These factors will rev up growth prospects for the market. The government is also facilitating improvements in port and in-frastructure facilities and eas-ing regulations and taxes to as-sist the industry in addressing the challenges and overcoming its barriers. Participants in this space are striving to gain a foot-hold in the small and special category vehicles segment, such as offshore vessels to optimize business traction.

The aging fleet of shipping companies offers good prospects for

the Indian shipbuilding industry.

12

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TVS Logistics May Tap Capital Market With IPO Chennai

If the company board decides, TVS Logistics may soon tap

the capital market through an Initial Public Offering (IPO) in the next three-six months.

The funds raised will be used to fund its acquisition plans. The move is part of the logistics company’s plans to become the fl agship arm of the TVS Group.

The company is planning to raise `100-200 crore through the IPO. Besides, the company

has also set a target of doubling its turnover this year. In 2009-2010, the company realized a turnover of `650 crore; for 2010-11, it is expecting to reach around `1,250 crore, according to reports.

The company has also an-nounced its acquisition of US-based Manufacturers Equip-ment and Supply Company (MESCO) for a 100 percent cash deal. As part of the ac-quisition, TVS Logistics would

fedeX was the fIrst to eQuIp delIvery vans wIth technology to track packages

make an investment of `50 crore. Through the acquisi-tion the company besides lev-eraging the clients of MESCO, would also expand its presence in the United States market. This acquisition is expected to help handle the supply chain management in the tool and dye business, besides increas-ing the company’s presence in North America.

Currently, TVS Logistics garners 40 percent of revenue

from the domestic market with the remaining coming from its overseas operations. In 2007, TVS Logistics acquired 49 per-cent stake in another US fi rm Global Rush. Having bought the remaining 51 percent, Glo-bal Rush is now a 100 percent subsidiary of the TVS Logistics in the United States.

In the near future, the com-pany plans to expand opera-tions in China, South East Asia and Turkey.

IndIa Is the second largest producer of two-wheelers In the world

Universal Freight Management Optimizes Supply Chain With Four Soft Solutions Hyderabad

Universal Freight Manage-ment (India) has entered

into an agreement with Four Soft (4S), a global leader of-fering software solutions for logistics and transportation industry, to implement its web-centric freight management system (4S eTrans) and India customs compliance solution (4SeCustoms) across multiple locations.

Universal Freight Manage-ment (UFM), with partners lo-cated worldwide, offers range of services to customers like air & ocean forwarding, multi-modal transport, customs bro-kerage, logistics/distribution, warehousing, and consultancy.

With the new solutions, UFM expects to expand its business reach, improve overall business productivity and offer effi cient services to custom-ers. The web-centric solutions

should enable UFM to auto-mate its processes, improve op-erational productivity, reduce overall costs and increase serv-ice levels to customers.

4S eTrans is Four Soft’s web-centric Freight Management System capable of handling air, sea, road and multi-modal transport management serv-ices. Built on J2EE platform with a native browser interface, 4S eTrans is designed to pro-vide logistics operators with operational and fi nancial con-trol over their day to day, order to cash process of the domes-tic and international freight movements. Equipped with an

integrated freight accounting module and interface capabili-ties with external accounting systems, 4S eTrans provides a scalable and fl exible freight management solution.

4S eCustoms is an anytime, anywhere global customs com-pliance solution, with plug and play modules for different countries, designed to work in a multicultural, multilingual environment, as one pack-age with interface capabilities with all Four Soft enterprise products and other ERP appli-cations. With native browser access and a generic third party interface, 4S solutions

DIeSL initiates Shram DaanMumbai

As part of its CSR move, Drive India Enterprise

Solutions Ltd. (DIESL) has initiated ‘Shram Daan’ to construct a mini dam in the village of Jarandi in Thane district. The construction was undertaken by over 100 employees from DIESL and is the part of the village de-velopment program initiated last year by the company.

The construction of the dam is part of the ‘rain-water harvesting’ project under the village development program. DIESL will monitor this ex-tensive and comprehensive three-year plan with an inter-nal audit team with a view to duplicating the model in other villages in the country.

The web-centric solutions will enable UFM to automate its processes, improve operational productivity and increase service levels to customers.

are highly interactive and cost effective for the international freight forwarding and cus-toms brokerage community.

piecing it together

What has been you experience of moving from established compa-nies to a start-up?

When Siesta Logistics be-gan operations in 2007, it took us 2-3 years to plan and un-derstand the business module. Our group of specialists with more than 15 years of industry experience helped ease uncer-tainties.

We are now in a position to help clients redesign their sup-ply chains, optimize routes, negotiate better vendor terms and ensure that their materials reach on time.

Our clients include Reliance Retail, DHL, Coca-Cola, Nokia, UB Group, Videocon, Fujitsu, Philips, Airbus, Amway, Parle Agro, among others.

How does Siesta Logistics plan to expand globally?

Our network of operations covers Asia, Europe, Australia, Hong Kong, North and South America. We are looking at set-ting up operations in South East Asia, Vietnam, South Africa, Co-lombo, Middle East Asia, London and more locations in the USA.

Siesta Group is a diversified con-glomerate with interests in hospi-tality, retail and agriculture. How is the overall logistics managed?

Each entity is supported by Siesta Logistics when there is a requirement. For example, Im-prints, our footwear brand, has a section of its manufacturing in Kolkata. SLCL steps in to coor-dinate the raw material require-

ments from the vendors’ desti-nation to delivering the finished products to points of sales.

How do you customize logistics for your clients emerging from various verticals?

We cater to specific require-ments from verticals such as finance, telecom, retail, and FMCG. Our domain knowledge combined with our capabilities of end-to end logistics manage-ment helps us design and execute solutions, thus enabling us to ap-proach and acquire new clients within any vertical.

Our customized solutions enhance their efficiency in lo-gistics and bring them substan-tial savings. Your motto has been to remain as-

set light. How do you manage busi-ness globally?

We have a wide network of partners that allows us to work on an asset light model. We have associates in over 20 destina-tions across the globe. We are part of a Global Logistics Net-work which has 375 members, offices in 382 cities and network in 132 countries.

Siesta seeks to “create an increas-ing need for seamless logistics so-lutions”. How do you plan to chan-nelize this?

We aggregate services in the entire supply chain, so we re-main in control. We cater to all imports and exports to and from India including permissions and paperwork.

Siesta Logistics Corporation (SLCL) is expanding globally. For this reason, the company raised $10 million by selling a minority stake. kiran salunke, managing director, slcl tells Log.India the company’s road map.

Thomson and ThomsonOwing to our rich industry experience of more than three decades, we

are able to manufacture and export a quality range of Air Curtains,Industrial Air Curtain,Commercial Air

Curtains,Pharmaceutical Air Curtain, PVC Strip Curtain, PVC Flap Door, Air Purifiers etc.

Mr. G. ThomasTelephone : +91-22-28345547/28207912Mobile : +91-9867099434, Fax : +91-22-28207912Email: [email protected], [email protected]

Thomson and ThomsonUnit No. 7, Near Siddivinayak Temple, Ashok Nager, Marol Pipeline, Andheri EastMumbai, Maharashtra - 400 059, India

< IntervIew

< EVENT REPORT

Ideas from AbroadParticipants at the Port Finance were firm that Indian companies need to go back to the drawing board before constructing new ports. Frewin Francis looks at the sea of troubles that Indian ports face.

Mumbai witnessed its first port finance event for the international port fi-

nance and investment markets, Port Finance International. The event was organized by an UK based on-line news portal sharing a similar name. The event followed close on the heels of the much talked about fifth Vibrant Gujarat Summit 2011.

Participants were eminent per-sonnel from maritime boards and advisories, infrastructure com-panies, law firms and investment firms, among others. A constant re-frain throughout the event was that ports in India can be made more efficient if the feasibility due dili-gence has been done well.

The highlights of some of the sessions are as below:Session: Planning and Risk Management in the

Indian Ports Structure

Speaker: Gordon Rankine, Director, Beckett

Rankine

Beckett Rankine, an engineer-ing consultancy firm, specializes in planning and designing marine in-frastructure. Some of their notable works include planning the world's largest man-made harbor at Ras Laf-fan in Qatar, the award winning Mill-bank Pier in London, and the design of the Dockmaster pontoon range.

Gordon Rankine, Director at Beckett Marine, shared his

thoughts on development of ports and spoke at length on the areas that authorities should focus on. Having helped with surveys, strat-egies, designs, master plans, and project management for jetties, quays, piers, terminals, dredging and other marine infrastructure, he expressed his concerns regarding the Indian port story. He observed that a recent trend emerging is the entry of several infrastructure firms into port development without a clear understanding of marine re-lated issues.

He began his address with the study of waves. High tide often results in log period swells that disrupt cargo efficiency. It is also important to conduct a thorough understanding of the soil prior to constructing a port. He cited a re-cent disaster that took place at the port of Chibatão, Manaus, Brazil. A huge crack along the length of the terminal saw parts of the terminal patio give way and crumble into the river, with containers and port equipment getting swept away.

Another area that Rankine


stressed on was financial control. (See graph, facing page) “Saving a few lakh rupees during the initial con-cept and feasibility study by cutting down on due diligence and surveys will entail the risk of enormous losses. Environmental, regulatory, design related, topography related, political, natural calamities and navigational issues need to be care-fully taken into consideration before the foundation stone is laid down.”Session: Case study on Gujarat Maritime Board

(GMB)

Speaker: Pankaj Kumar, Vice-Chairman, GMB

In his presentation, Kumar highlighted some of the initiatives by GMB to develop the port sector in the state. He discussed the vari-ous initiatives taken by the board to attract sector players to invest in the state and the huge potential it pos-sessed for the maritime vertical.

Some pressing issues concern the environmental impacts due to ship recycling at Alang. However, steps have been taken to provide an environmentally-friendly and eco-nomically feasible solution.

He also pointed out some of

Date : January 19 and 20, 2011Event: Port FinanceOrganizer: Port Finance InternationalVenue: Novotel, Mumbai

(L-R) Pankaj Kumar, Vice-Chairman, GMB; Gordon Rankine, Director, Beckett Rankine; Marten van

den Bossche, Chairman, ECORYS Nederland BV; and Dr. Parakrama Dissanayake, Chairman/CEO,

Aitken Spence Maritime.

Ideas from Abroad

Securing Long Term TiesSupply Chain Management

Development Council host-ed Supply Chain India Meet

2011 on January 8 in Mumbai. The event saw a turnout from 20 lead-ing supply-chain practitioners, 22 premium acad-emicians and 50 young B-school graduates seeking a beginning in the field of logistics and supply-chain.

This academic forum in the field of logistics and supply chain man-agement aims at motivating young

the compelling issues of security, subsequent to the Gujarat and Ma-harashtra coast being identified by the Intelligence Bureau as possible routes for terrorist infiltration. The state has stationed special battal-ions and marine police along the waters. Also the Vehicle Tracking & Monitoring System (VTMS) em-ployed in the Gulf of Kutch, on a clear day, can detect ships as far as the coastline of Goa and Oman.

The GMB has also planned for port cities/coastal townships in Mundra and Pipavav. This would also mean setting up desalination plants and solid waste manage-ment facilities to ensure clean liv-ing conditions to people employed at the ports.Session: Gujarat: Main entry point for India?

Speaker: Marten van den Bossche, Chairman,

ECORYS Nederland BV

Bossche’s presentation followed Kumar’s on Vibrant Gujarat. The concerns voiced were based on his experience and exposure to the In-

dian business climate. He pointed out that while Gujarat might be the most lucrative region as far as investment in ports is concerned, it still remained as one of the most expensive regions to develop a port, citing climatologic and other soil related issues.

He averred that while a large number of ports look economically attractive, in the long term consid-ering economies of scale a larger port on the lines of the port of Rot-terdam or Antwerp would still fare better.

He identified Dahej and Hazira as the regions with maximum advan-tage due to the high level of commer-cialisation in contrast to Mundra which is sparsely populated.

Development of hinterland ac-cess routes was also a long-stand-ing problem, he added. While hav-ing a well-designed and efficient port is desirable, the lack of access routes to these ports makes logis-tics costs rise drastically.

INDIA| February 2011 | www.logisticsweek.com 17

Conc

ept

Feas

ibili

tyPl

anni

ngDe

sign

Bankability

Project Time

Project Cost

Influence of Cost

Rankine's relationship graph between cost and time in a project implementation

B-school graduates and working executives by extending industry knowledge through well-known supply-chain professionals.

Amongst the speakers who pre-

Date : January 8, 2011Event: Supply Chain India Meet 2011Organizer: Supply Chain Management Development Council (SCMDC)Venue: Hotel Stars Parade, Mumbai

Dr. RS Ghosh, President, SCMDC delivering the welcome note.

sented their views were Anjan Sen, General Manager (Logistics) at Ul-tra Tech Cement. He discussed the criticality of timely delivery and key issues of the cement supply chain. This is because as a commodity, ce-ment has a volatile pricing model and requires high dependence on various suppliers for raw materials. It also calls for constant re-engi-neering to improve the efficiency of the supply-chain.

Graph Courtesy: Beckett Rankine

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My Pop Strongest

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From Logistics To Supply Chain

Padmini Pagadala General Manager, TPG Consulting, Mumbai

The idea of logistics has expanded over the years to become the interesting, all-encompassing entity - supply chain - that it is today. Padmini Pagadala explores the two terms.

What’s in a name one may ask? We may shrug off the discussion, but not so the ex-perts in our industry. Recently, i was at a cocktail party with some international veter-ans from our industry, and they started talk-ing about what the right word was to refer to the industry we work in. they discussed the subject with so much vigor and argued back and forth, that i thought it would be valu-able to recount their conversation. More than that, it’s important because i think it shows how the field has evolved.

What’s interesting for me as a relative new-comer to this field is that we haven’t always been called supply chain professionals. according to these “veterans,” our profession has really changed its name three times over in the last 50 years or so. it wasn’t until the beginning of the new millennium that our recent name change to supply chain professionals took place.

Why did the change take place? as we in india follow the supply chain evolution path that the West has mapped, it’s worthy to con-sider each step and whether or not that step was really necessary or relevant. the biggest mistake we can make is copying for the sake of copying. it strikes me that sometimes even the logistics terms used might not transfer as well as the practices.

The BeginningMost of you would be familiar with the Coun-cil of supply Chain Management Professionals (CsCMP). the CsCMP is the world’s pre-eminent organization of supply chain professionals . there are thriving chapters of the organization in Mumbai and Delhi. But, what most readers may not be familiar with is that in the very begin-ning in 1963, when the founders came together to set it up, that’s not what they called it.

PADMINI PAGADALA General Manager, TPG Consulting, Mumbai

India’s Mom and Pop stores should not feel threatened with the knock of multi-brand FDI at the door — not only do they have a home advantage, but they are formidable in the areas of customer service, delivery, and relationship.

THERE IS A general perception that Foreign Di-rect Investment (FDI) in multi-brand retail could threaten small independent retailers. Maybe so. But there are a few arguments here that could make the independent retailers (kiraana stores) feel better once they know their ground. For instance, if at 10 in the night, I call up my local kiraana shop to order a loaf of bread who will de-livers it in ten minutes, I wonder why they have to fear the big MNCs. Having said that, do I walk through a supermarket to buy stuff? Of course I do. When I lived in Singapore, Mustafa Centre, which must undisputedly be the world’s larg-est store, was one of my favourite haunts. To be able to see rows of tiny bottles of salad dressing never ceased to warm my heart. Will this lure of foreign capital take away the business from our local retailers? Does the entry of foreign capital in the multi-brand market mean the end of our kiraana shops? Will the lessons that they have learnt help them survive and hopefully emerge better than their foreign counterparts? When this inevitable epic battle is complete, will the consumers rejoice? Although we will likely have to wait years for the answers, I believe it’s worth looking at the Indian customer behavior to guess who might have an advantage.

Soft CustomerThe Indian consumer is very tolerant to stock-outs. We buy from what is available, more so in

the vegetable market. Contrary to the West, we are quite averse to eat mangoes in December or strawberries in summer.

When a customer walks into a store and asks for a product, he is expected to make do from what is available. Compare that to the promise of the local kiraana store to deliver home an out-of-stock product the minute he procures it. This is of course possible because the local retailer sources his manpower from villages and sustains his profi ts by underpay-ing his employees. What would happen when India enforces minimum wages or its child la-bor laws with vehemence?

This same “make do” attitude, I think, shapes Indian thoughts on brands. How often do we go to a kiraana store and ask for “Good Knight” and settle for “Mortein”? This is extended to health and beauty aids and even dry grocery as well. But the question is, if the products do start appear-ing on the shelves, would consumers start to be-come brand conscious? Will we always tolerate a supply chain that forces us to settle for prod-ucts other than those asked for? Customers are known to wait for the car they want or seek out another retailer to buy the cell phone they want, but will this trickle to products such as atta and washing powder? There is reason to believe that if the products are available on the shelf when a customer needs it in one store, there will be a shift towards the product than the retailer.


Price MattersMost Indian consumers are lured by competitive prices and promotional offers. The queue for the annual Big Bazaar sale runs through the entire length of a popular mall in Mumbai. This year I braved myself and tried to catch a glimpse of what the store looked like on the inside, the fi rst day of the sale. Like any big sale, the smaller sellable units had been replaced with bigger ones. While the sav-ings could not justify my having to haul home fi ve-kilo bags of washing powder or any other products, I could see how it all could add up for a household buying dry grocery for two months or more.

Today, even by very conservative estimates, at least 40 percent of the Fruits and Vegetables (F&V) are dam-aged in transit. This means that the supply is short and it is the customer who has to pay for the pilferage. Multi-brand retailers can run their supply chain at about eight percent of the cost of goods sold and the savings accrued are passed on to the customer. The real savings in a retail business is the ability to save the pennies. This can only be saved if the retailer manages to grab a small percent-age from every nook and corner of the supply chain or other areas of the outlet. This is the biggest, and prob-ably the only, area where organized retailers beat the lo-cal retailers hands down.

Quick Home DeliveryWhile home delivery may border on the premium for veg-etables or pulses, it is expected in terms of white goods. It is also expected that installation will be done as in the case of home theaters. The organized retailers have tried to work around it by offering home delivery for the following day. This is managed from the store rather than the warehouse, unlike in the West. Of course, the customer cannot choose the time when the product will be delivered.

This is an opportunity area for local retailers. The mom and pop stores could do this effortlessly with their small scale of operations. It could even mean bigger sales, if they could fi gure out a cost-effective method.

Building RelationshipsWhen the person whom I have purchased goods regu-larly from walks into my offi ce and answers all my ques-tions with regards to a new product, he clinches the sale. It should seem pretty simple for large retailers to do this. Of-ten, they do not seem to get this right. If I do buy a product from a big retail chain, it is unlikely that I will fi nd the same sales person every time I make a purchase. The product is always more expensive. Worse of all when I have a prob-lem, they will tell you to go elsewhere. Unlike my vendor who may not be able to solve the problem himself, but will direct me to the right place and offer his personnel to get the work done - for a premium of course. This is the golden

19

The author can be reached at [email protected].

zone that the mom and pop stores have. You only have to call them when something goes wrong. They would take back the product with no questions asked or in other cases fi x it. They do not have a ‘sales’ team, a ‘delivery’ team or a ‘repair’ team. They are truly one company. This is prob-ably where local retailers can cash in. While building a personal relationship with the client may seem tough, it is not impossible to hire the right staff to answer questions and make sure that repairs, if not returns, are accepted amicably and processed in a reasonable amount of time.

Who Will The Winner Be?If I were a local retailer, I have the home advantage. I have procured the real estate for the stores which is, by far, a diffi cult task. Also, I know most of the challenges and have a head start on how to tackle them. If the mar-ket does get opened up to multi-brand retailers, the best ‘win win’ strategy would be to tie up with the right foreign company rather than fi ght them. That would be a mar-riage that would make even the consumers happy.

As a matured retailer from outside, their vast knowl-edge would be an advantage. There is the capacity of be-ing able to run the supply chain at 6-8 percent of the cost of goods sold. This cannot be construed as being able to merely copy paste western or for that matter any other so-lutions here. As the cliché goes, India is unique. Having made mistakes already, matured retailers know where to invest. The foreign companies would still have to procure the real estate for the stores and fi gure out how home de-livery could be made effi ciently.

If I were a kiraana store, would I worry? A little. One cannot forget that the same debate raged a few years back when large retailers started to set shop in India. Did that mean the end of the kiraana shops? Defi nitely not. A few may have lost some of their sales but not the ones who had a good relationship with their customers. As a kiraana store or even a small electronics dealer, there is always the price advantage. There is no way a large retail chain can beat the seller who sells onions near a local railway station. The seller will make it a point to peel off the bad layers till each onion is clean. The fruit seller has the skill to note ‘good customers’ for whom he will handpick the good apples. If I were a kiraana guy who had the capacity to home deliver in ten minutes and take cash at delivery, I would only be a bit worried. Best of all, if I own the piece of land where my little shop sits in the midst of a hundred households, I might not be that worried.

And best yet if I were sitting on top of the supply chain buying my shampoos from the mall, getting my apples from a retail store and my monthly grocery home delivered, I just might sit back and wait for the battle to begin.


A large component of logistics costs stems from companies glossing over the good ol’ basics, says Ram Madhav Sarma.

20

It is a much bandied about fact that logistics costs in India amount to 13 percent of GDP compared to the developed

world’s fi gure of around 6 to 8 percent. Logistics players in India attribute the high cost to government policies, duty structure etc., and also, to a large extent, on our dependence on the “unorganized sector”.

To me, the term “unorganized” used in this context must not be re-stricted only to small fragmented players who work with unskilled labor, restricted assets and infra-structure, but should also be ex-panded to include the big, major players who throw away the “ba-sics” to the wind, a propensity that I feel is a big contributor to the costs.

Unlike other sectors, logistics

< GUEST FEATURE

The Fundamental Truth

involve costs at every level; every aspect of the logistics processes, ir-respective of the size and quantum, adds up to the overall costs. There-fore, the reduction in the overall costs at the macro level has to begin at the micro level.

The mention of costs brings to mind the experience of this high ranking offi cial who retired from the government service with an of-fer from a paper company, to head its division in one of the metros. In the way that he was used to work-ing, he started with establishing the basic systems and processes within the company in fi rst three months after joining.

During the fourth month, the company fi red him. The reason: He was not generating the adequate

revenue for its division. The com-pany argued that his basic job was to earn the revenue for the division and all the other things remained “secondary”. Obviously, the com-pany did not feel the requirement for such systems as, in all prob-abilities, the company must’ve been covering these costs through either

It is a fact that efforts made to generate revenue accrue better output than that of reduction of costs.


high revenue generation, or in other words, by passing on these costs to its customers.

Similarly, a European Projects company contracted for transpor-tation of vehicles from an African country to India did not have a well laid out system for the collection of the vehicle keys from the agent at the embarkation port. The of-fl oading of vehicles at the Indian port could not be delayed till the arrival of the keys; therefore, the costly specialist vehicles had to be offl oaded with the help of a crane, resulting in a substantial loss as handling damages.

The auto company had carried out the initial acceptance checks of all the vehicles at the consignee point, but the similar system was not followed at various transship-ment points by its 3PL providers, re-sulting in the auto company incur-ring losses again due to defi ciencies in the vehicles which it could not pinpoint to any of its outsourced agencies. All because of the com-pany’s neglect of a basic procedure.

A simpler example is of the pas-senger cargo-handling system at our airports. Most of the damages to the baggage do not occur during transit, they occur due to mishan-dling at the transshipment points by the ground handlers.

A regular passenger can rarely spot any baggage coming out on the conveyer belt in an upright position, which results in a long queue at the claims counter. It just requires an ef-fective supervision at the transship-ment point by the handler. Shouldn’t an airline carry out a cost-benefi t analysis for such an issue?

All these examples had two things in common: One, these lo-gistics guys did not see any merit in concentrating on the small is-sues at hand, and two, they obvi-ously pushed the resultant costs to their consumers. It is not that they are not aware of these basics; it’s

just that these are too small issues for them to concentrate upon vis-à-vis the bigger picture of revenue generation.

It is a fact that efforts made to generate revenue accrue better out-put than that of reduction of costs. Hence most of the players focus on the top-line and think that passing off the costs to the end consumers will solve the problem. But the com-panies don’t see how that adds to the overall logistics costs.

Importantly, it’s more critical for the bigger players to contain logistics costs by sticking to basics – due to the quality imperatives and bigger quantum of processes in-volved. The so called “organized” players do have the wherewithal to work out the costs, but what they need is the attitude to look for it. This attitude, once adopted, perco-lates down to various players along the supply chain. On the other hand, due to high competition, the smaller players somehow become aware of these basic benefi ts and have to perforce utilize it to their advantage.

The onus of breaking the vicious cycle of costs remains with the lo-gistics sector due to the enormity of its role. Some micro-level solutions for that lie in:

(a) Recognizing that even the smallest process carries costs to the company.

(b) Re-engineering every proc-ess in order to fi nd and reduce the costs.

(c) Educating the lowest employ-ee about the outcome of her involve-ment in the process of achieving cost reduction.

(d) Executing accountability at every level in the process.

(e) Incorporating the term “con-tributing to reduction of overall logistics costs” in their respective mission statements.

Ravi Madhav Sarma is a qualif ied logistics manager with two decades of experience in military logistics. The views expressed here are his own based on his experiences with corporate logistics.

Most of the play-

ers focus on the

top-line and think

that passing off

the logistics costs

to the end con-

sumers will solve

the problem.


< Guest feature

Service logistics not only retains customers but it also provides substantial revenue.

sanjiv KathuriaCountry - Sales and Marketing Director, TNT

22

Service logistics has come to the fore and is believed by many to have the potential of being a game changer in the industry. The growing concern

for the environment, along with a rapid increase in the introduction and use of new and advanced technology, has led to an increased interest and focus on service logistics. And expectedly, any one definition fails to satisfy all its stakeholders.

For the purpose of this article, service lo-gistics is defined as “All logistical activities that support the servicing of a sold product throughout its lifecycle”. This includes man-aging Dead On Arrival (DOA), Dead After Purchase (DAP), Warranty Management, Col-lection of Defective goods from customers for repair, Swap, Storage, Order management and Distribution of spare parts required for repair.

a Key DifferentiatorAs the high technology market particularly becomes increasingly commoditized, there is a growing realization that the manufacturer’s aftermarket service can become a key differen-tiator in customer retention, sustained growth and a substantial revenue stream. This means offering good service, maintenance, repair and warranty programs. Managing and sup-plying spare parts within a specified time limit is also a critical part of service logistics.

Traditionally, organizations have used for-ward logistics channels to fulfill their service logistics activities. This is partly due to the

comfort of riding on existing infrastructure and avoiding multiple vendor management. This created inefficiencies and a clear conflict of interest between the manufacturer and their distribution partners. To address this, manu-facturers began to look to outsourcing service logistics functions to specialist companies who can bridge the gap between the service commitment of the manufacturer and its ac-tual fulfillment.

The outsourcing of the service logistics supply chain has given the manufacturers the benefit of faster turnaround time, and reduced total distribution costs by keeping a tab on the inventory carrying cost and lever-aging the expertise of organization skilled in service logistics.

rapid GrowthSome of the industries that have been early adopters of ensuring a robust service logis-tics supply chain are from the computing and telecom vertical. The telecom industry for both hardware infrastructure services and devices has been aggressive in adopting the service logistics route primarily, as the cost of the device comes down and sales volumes increase across the geographical expanse of the country. The service logistics market in India grew rapidly at an estimated 16 per-cent CAGR in 2009-10. According to a recent study, the service logistics market potential was valued at €200 million (`1400 crore) for these industries alone.

Service LogiSticS:

the game changer


< Guest feature

service supply ChainThe service logistics customers can be grouped into two categories–Installed Base Product (IBP) like, servers, heavy duty print-ers, telecom towers and Return to Bench (RTB) for example, mobile phones, laptops and iPods. In the case of the Installed Base customer, only the spare that is defective moves, whereas for the Return to Bench cat-egory, the entire product is sent back for re-pair. The diagrams below depict a typical sup-ply chain for both the IBP and RTB customers (Figure 1 and 2).

For any manufacturer wanting to set up a service logistics supply chain, the road is full of hurdles. Most of the current options are highly disorganized with multiple lo-cal logistics and repair providers acting in-dependently. One of the key challenges that companies face is managing a complex net-work of multiple vendors with varied service levels and costing. With increasing levels of competition, aftermarket service has become the key differentiator. As the product cost de-creases, the cost of service as a percentage in-creases. This dichotomy of controlling costs, while improving service levels in a scenario of decreasing product costs, is propelling man-ufacturers to focus on designing an efficient supply chain to optimize this cost.

For manufacturers set to design and evalu-ate a service logistics supply chain solution, some of the questions that need to be an-

swered are: n What is the percentage of products re-

turned for repair during warranty?n What is the cost to process return vs.

cost of product? n What percentage of the value of a re-

turned product did the company manage to eventually recover?

The answers to these questions will help determine the viability of engaging with a logistics service provider. Some of the chal-lenges that companies and people in service logistic supply chain experience include: n A general lack of focus or top manage-

ment involvement in this part of the supply chain.n Lack of sound forecasting techniques for

service parts. n Inefficient and ill-suited IT systems to

manage service logistic activities. n Major growth coming from Tier II and

Tier III cities and beyond, coupled with poor transportation network connecting them. n Logistic service providers have limited

coverage in these locations. n Reliance on channel partners to manage

returns business, resulting in lack of focus and conflict of interest.

is Outsourcing the answer?Service logistics helps the client to reduce inventory and logistics costs and shorten delivery timescales, as well as provide rap-

As the product cost decreAses, the cost of service As A percentAge increAses.

figure 1: supply Chain of installed Base Product

Source: TNT


id pick and pack distribution service. Com-panies now need to choose between “make” or “buy”. Companies which decide to man-age this part of the supply chain in-house will need to evaluate their practices and use of technology, or face growing costs and customer concerns. The skill set of individu-als managing it also needs to be checked. To take care of the future and be competitive, companies need to keep investing in the latest IT technology and also regularly train its manpower.

The move towards outsourcing is beneficial because of the complexities in this part of the supply chain. It requires a different level of expertise and know-how, and enables compa-nies to procure services from specialists and leverage the advantage of using the shared resources on space, manpower and IT with degrees of customization as required. The specialists invest constantly in upgraded IT in-frastructure, manpower and reach, along with the sharing of best practices which are passed on to customers.

Repair turnaround times, inventory con-trol, security, network reach and real-time data visibility are key priorities for customers when identifying a logistics provider.

While choosing a reliable service logistics partner, the company needs to evaluate the partner on various parameters. The param-eters will include criteria such as does the partner have a road and air network for do-mestic and international locations, security

readiness in terms of certifications and robust systems, data availability and clarity, cost effi-ciency in terms of shared fixed costs and flexi-ble pricing methods, value added services such as escalated deliveries for critical parts, IT system enabling transparency, reporting and monitoring and last, but not the least, service logistics knowledge, the right people and the right experience.

after Market serviceSelecting a good service logistics partner is just half the job done. The critical part still lies with the manufacturer. The key differen-tiator in aftermarket service still has to be cre-ated by the manufacturer by integrating and defining the scope and objectives of service logistics activities. The first task is to lay out a well-defined and documented service policy. The manufacturer also has to select the right partner and integrate all the stakeholders in the service logistics supply chain with a clearly specified scope of activities in order to effi-ciently monitor performance. A continuous improvement process will help refine and raise the benchmark.

Thus, a well-designed service logistics operation ensures that the manufacturer’s supply chain is always dynamic, on demand, and fast to market with seamless storage and distribution.

repAir turnAround times, inventory control, security, network reAch And dAtA visibility Are priorities for customers.

The author can be reached at [email protected]

figure 2: supply Chain of return to Bench Product

Source: TNT

< Cover Story

Photos: Ramlath Kavil

Eye For Innovation


Maruti Suzuki India thrives on a remarkably effi cient supply-chain aided by General Manager (Supply-Chain Division) r. Harikumar's penchant for innovative ideas that work. Pamela Cheema reports.

R. HARIKUMAR,General Manager (Supply Chain Division), Maruti Suzuki

< Cover Story

Neat rows of Maruti’s popular models of cars, like the A-Star, Ritz and Wagon-R glint

in the early morning winter sunlight in the stockyards as we drive into the 300-acre Maruti Suzuki plant at Gurgaon, Haryana. Inside the plant, there is frenetic activity as executives and workers, clad alike in pale green uniforms, are huddled over their work in austere offices. Adjacent to the offices and adding to the general clamor and din of a manufacturing plant are conveyor belts, with mas-sive chains holding the gleaming bodies of new cars, creaking noisily above the belts.

R. Harikumar, General Manager (Supply Chain Division), Maruti Su-zuki India Limited, ignores the ca-

cophony as he earnestly discusses the supply chain methods of his com-pany which have helped Maruti grab a substantial chunk of the domestic market. Maruti has a 50 percent plus share of the domestic market and manufactures 1.2 million cars per year — this includes the domestic and export market. "By 2015 we aim to hit the 2 million mark" discloses Harikumar. “With that goal in mind, we are increasing the capacity of our plants. We already have a second plant in Manesar, Haryana, 25 kms from our Gurgaon plant and we are planning to set up another plant at the same site, thus augmenting the capacity of our plants.”

Delivering valueKumar proudly describes Maruti’s supply chain or ‘value chain model’ (as he terms it) as “very slim, trim and robust.” A large tranche of the company’s domestic suppliers, around 86 percent of them, are lo-cated within a 100-km radius of the Gurgaon factory. The vendors keep up an unending supply of critical components like body panels, bump-ers etc. with only tyres sourced from Ballabgarh in Haryana, Chennai and

remote areas of Madhya Pradesh. Vast supplies of components, based on indents, are ordered from the vendors; keeping a watchful eye on customer satisfaction, Maruti stock-piles its components (which form a part of Maruti’s Genuine Parts sys-tem) and distributes them swiftly from its central warehouse located close to its Gurgaon factory, into the aftermarket.

the transport MixMaruti Suzuki is said to possess the largest and most closely connected auto dealer and aftermarket net-work in the country. The company has 877 sales outlets in 619 cities, with 2,855 workshops in 1,363 cit-ies. It also has 346 True Value Out-lets (certified used car dealer net-work) which cover 202 cities! Most of the company’s cars are moved to their destinations by trucks and trailers, with less than 10 percent being transported by rail. Poor and snail-slow development has ham-strung rail infrastructure, which thus offers few options to auto manufacturers in the country.

“We are in discussions with the railways to increase transportation

A large tranche of the company’s domestic suppliers are located within

a 100-km radius of the Gurgaon factory.

nCurrent annual production : 1.2 million capacitynAvg. components per car : 7,000nNo. of local Tier I vendors : 250nGlobal vendors : 20nSupply Chain Employees : 150nInventory Turn Ratio in 2009-10 : 21.2nNo. of LSPs : More than 100nManufacturing plants : Gurgaon & ManesarnDC location : Gurgaon

The Maruti Suzuki Supply-Chain: Highlights



< Cover Story

by rail,” says Kumar. “We also ex-pect auto wagons to be ready within a couple of years. But even when auto wagons are ready, the poor state of railway infrastructure – insufficient number of railway tracks and wagons – will severely limit auto transporta-tion by rail.”

Demand FulfillmentMaruti’s trim and efficient supply chain network has netted the com-pany many rewards, notably the ability to assess market demand accurately, fulfill it speedily and to the entire satisfaction of its legions of customers. The company has 250 plus Tier-I vendors and 20 global suppliers who ensure continuous supplies. Maruti maintains a spare Just-In-Time inventory which is re-plenished on an hourly basis. Its vendors are connected to the com-pany’s much-lauded e-nagare sys-tem, which is an electronic supply chain system, through which the

vendors inform the company on a day-to-day basis of diverse require-ments and provision of supplies. Once informed of desired supplies, the vendors deliver the material to the factory doorstep.

“Our seamless supply chain is due to the combined effort of the com-pany and its vendors. This is what keeps our system running,” says Ku-mar proudly. “Our production system is also very efficient and it gives an absolutely correct prediction of de-mand.” The company’s production is planned meticulously and with great attention to detail and once a target has been fixed, Maruti resolutely sticks to it.

The company’s target is decided by the market as well as organiza-tional directives. Maruti's numerous dealers send their feedback through the company’s IT systems which are then compiled and used as market surveys. “Our dealerships are closed and very mature,” emphasizes Ku-mar. “Our dealers know our policies and priorities, so we know we can rely on their data.”

With its supple and effective sup-ply chain strategies, Maruti has been able to navigate through the shoals

of the economic downturn and even fend off stiff competition from multi-ple auto brands. Its inventory turn ra-tio has improved by 27 percent from 16.7 in 2008-09 to 21.2 in 2009-10.

Handling Global SuppliersThe rise in inventory turn ratio has been assisted not just by deft han-dling of the domestic market, but also the seamless management of supplies sent by global suppliers. Maruti Suzuki receives 60 contain-ers of components from Japanese companies every week. “Most of our shipments are on a Free on Board basis, that is, we decide the shipping schedule and the shipping com-pany,” elaborates Kumar. “Maruti is responsible for shipments from their factory to my factory here. I am responsible for shipping, port clearance, customs clearance and inland transportation. So from the foreign destination to my factory here, is my job. This makes for bet-ter control.”

Kumar, who has a degree in Busi-ness Economics from Delhi Univer-sity and who joined Maruti Suzuki India Limited in 1984 (in marketing and later graduated to logistics), has

nGross Revenue (2009-10): $67 Billion.n40% increase in Domestic Sales.n111% increase in Export Sales.

FY10: How Maruti Fared

Maruti's vendors are connected to the company’s much-lauded e-nagare system.

nTo develop capability for full model change in all as-pects - planning, design, development and testing.

nTo develop more products with alternative fuel option.nCompliance to safety and emission regulation such

as offset, side impact, etc.nCarry out continuous up-gradation of existing models.nTo build the Company's knowledge base and its

image on technology by designing and showcasing projects in auto exhibitions.

nEmphasis on VA/VE & innovative cost reduction ideas to cut down costs.

nDeveloping costing knowledge of various automo-tive technologies through standard cost tables and cost benchmarking.

nCost planning of new products right at the new product planning stage to put cost in right perspec-tive during the concept stage and give target cost to designers.

nEmphasis on focused cost down models for com-petitiveness.

Future Action Plan

So

urce: Maruti S

uzuki


< Cover Story

prepared precise and detailed plans of shipping schedules for global suppliers. “I have yearly, half-yearly, quarterly and monthly plans,” he explains. “When there are just four months left for the materials to be shipped, I tell my suppliers to firm up their schedules. I also give pro-jection letters to my suppliers detail-ing the quantities we require. When there is just one month left, we in-form the shipping companies of the schedules and tell them to liaise with our suppliers. By that time, we also know what are the volumes of material we require in our plant for the various models."

Warming up to his subject, he dips into greater detail as he says

expansively,"When the ship sails, through our IT systems we get to know when it will be at JNPT; we post a person there who takes the matter forward.”

Despite the auto maker’s grueling work schedules and the rough and tumble of the auto market, Kumar insists that his company has never had to fret about vendor lead time is-sues. Supplies from the vendors have segued seamlessly with production schedules, with rare work stoppages, due to the maturity and finesse of Maruti’s supply chain system. This in turn, according to Kumar, has

spawned the attitude in the company that stoppage of production is a crime.

the e-nagare Factor Much of the credit for this uber ef-ficiency is due to Maruti’s much-discussed ‘e-nagare’ supply chain system. E-nagare is a Japanese word which defines continuity and flow. It was installed at the Gurgaon plant in 2003 after several experiments with various supply chain strategies. This is a system which has been pioneered by Maruti for Just-In-Time inventory, uninterrupted production and quick response to market fluctuations. It is suitable for vendors who operate

in the vicinity of the plant and with-in a three-hour transit time from the factory.

The stock position is generated dai-ly and sent to the vendor at a particular time through this system. The vendor then plans the schedule accordingly for the next day. Every corridor of Maruti’s plants is lined with movable storage cabins known as ‘bins’ which store auto components. As the stock in the bins is used up, information is sent to the vendor through e-nagare and it is replenished. Says Kumar: “The sys-tem is so designed that it picks up the nearest supply time for each block of production requirement. And as per

e-nagare is a system which has been pioneered by Maruti for Just-In-time inventory, uninterrupted production and quick response to market fluctuations.


our inventory norms, no safety stocks are maintained. Only advance mate-rial for about two hours production will be available at best.”

On the basis of the information that is supplied, the vendor ensures supplies at pre-defined timings and frequencies. Kumar is visibly proud of the e-nagare system “which ena-bles us to roll off 4,600 cars a day. This system is now our lifeline!”

eye on QualityDespite the hard slog of an ambitious production schedule, Maruti has de-vised a program called 'Shikhar’ to keep a sharp check on efficiency and

productivity. The HR, production and supply chain verticals of the company structured this program to halt any slide in quality. Actually, Shikhar is an incisive vendor analysis, whereby the performance of those vendors who produce the most defective equip-ment is measured. Kumar explains the concept carefully by pointing out that “those vendors are checked who produce defects at a monthly aver-age of 500 per million.” Vendors who exceed Maruti’s sacrosanct limit are retrained and educated till their per-formance improves substantially.

Other benchmarking initiatives comprise of performance measure-

33

Supplies from

the vendors

have segued

seamlessly

with production

schedules.

Shikhar is an incisive vendor analysis, whereby the performance of those vendors who produce the most defective equipment is measured.

34

< Cover Story

connectivity, ill-trained manpower, obsolete trucks and the ubiquitous pot-holed roads! “I have seen many ports in the world, especially in Singapore and China, they are so different from ours with their high productivity and punctuality,” com-plains Kumar. “We have to develop our infrastructure, but I will say that it’s not just the government’s fault, even the different stakehold-ers are responsible for this state of affairs.” Kumar also points out the deficiencies in railway infrastruc-ture and the urgent need to lay more tracks. “We also need to have more dedicated freight corridors all over the country. If China can have many freight corridors across the country, why not India?”

No Big-Name LSPsMaruti Suzuki’s finished goods are carried across the country by more than a 100 LSPs who are on the pan-el of the company. The automaker avoids the pitfall of being lured by big name LSPs and prefers to nur-ture small-time service providers who are eager to grow with the com-pany and form its rock-solid service provider base. The company believes that large big players are loth to shed their time-tested methods and learn new techniques. Hence it prefers to hire service providers who have just made a foray into the business, moulds them carefully and encour-ages them to stay with the company, with the additional carrot of long-term contracts! “Many of our trans-porters have been with us for 12-13 years if they live up to our perform-ance expectations,” says Kumar, “and some of our clearing agents and shipping companies have been working with us for 24 years!”

Maruti keeps checking the road-worthiness of the vast fleet of vehicles maintained by its transporters. “We never use a trailer older than four years,” asserts Kumar. “After every four years we change the trailers. We

have a contract with our transport-ers about this and they are bound to make this change.”

Wider NetMaruti does not transport or store the various components of its fin-ished goods in warehouses across the country. It has a single main warehouse in Gurgaon, Haryana, in which the components of its finished cars are stored. From this warehouse, products are distrib-uted by indents to multiple dealers. According to Kumar, the present system has been indisputably suc-cessful because dealers order spare parts along with the cars. This sys-tem was devised to ensure quality. But with Maruti’s present hegem-onic position in the auto market and the need to distribute its prod-ucts more evenly in the market, the management is reconsidering its warehouse policies. The company now favors decentralization, with warehouses established in every re-gion in the country.

Maruti Suzuki’s warehouses are fully automated with the latest loading, unloading, pick-up and carry equipment. The warehouse systems also enable on-line mate-rial identification and capture First-in-First-Out movement, periodic stock taking and inventory carrying cost analysis.

With the winds of change sweep-ing the logistics industry and resist-ance to new ideas crumbling, there has been much talk recently about the concept of collaborative logis-tics. Tapping combined strengths could decisively lower costs in a market where inflation shows no signs of abating. Kumar is receptive to the idea and mentions that “we allow our transporters to take other vehicles, like Hyundai cars, on their return trips. But using the same stockyards is a sensitive and politi-cal issue, a decision which only the management can take.”

ments in various Key Result Areas (KRAs) which are applied to managers, suppliers, dealers, etc. with dif-ferent parameters for each category. Due to this relentless quest for quality, according to Kumar, there has never been a line stop in the company.

However, poor infra-structure in the country may pose challenges to Maruti Suzuki’s ambi-tions for the future. Kumar underscores the decrepit condition of most Indian ports, the low productivity, poor

nFirst to set up effluent treatment facilities way back in 1984, when there was no legal requirement.

nFirst Indian automobile company to go for ISO 14001 certification in 1999.

nFirst to use natural gas for power generation at its captive power plants.

nFirst to introduce factory fitted LPG and CNG cars.nFirst to launch ELV compliant cars.nFirst to launch cars complying to Bharat Stage-IV

emission norms.nFirst to voluntarily disclose fuel efficiency of cars at

dealership.

Pioneering Green Automaking In India

We also need to have more

dedicated freight corridors all over

the country. If China can have

many freight corridors across the country, why

not India?

110 0 37

1 11 1 11 1 119 2 2 2 26783 8 9 678 48 8


< Cover Story

Accurate ForetellingGlobally, the market is just emerg-ing from a harsh downturn whose lingering effects are still being felt. Maruti Suzuki is in the process of becoming a major exporter in South-East Asia and the Asia-Pacific region. The company is also attempting to make deep inroads into the Euro-pean and South American markets with the assistance of its Japanese parent company. With its multiple ambitions and fierce domestic pres-

sures, the company’s market esti-mates and its demand forecasting projections could go awry. But Ku-mar maintains that the company’s forecasting techniques have been finessed to exclude possibilities of error; Maruti ensures that its pro-jections are neither too conservative nor too optimistic. This enables the company to maintain equilibrium – it fulfills its own sales projections and customer expectations and at the same time, never loses sight of ground realities.

Similar care is taken to sat-

isfy customer expectations about Maruti’s products. Through the practice of ‘kaizen’, checks and balances are maintained to ensure that there is no slippage in the quality of its products. “We observe each and every activity and identify gaps and scope for improvement,” says Kumar earnestly. “Then we make step-by-step improvements, spread out over a period of time. We also check the ‘before’ and ‘af-ter’ scenario and only then stand-ardize our products.”

The company is equally fastidious about its sourcing decisions as it will never permit consumer confidence to sag. Maruti Suzuki maintains a huge databank of vendors and is aware of the components produced by each vendor; if a new product has to be developed, the existing vendor will first be tried. If the vendor has difficulties with the product, a new vendor will be developed. Sourcing decisions also include the formula-tion of alternate plans to offset any negative blowback. “For every Plan A, we have a Plan B in place, but it’s seldom applied, as we know and we ensure that we are right the first time and every time,” says Kumar with supreme self-confidence.

the Persistent InnovatorToday Maruti Suzuki India Limited has a totemic significance in the In-dian auto market – a company which began small, struggled to the top and now has carved an enviable po-sition for itself in the auto industry. It constantly seeks innovations and tries not to let a single new idea run into the sands. In keeping with the times when green initiatives are be-ing emphasized, the company man-ufactures CNG and LPG vehicles. Research is in progress for the pro-duction of hybrid and electric cars in the future. Maruti uses only CFL bulbs in its factories and has invest-ed heavily in a very effective water harvesting system.

The company employs 7,000 plus workers in its various offices across the country; the Gurgaon plant alone has 3,000 plus employees on its rolls. The percentage of women in its various plants is increasing with more women being promoted as supervisors in the company. Maruti also runs an all-women ITT (Industrial Training Institute) at Gurgaon.

Among other corporate so-cial responsibility initiatives are road safety and vocational train-ing programs, some of which the company has been conducting for a decade. Maruti established its f irst Institute of Driving Training and Research (IDTR), in partner-ship with the Delhi government in 2000. This was followed by the sec-ond IDTR in 2009 and two more in 2009-10. New IDTRs are also being established in Gujarat, Haryana and Uttarkhand.

In an effort to increase con-sciousness about road safety issues which have remained in a state of benign neglect for years, the compa-ny launched its first Maruti Driving School in 2005 – it now has 83 Maru-ti Driving Schools across the coun-try. Maruti Suzuki has also adopted four villages around its second plant at Manesar in Haryana and bank-rolls the development of their educa-tion and healthcare.

Outside R Harikumar’s office the conveyor belts are still grinding on relentlessly, giving one a jump-seat view of Maruti Suzuki’s steadfast pursuit of its production goals and targets. Ignoring the knot of peo-ple around him urging him on to the next meeting and the klatch of people at various desks in the open office, Kumar looks at the machines with visible pride on his face. “You know,” he says proudly before he walks away, “ I don’t remember a sin-gle day in Maruti when we planned 1,00,000 cars and ended up produc-ing just 99,000 cars!”

today Maruti Suzuki India Limited has a totemic significance in the Indian auto market – a company which began small, struggled to the top and now has carved an enviable position for itself in the auto industry.

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38 INDIA| February2011 | www.logisticsweek.com

< feature

the evolution of less-than-container load (LCL) had its beginnings when small and medium-size companies realized the high costs of shipping small parcels and sought an option from shippers. Vivek Kele brings to us the history of LCL.

< feature

Carriage of small parcels has been in existence since merchant shipping

started. Earlier, small parcels were transported by sea in break bulk mode as general cargoes. All this changed with the advent of containerization. Gradually, the entire liner trade moved from break bulk to container mode, so much so that liner shipping became synonymous with container shipping. The fact however remains that any regular shipping service, break bulk or container, with dedicated port rotation and schedule integrity is a liner service.

This schedule integrity could be practiced better with containeriza-

The Rise and Rise of LCL

tion. But in the bargain, the export-ers dealing with small parcels had a problem, as the decline of break bulk services left them with fewer options to carry their parcels. The need to carry small parcels still re-mained whereas the carriers could offer only Full Container Services. Thus began the era of specialized LCL carriers.

The development of a modern LCL carrier can be traced in the fol-lowing four stages of evolution:

Stage One (1982-1987)In this era, containerization was a new phenomenon and container carriers could offer only FCL services. Port-to-port LCL services was being offered


LCL carriage activity was cumbersome and not remunerative enough.

This resulted in setting of ex-tremely high LCL freight rates, mak-ing it an elitist kind of service. What the carriers did not realize was that the users of LCL services were the small and medium manufactures and traders whose business model did not permit incurring high costs towards transportation and this kind of pricing directly affected their competitiveness.

Stage two (1988-1995)Considering these issues faced by the carriers and the trade, around the same time large customers be-gan demanding of the carriers to of-fer them LCL carriage. Since this was a specialized activity, it prompted the ocean carriers to start separate divisions within their companies to cater to this new business activity.

The newly consolidated divisions used the containers of the parent company, and services were offered to select large customers such as department stores, large buying houses, catalogue sales companies in North America and Europe.

However, there were other cus-tomers who sought to send their shipment by LCL mode and did not have viable options. Seeing this as an opportunity, a few entrepreneurs started offering LCL services. They bought FCL space from the carriers and retailed the same on an LCL ba-sis. This method involved a certain amount of risk and dedication at the same time. The risks were towards paying for FCL space to the carrier —independent of the cargo avail-able — and then work backward to gather enough LCL cargo to make a full load. Sometimes they succeeded, sometimes they did not. It also called for dedication to manage the cargo by ensuring warehousing space to receive LCL consignments and then stuff them in to container loads. They did this by choosing experts in

the team to manage heterogeneously packaged cargoes and organizing all the customs and port documentation required at the port of origin, port of transshipment and fi nally at the port of discharge. All this made the LCL business challenging and a niche business that thrived for those who took the risks and had the dedication to organize the complex activities.

Stage three (1995-2007)Slowly and steadily, by 2000, almost all major shipping lines had with-drawn from this business and car-riage of LCL cargo developed into a specialized domain of consolida-tors. This gave an opportunity for new players to enter this space, and while some were serious operators, there were some who were testing the waters. In time, only the serious players survived.

As the LCL carriage activity ma-tured, it became more streamlined and gave rise to the Hub and Spoke concept and worked exactly the way airlines operate through this mod-el. Cargo originating from smaller ports to a large one or originating from a larger port and destined for smaller ports had to be routed through a hub location. This hub location required to have enough cargo inducement to make direct boxes to far and wide destinations. Depending on the cargo fl ow and the cost of transport some FCL in-ternational transshipment hubs concurrently emerged as LCL cargo hubs over a period of time. The early 90s saw the ports of Hamburg/Rot-terdam/Antwerp emerge as LCL hub ports in Europe, and Singapore/Hong Kong in Asia. Over the years other ports like Dubai, Durban, Bu-san (South Korea), Barcelona, Mi-ami, Colon Free Zone and Colombo also emerged as regional LCL hubs.

Simultaneously, another develop-ment was the extension of LCL car-riage activity to the land side by the LCL consolidators. This was facili-

only by enterprising and better organ-ized shipping lines. But these were few and far between and the services were offered only on the trade lanes where they had direct calls. Very few carri-ers offered transshipment services for the LCL cargoes and the ports covered under these services were limited. Moreover, the LCL services offered were purely based on inducement. Firstly, there were no weekly services and there was nothing like “fi xed day calls” and that coupled with induce-ment based departures made the LCL services then offered inconsistent and arbitrary. Also, LCL carriage was not an attractive business for the carriers; their core competencies rested in han-dling ships and containers. For them,

40 INDIA| February2011 | www.logisticsweek.com

< feature

nent players are emerging to be strong operators who can offer global servic-es with consistency. The industry has also seen large forwarding companies offering LCL services; these services are offerings limited to their in-house dedicated customers only.

The global LCL business is characterized by the following service features:1. Global footprint in operations ca-

tering to the LCL transport needs of large MNC freight forwarders.

2. Movement visibility through use of strong back-end technology.

3. A multimodal transport docu-ment backed by the goods car-rier’s liability coverage.

4. Service availability through effec-tive and efficient routes.

5. Offering local pickups from with-in city warehouses/CFSs for inter-national destinations.

6. Nationwide land and port side LCL cargo capabilities though own offices and agents.

7. DDU (delivered duty unpaid) and DDP (delivered duty paid) services for exports and ex-works LCL pick up services for Imports.

8. Air and sea services.

What Makes a Good LCL Service ProviderA good LCL operator can be recognized by the following characteristics:a. Global services through a right

mix of direct and transshipment services.

b. Full visibility of movement of car-go on the web through a strong IT system.

c. Full knowledge of documenta-tion required for carrying the LCL consignment till final delivery, especially in the world of AMS (Advance Manifest System), ACI (Advance Commercial Informa-tion) and ENS (Entry Summary Declaration).

d. Strong infrastructure in terms of warehouses to handle smaller LCL shipments of all kinds.

LCL shippers also face challenges. Some of them are:1. Inability to choose the right service

provider as price is the single most governing factor in most cases.

2. Unscrupulous LCL operators of-fering cheap rates at origins and overcharging the consignees.

3. Lack of responsibility by some operators to handle extraordinary situations leading to claims.

4. Poor infrastructure available to handle the LCL shipments lead-ing to damages and unhappy con-signees.

On the other hand, LCL operators too face some challenges. They are:1. Shippers inadequately packing

cargo which cannot withstand multiple handling — a sure with LCL cargo.

2. Shippers ignoring the packag-ing requirement at destination, namely the WPM (Wood Packag-ing Material) regulation, AQIS (Australian Quarantine) etc.

3. Shippers not providing the docu-mentation Invoice, Packing List, Declarations, Import Licenses, etc. required for smooth deliver-ies at destinations.

4. Mis-declaration of ‘haz’ cargoes, declaring wrong weights, leading to accidents and loss of property.

5. Fraudulent exports made to claim export benefits leading to un-claimed cargoes at destination and hence carrier charges re-maining unpaid. As global trade expands, mer-

chants will require transporting cargo on an LCL basis. There will be enough cargo for LCL operators to carry. It is also important to know that only the large global operators with consistent services will contin-ue to survive, grow and expand.

tated in countries like the USA, Ger-many and other European countries where the transport infrastructure in terms of roads and warehouses was better developed, not to men-tion that its customs legislation were open to this kind of business activity. In India this is being devel-oped through multi-city consolida-tion with permission from the In-dian Customs. LCL cargoes can now be Custom cleared at ICDs.

A value addition that Consolida-tors started offering at this stage of evolution was the carriage of hazard-ous (Haz) cargo by LCL mode. This was made possible after the classi-fication of Haz cargoes by the IMO along with laying down of packaging norms, handling procedures and the paperwork involved. This was a boon to shippers as it brought down their transport costs drastically.

Stage four (2008-present)LCL carriage business is steadily being consolidated globally. In terms of neu-tral LCL operations, only 3-4 promi-

As LCL carriage

activity matured,

it gave rise to the

hub-and-spoke

concept.

Pho

tos:

Ram

lath

Kav

il

The author is Director, Teamglobal Logistics Pvt Ltd. He is also Managing Committee Member of AMTOI (Association of Multimodal Transport Operators of India) as a Special Invitee. He can be reached at [email protected].

< feature< feature

STEEL ON WHEELS


43INDIA| February 2011 | www.logisticsweek.com 43INDIA| February 2011 | www.logisticsweek.com

Supply-chains of steel function at a global level and call for a high level of activity. Logistics service providers have to consider various levels of pre- and post-production processes. Jayashree Mendes follows the trail.

According to industry estimates, India’s steel production in 2009-10

stood at 64.88 million ton (MT), up 11 percent from a year ago. In the same year the country also emerged as the third largest producer of fi nished steel in the world. So it’s not surprising that Indian steel companies are organizing themselves to increase production through Greenfi eld (26 mt) as well as Brownfi eld (34 mt) expansions.Moreover, in their bid to make better steel products, most steel companies have been eyeing global acquisitions or tie-ups and have thus acquired access to better raw materials, components, technology, etc.

Engaged in an unbound rush for scale, steelmakers are following two main goals: they are purchas-ing additional production capac-ity that will help them to improve their cost structure, while offering increased market advantage.

The last two months alone have seen two major announcements from the giants of the steel in-dustry. Tata Steel has tied up with Japan-based Nippon Steel Corp will invest $479 million to pro-duce 600,000 tons of cold rolled automotive steel by 2012. Jindal’s JSW Steel, on the other hand, is acquiring 41 percent stake in Ispat Industries, which will make JSW

the largest steel maker in India. Almost all other domestic compa-nies too have announced similar tie-ups or expansion projects.

Steel GiantsThe Indian steel industry consists of three groups. The f irst group is the integrated steel producers which produce greater than one million ton and includes Steel Au-thority of India Ltd (SAIL), Tata Steel and Rashtriya Ispat Nigam Ltd (RINL). The group of second-ary majors consists of the Ispat Group, Jindal Group, Lloyds and Essar Steel. Their capacities range between one million ton and two million ton using a mix of tech-nologies, with much lesser degree

of backward integration. These two strategic groups together con-trol around 70 percent of the mild steel capacity. The third groups of tertiary producers are mini-steel plants, using electric arc or induc-tion furnaces and comprise a small part of the market.

Globally, steel consumption has been increasing consistently year after year. Although develop-ment of infrastructure is a primary reason, complementary industries such as automobiles, construction, railways, etc is helping the steel in-dustry to grow at a rapid pace.

Most steel companies run op-erations with plants at several lo-cations, from where products are shipped to various destinations.

Metals Industry Supply ChainMetals Industry Value Chain

Suppliers

• Coal• Iron ore• Scrap• Limestone• Fluxes• Alloys• Gas• Scraps• Slabs• Hot

bands

• Equipments• Spares

Parts

Traders

Logistics Providers

IntegratedMills

(Steel,

Aluminum)

Buyers

• Transportation

• Construction

• Industrial/Commercial

• Equipment

• Energy

Distribution

CentersFabricators,

Converters andService Centers

Non-IntegratedMills

(Steel,

Aluminum)

Processors

Graph Courtesy: Ispat Industries


< feature

(logistics solutions), Gangadhar Rout, and manufacturing one ton of steel requires handling and transporting four ton of bulk (raw) material. In addition, the capital outlay that goes into steel manu-facturing is quite large and has to be computed by the tonnage and adhered to. Hence, it is important that steel companies maintain a hawkish eye on logistics and sup-ply chain operations. “The logis-tics cost of steel can go as high as 13-18 percent of production if com-panies are not careful,” he adds.

For managing the supply-chain of steel, it would help the supply chain division of manufacturers or logistics service providers (LSPs) to understand the various types of steel, the specif ic requirements and purpose of steel and related products (See Box: Types and Uses of Steel), and the transport require-ments for each. The company or department responsible for the supply chain of steel must also un-derstand the multiple objectives and stages of steel production. Moreover, steel companies operate in a global market, and its supply chain would function at a global level too.

Clearly, the supply-chain of

steel is not confined to f inished products. Raw materials such as coke, limestone, iron ore pellets, iron ore lumps and f ines take up the majority, says Hitesh Gossain, Senior Vice-President, Credence Logistics, a leading supply-chain solutions company.

“Logistics in pre-production would include inbound raw ma-terial movement management, in-plant material handling, and in-plant logistics; the post-produc-tion would entail semi-f inished products, f inished products, and slag management and utilization.”

Steel comprises f inished steel, semi-f inished steel, stainless steel and pig iron. Hence all these prod-ucts require an eff icient supply chain that extends visibility of de-mand based on economy and mar-ket, raw material supply based on transportation, and suppliers and their price.

raw Material LogisticsThe raw material for steel, available in loose form, requires a separate set of vehicles and the transport operators include mainly brokers. Transportation weight loss and quality check are a major concern in this segment. Most steel manu-facturers prefer to source vehicles from large f leet owners and man-age to transport steel products via established road, rail and marine networks through strategic alli-ances with major contractors.

Abhijit Chaudhuri, Director (Supply Chain Management), Is-pat Industries, says, “Supply-chain management is synchronizing of different modes of transportation. For instance, for transporting raw materials we use rakes, barges, road, Handymax, mini bulk carri-ers (MBCs), or Panamax.”

According to a source in Tata Steel, steel and its raw materials being bulk material are mostly transported by rail and sea. It re-

The supply-chain would tend to get complex. Considering the vo-luminosity of steel companies, it is only natural that their emphasis remains on maximizing capac-ity utilization and keeping costs low, especially in each phase of the supply chain (See Box: Metals Industry Supply Chain). Considering that steel goods move in a volatile market, steel companies are in

the habit of conducting a periodic analysis to minimize costs that aid in production planning.

Keeping a Hawk's eyeSteel production is a highly mate-rial and energy intensive industry, according to Essar Steel’s head

the logistics cost of steel can go as high as 13-18 percent of production if companies are not careful.

— Gangadhar rout, Head (Logistics Solutions), Essar Steel

Product Form UsesHot Rolled Coil/Sheet Cold rolling

Auto parts manufacturing

Railway wagons

Cold Rolled Coil/Sheet Construction, Welded tubes and pipes, Strapping, Gal-vanizing / Color Coating

Hot Dip Galvanized Coil/Sheet Roofing, Partition, False Ceiling, Steel buildings, Decking, Truck bodies, Fuel and oil tank, exhaust pipe, washing machine body, water tank, door/window pane, grain silo, water heater, freezer, desk, locker, container, packaging material, etc

Steel Billets Round bar, Flat Bar, Wire Rod

Wire Rods Electrodes, Wire Mesh, Fasteners

Galvanized Corrugated Sheets Sheet Industrial Sheds, Temporary Structures, Housing

types and uses of Steel

warehousing

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• PPP: Challenges and Opportunities

• Major and Non-Major ports: Lessons to

be Learned


< feature

quires a massive handling system like tipplers, stock yards, material handling systems like stacker or reclaimer and also large storage capacity.

Unique to steel products is its long shelf-life. Steel dispatches re-quire care in packaging, bundling and handling to avoid damages. Hence, companies prefer the last leg dispatches by road only. The movement of products involves trucks/rails/barges from origin to load port, from there on to cus-toms, then shipping at load port, and f inally discharge.

Shirish Deshpande, Manager (Supply Chain Division), Kalyani Steel, says, "Raw material is bulk, while manufactured goods have dimension. Since cargo movement is in bulk, an inadequate infra-structure for smooth movement is necessary. Well maintained equipment for continuous use is important, because breakdowns are common and this can halt the supply chain.”

As an LSP, Credence Logistics helps integrated steel manufac-turers address the needs of to-day’s marketplace requirements effectively by managing the f low

of information across operational interfaces like supplier-procure-ment, raw material-production, operations-maintenance, product-distribution, and retail-customer – in other words, the extended sup-ply chain of the organization.

A spokesperson from Arshiya Rail Infrastructure Limited, a subsidiary of Arshiya Interna-tional Limited, says that tradition-ally steel and steel products have been moving through trailers and trucks via road, and were subject to much ineff iciency like dam-age, high rate of accidents, theft and pilferage, etc. Containerized rail movement was minimal. “Ever since we obtained a pan-India rail license, we have been engaged in the movement of steel and steel products in various forms for lead-ing manufacturers. Being sensitive to the specif ic needs of our cus-tomers, we have begun providing dedicated rakes (charter services) along with customized containers to meet specif ic product demands thus reducing losses.”

Although rail is an inexpensive method of transportation, steel manufacturers are irked with the difference in pricing by Concor for domestic and export of steel prod-ucts. The Railways charge `800 a ton for domestic movement of iron ore, while it charges `1,980 a ton for exports. This has resulted in a sharp increase in prices of iron ore.

To obviate and decrease trans-portation costs, Tata NYK Ship-ping, a joint venture between Tata Steel and Japan’s NYK Line, has plans to more than double its f leet to 30 ships by 2014. In the next 3-4 years, Tata NYK has plans to in-crease its f leet size to 30 vessels in-cluding 16 owned ships. The joint venture shipping company was formed to move raw materials and f inished steel for the Tata Group and to allow it gain strategic con-trol over logistics.

Finished Steel Flow for Essar Steel

HAZIRA

ROAD/RAIL/SEA RETAIL

OUTLET

ROAD

DOMESTIC

CUSTOMER

SERVICE

CENTRE

ROAD / RAIL /SEA ROAD

OVERSEAS

CUSTOMER

SEA

ROAD/RAIL/SEA

finished Steel flow

SCOPE OF LOGISTICS SERVICES IN STEEL

PRE-PRODUCTION

Inbound raw material movement management

Rail movements

Road movements

Sea movements

Coastal operations

Port Logistics Management

In-plant material handling

Bulk raw material

Gas transportation

DRI (Direct Reduced Iron) transportation

Scrap management – movement , storage and handling

In-plant logistics

Ladel transportation

Slag removal and handling

POST-PRODUCTION

Semi-finished products

Computerized management systems –trace

Product tracking

Slab handling

Finished products

Outbound transportation management

Packaging solutions

Quality control – QA mapping

Yard Management – Stacking / Stock management/ Bar coding

ANCILLARY SERVICES

Slag Management and Utilization

Courtesy: Credence Logistics

Graph Courtesy: Essar Steel


< feature

Ports on their own too are increasing capacities to accom-modate for iron and steel cargo. Paradip Port, for instance, has an-nounced plans to adding one more iron ore and coking coal berth at the beginning of 2020 and a dedi-cated container terminal with a capacity of about one million TEU during the same period. It plans to develop logistics parks and CFS’s, not requiring waterfront access, outside of the port premises. The estimated land required to develop an integrated steel logistics park would be 2,500 to 5,000 acres de-pending upon the scale of logistics

activities which will be undertaken in that park.

However, steel manufacturers are happy with changes taking place to make logistics easy. New heavy vehi-cles with more carrying capacity are coming into the market. Integration of multimodal operations are effec-tive, while utilization of waterways is better for transportation and even helps in reduction of CO

2 level. The

development of large private ports like Gangavaram, Krishnapatnam and Kakinada (East Coast), Mundra, JSW (East Coast) will make supply chain smoother.

Secondary steel manufacturers prefer to create a safe and smart

supply-chain by making it f lexible so that it can handle variations in demand. Supply-chains are run from business units owned by them, and which acts as their serv-ice provider. A sophisticated trans-port management system helps complete the picture. Forecasts are collaboratively planned with dis-tributors, local manufacturers and export orders.

role of technologyTechnology plays a vital role in today’s logistics scenario. Com-panies need to ensure that supply chain planning, order manage-ment and IT production control systems are fully integrated. Sup-ply-chain visibility is a prime con-cern for steel companies. Visibility here implies the faculty to see in-formation and collaboration, the chain of activity and understand the need to respond internally, as well as through the network of suppliers and customers. A strong visibility helps steel companies to coordinate activities across the supply chain, improve eff iciency and respond more quickly to events at the end of the chain.

In terms of managing ware-housing facilities at key delivery points around the world, supply-chains of steel companies are re-sorting to retaining depots or ter-minals, in the case of shipping of goods, close to dispatch sites and steel service centers.

Essar Steel manages its service centers on a strong IT backbone comprising SAP, i2, JDA and inter-nal developed solutions that provide end-to-end visibility. With the larg-est and youngest steel service centers in India, its resources are managed by Essar Logistics, its own logistics division. Moreover, dedicated trail-ers fitted with GPS systems help track movement.

As an LSP, realizing the im-portance of technology, Credence

Logistics has invested heavily and developed an in-house software for resource planning and accounts assimilation. It has also developed a track-and-trace system for all its movable assets (trailors, tankers and barges) for which clients have access to real time positioning data. It also offers its customers an in-house customer care center with a dedicated toll free number to help track their consignments.

According to a report brought out by IBM in 2009, the supply chain of steel needs to connecting top floor to shop floor by integrating enterprise resource planning (ERP) and manu-facturing execution systems – and ERP to ERP connections across the supplier/customer network. Within the metals and mining supply chain, different management practices have different times frames. Plan-ning is medium to long term in time and precedes action and is demand-driven. Scheduling is immediate to short term and as exact as possible and is order-driven. Execution, pro-duction of steel and filling orders, should be exact and concurrent.

The study further points to an evolving role of supply chain lead-ership in managing challenges. Across industries, the traditional supply chain roles of distribution and logistics, planning and sourc-ing/procurement are still primary responsibilities. However, fewer metal companies have an increased span-of-control including technol-ogy enablement, risk management, and customer management.

As supply chain executives ad-dress the new challenges, these non-traditional functions will likely rise in importance. Steel companies are less likely, howev-er, to collaborate with customers on demand planning, forecasting and replenishment programs. This suggests that steel companies have an opportunity to improve the val-ue provided to the customer.

the supply-chain of steel is not confined to finished products. raw materials such as coke, limestone, iron ore pellets, iron ore lumps and fines take up the majority.

— Hitesh Gossain, Sr. Vice-President, Credence Logistics

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Every Move You Make


A recent report released by SIAM India (Society of Indian Automobile Manufacturers)

predicts sales of light commercial vehicles (LCVs) to grow by 25 percent and medium commercial vehicles (MCVs) by 23 percent in calendar year 2010-2011. While this might bring a smile on the faces of component suppliers, tracking solution providers are not exactly ecstatic. Although increasing values and criticality of goods is making it mandatory for logistics companies to track their consignments, acceptance of tracking technology is yet to be widely embraced.

Global Positioning Systems (GPS) might have greater acceptance in developed countries, but it is yet to become fashionable in India. GPS involves two functionalities: tracking and navigation. Tracking accounts for approximately 25 percent of the market, with navigation enjoying the larger pie. According to a recent re-port brought out by knowledge serv-ices fi rm Netscribes (India) on the GPS market in India, the overall mar-ket in India has been growing at 65 percent and has been pegged at `7.8 billion in 2010.

Gaurav Kumar, Assistant Research Manager at Netscribes explains the disinclination to adopt tracking tech-nology. “Organized logistics service providers who are willing to embrace GPS form a mere 15 percent, while unorganized players are unwilling to use GPS due to a limited fl eet size. GPS service providers are also discouraged with the National Map Policy of 2005 that requires them to take prior per-mission from the Survey of India (it

plays a nodal role in dissemination of map data to the general public) to use maps. The high import duty of 34 percent on GPS devices has also not helped its case.”

How it WorksGPS is run from a space-based global navigation satellite system (GNSS) that provides location and time in-formation anywhere. However, the devices must have access to four or more GPS satellites. The satellites are maintained by the United States government and are freely accessible to anyone with a GPS receiver.

GPS tracking, as the name sug-gests, is a service. Shivalik Prasad,

Director, MapmyIndia, a tracking service provider, says, “The service functions through four blocks that work thus: A GPS module receives the GPS signal and calculates the co-ordinates. A telecommunication link transmits the GPS data, and an intri-cate map server and a GPS server at the service provider’s end complete the picture.”

A GPS receiver calculates its po-sition by timing the signals sent out by GPS satellites. Each satellite con-tinuously transmits messages that include the time the message was transmitted and precise orbital in-formation. The receiver understands the messages to determine the transit time of each message and computes the distance to each satellite. These distances along with the satellites' locations are used to triangulate the position of the receiver.

Three satellites might seem enough to calculate the position since space is three dimensional and

A GPS module connected to an internal communications network of an automobile provides limitless possibilities to the amount of data that can be captured and processed.”

— Shivalik Prasad, Director, MapmyIndia

A GPS Navigation Device - (Source: MapmyIndia)

Global Positioning Systems (GPS) helps track precise locations of objects using a space-based navigation system. But unfortunately, the logistics industry, where it could largely be used, have adopted a passive attitude to the technology. Frewin Francis tracks down the reasons.


< feature

been shut down, among others. The range of data captured is subject to the customer’s requirements and in-vestment options.

types of tracking unitsGPS tracking units are divided into three categories. A GPS data logger logs the position of the object at regu-lar intervals and stores information in flash-based memory. Data on the memory can be retrieved or trans-ferred to other stores with the help of USB connectivity. These devices are suitable for hikers and cycling enthu-siasts, who can make use of the log-ging facility to chalk out future routes.

GPS data pushers are used for se-curity purposes. This unit sends data from the device to a central database, updating information on location, direction, speed and distance. Such devices are suitable for monitor-ing vehicles. Since it is easy to track

a position closest to the Earth's sur-face can be assumed. However, even a minute clock error could result in a positional error. Hence receivers use four or more satellites to calculate the receiver's location and time.

For instance, says Prasad, a GPS module connected to an internal communications network of an automobile provides limitless pos-sibilities to the amount of data that can be captured and processed. Data could range from internal tempera-ture inside the car, indication if door is open, indication if the engine has

movements of vehicles carrying valu-able items, data pushers are often used for spying.

A GPS data puller allows the user to ‘pull’ data from the receiver as and when needed. The device remains on at all times. Though it is not as com-monly used as the pusher device, it is particularly useful for tracing stolen goods. A mobile phone with integrat-ed GPS can reply to an SMS from the data puller.

Vehicle tracking SystemThe Real-time Tracking Devices, also known as active trackers, has the ability to track a vehicle or any other object in real-time. Trackers can locate a particular object or col-lect the positioning data and send that data to the end user with the help of cellular phone network. Us-ers can request live information at any point of time and even access

Mahindra & Mahindra’s (M&M) Farm Equipment Sector (FES) is one of

the largest manufacturers of tractors in India. M&M has two tractor manufactur-ing plants located at Mumbai and Nag-pur in Maharashtra. Apart from these, the FES has satellite plants located at Rudrapur in Uttaranchal and Jaipur in Rajasthan. The objective of satellite plants is to produce tractors of high customization and quality at affordable costs and facilitate quicker deliveries.

Strategically, M&M FES sources components and parts at a single loca-tion from Kandivali (Mumbai) and sends the required quantity to its assem-bling plants at Rudrapur and Nagpur. While Nagpur is around 800 km from Mumbai, Rudrapur is around 1,400 km away. The trucks have to traverse four states —Maharashtra, MP, UP, and Chhattisgarh — to reach Rudrapur. The FES division uses the services of 12 transporters together owning 350 trucks. With a production capacity

of 9,000 tractors per year, ensuring availability of raw materials on time is a challenging task. Despite meticulous planning, M&M encountered problems in transporting raw materials as per the dynamic requirements of the plants. Problems were: n Dispatches delayed due to non-

availability of trucks on time.n Absence of information on the ex-

pected time of arrival of the trucks.n In-transit idle times of trucks un-

known thus delaying deliveries.M&M continuously strove to imple-

ment IT enabled measures to transform the SCM. It was then that they came across automatic vehicle tracking serv-ices (AVTS) from eLogistics.

the etracK SolutionInitially eTracK devices were installed on 200 trucks in the first phase and later extended to the entire fleet. Major-ity of the trucks earmarked for tracking were n the Mumbai-Rudrapur route.

eLogistics provides online vehicle loca-tion reports every two hours and status reports on a daily and weekly basis. It has also provided M&M online access to eTracK application software to track location of the trucks.

The weekly reports comprise dis-tance travelled between trips, average speed of trucks, number of kilometers travelled by each truck, idle time and unscheduled halts.

Benefits of etracK The following are the benefits accrued out of eTracK system:n Real-time information of trucks

estimating arrival time and dispatch planning.

n Idle-time reduction through constant monitoring of vehicles.

n Improved productivity by reduction in turnaround time.

n Reduction in in-transit inventory.n Reduced anxiety levels in managing

supplies.

GPS to the aid of M&M's farm equipment

Source: eLogistics

A GPS receiver

with integrated

antenna.

Source: Wikipedia

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data through Internet for which they will have to pay a monthly fee.The other type is Passive Tracking Devices that collect data and store them in an internal memory. When the device is fitted onto a computer the tracking data is downloaded to analyze. These are limited only to vehicle tracking and are installed in a vehicle, and the data stored in the unit is later transferred to a hand-held device after the vehicle returns. With no monthly charges, this is cheaper than an active service.

Some roadblocksGPS service providers face several issues that prevent them from of-fering unconstrained services. A prime concern for service providers is tracking small towns. While big cities are organized for navigation, smaller towns follow inconsistent naming standards.

Selling a GPS device is easy. Fol-lowing it up with consistent service is not. V. Sanjeevi, Managing Direc-tor, eLogistics, a GPS service provid-er, a company recently acquired by Austria-based intelligent transport systems company, Efkon, says, “Of-ten, a fleet operator would buy the device only to find out a few months later that the company has vanished into the night. This leaves customers stuck with devices and no service.”

To make matters worse, most GPS devices include extended messages in their products as part of their data protocol for maintenance purposes.

These messages differ from vendor to vendor. Once a service provider flees, the customer is left with nothing but a bunch of GPS units and no tangible benefit for their investments. The lack of a good map server and a robust tel-ecommunication service provider also add to woes. Prasad states that compa-nies earlier used the map service from Google. This was initially offered free but later barred from commercial use.

Moreover, GPS service is provided using the SIM card of cellular service providers. And GPS service providers are unwilling to take ownership of the SIM. This has resulted in a small number of GPS service providers.

On the slow adoption of GPS service in India, Balaji Swaminathan, Global Practice Head (Shipping and Transport Logistics), Ramco Sys-tems, points out that there is resist-ance amongst some transporters to use GPS systems because of lack of coverage and the high cost of hard-ware and software.

Talking about price, Prasad says MapmyIndia offers a tracking serv-ice that costs `13,000 and comprises installation, SIM card and national roaming at a fee of `350 per month.

Changing timesThe arrival of international players in any business spells competition. This has succeeded in getting local players to scale up their operations. With new models of trucks coming from global players into India, GPS is expected to be a standard fitment.

Drivers are being educated that the GPS device is not meant to leash them but to help them. Tracking the vehicle could enable the company to provide help in case of an accident or any such occurrence.

Many PossibilitiesGPS need not limit itself to tracking vehicles and consignments by fleet operators. Banks use tracking serv-ices to monitor cash vans to ensure their safety at all times.

Dushyant Arya, Director, Indo Arya says that employing a tracking service drastically reduces communication costs and increases overall fleet man-agement. Tracking can help to com-municate with drivers warning them of impending roadblocks or dangers.

In the mining industry, routes of mines are intricate. LocationGuru’s Mine Management System (MMI) enables route/stops plotting and con-figuration. Web-based flash alerts provide for route deviation, automatic dumper trip monitoring, estima-tion of dumper output, call facility to communicate with driver, unexpected stops, over-speeding, and long halts.

With all the advantages provided by GPS, more players are expected to enter this space. It is hoped that stiff competition and the ever evolv-ing Indian customer will ensure that the market reaches a level of maturity where tracking is no long-er an option.

Employing a tracking service reduces communication costs and increases fleet management. It can help to communicate with drivers warning them of roadblocks or dangers.”

— Dushyant arya, Director, Indo Arya

GPS Signal: Radio signals broadcasted by GPS satel-lites enabling GPS receivers to determine location.GPS Tracker: Determines precise location of an asset to which it is attached and records its position at timely intervals.GPS Navigator: Receives GPS signals for determining current location.GPS Receiver/ Module: A GPS receiver calculates its position by precisely timing the signals sent by GPS satellites high above the Earth.GPS Modules feature a built-in antenna and memory back-up.

GPS explained

India’s Warehouse Landscape: A reality check

GST: Are we ready?

Changing Customer Expectations

Before The Take Off: Are the basics in place -- location, design, automation, technology?

Changing technology paradigms: To Adopt Or Not

Handling Risk

To Advertise / book your copy, [email protected]+91-22-40155947

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Frewin FrancisDirector and PublisherLogistics Week India

[email protected]

INDIA

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

THE WAREHOUSE HANDBOOK- II : Managing Change


< PAnoRAmA

Sustainable Supply Chain ManagementThe book focuses on the need to develop

sustainable supply chains in all aspects - environmentally, economically and so-cially. The authors aver that the definition of sustainable supply chains must not be re-stricted only to the so-called "green" supply chains, but recognize the fact that in order to be truly sustainable, supply chains must operate within a realistic f inancial model. Supply chains should contribute value to the society and they cannot be termed as sus-tainable unless they are realistically funded

Vivek Sehgal in his book provides guidance on creating competitive advantages through

strategy realization. It is his experience as sen-ior director of research at Manhattan Associates and at previous organizations that have helped him understand how one’s supply chain can create competitive advantages and help achieve business goals.

The author explains how aligning the sup-ply chain design with business strategy helps build competitive capabilities, prioritize capital investments, and takes fi rms beyond industry

The book constitutes the proceedings of the 8th International Heinz Nixdorf

Symposium, IHNS 2010, held in Paderborn, Germany, during April 21-22, 2010, under the title “Changing Paradigms: Advanced Manufacturing and Sustainable Logistics”. The 27 full and two short papers presented in this book have been carefully reviewed and selected by the authors from a total of 63 submissions. They are grouped in f ive parts on Supply Chain Management, Production Logistics and Industrial Engineering, Oper-ations Research Techniques, Humanitarian Logistics, and Simulation. The Heinz Nix-dorf Symposium is an established biannual

Advanced manufacturing and sustain-able LogisticsBy Wilhelm Dangelmaier, Alexander Blecken, Robin Delius, Stephen KlöperPublisher: SpringerPrice: `3,630

sustainable supply chain managementBy Balkan Cetinkaya, Richard Cuth-bertson, Graham Ewer, Thorsten Klaas-Wissing, Wojceich Piotrowicz, Christoph ThyssenPublisher: SpringerPrice: `2,900

supply chain as strategic Asset: the Key to Reaching Business GoalsBy Vivek Sehgal Publisher: WileyPrice: `2,700

OFF THE SHELF

and valued. The book provides an insight into the above mentioned issues via exam-ples from a range of real-life case studies.

event of the Heinz Nixdorf Institute during which researchers and practitioners come together to present challenges from indus-try, discuss contributions from research institutions and develop novel solution ap-proaches.

best-practices. The book does so with the help of real-life cases that demonstrate how strategy alignment can produce results for the most suc-cessful companies and how it can be achieved in-house. Some of the case-studies in the book include Wal-mart, Cemex, Kmart, HP and Dell.

Advanced Manufacturing and Sustainable Logistics

Supply Chain as Strategic Asset: The Key to Reaching Business Goals


Sustainable Supply Chain Management

ResouRce centeR Journals, Case Studies, Research Reports

TCO Of Rail Signaling SystemsBy Invensys Rail

Invensys Rail is a multinational company specializing in delivering state-of-the-art railway control and communication solutions. They set out to build a Total Cost of Ownership (TCO) model to quan-tify the cost of various lifecycle stages from scheme design to implementation, operation and maintenance. Ivensys populated the model with real-life data provided by rail infrastructure operators from Europe, US and Asia Pacific. This paper discusses some of their findings. Lifecycle costs are a well understood con-cept in networked infrastructure assets. In the rail industry the concept is less widespread, nevertheless a useful tool to inform resource allocation decisions or assess the relative merits of different rail signaling technologies across the whole asset lifecycle. Cost is not the only factor

in implementing a signaling system, but it is an area that interests all rail infra-structure operators.Search Tags: Invensys Rail, TCO, rail signaling

Streamlining Slow MoversBy Kuehne-Nagel

Nearly all companies face the challenge of storing "slow-moving" inventory that's ei-ther too important or expensive to throw away. Understanding the importance of finding efficient ways to manage slow-mov-ing products is a key to saving time and mon-ey. Kuehne+Nagel have a few suggestions on how this can be done effectively. Begin by dedicating private warehouses to slow-mov-ing products, especially among food chains. When products become fast moving in sea-son, food chains can package and transport them in store-ready pallets to other distri-bution centers to join high-turnover items. Selling inventory to resellers that take huge

amount of products to discounters at a profit is a viable solution for organizations that do not have policies against marketing their items at discount stores.Search Tags: Streamlining Slow Movers, Kuehne+Nagel

Poor Safety At Construction SitesBy Volvo

Every year, more than 300 people die in ve-hicle accidents at construction sites in the European Union (EU). According to Euro-stat, about 1,000 people die on European construction sites every year. It is usually the human factor that is the cause. This is why Volvo Trucks attach importance to safety issues in its training program for drivers. One-third of these accidents involve vehicles, meaning well over 300 fatalities a year. Volvo Trucks introduced the construction truck, Volvo FMX. Much of the course content deals with safety.Search Tags: poor safety, construction, Volvo FMX

some Key trends that Will Drive Freight transportation In 2011Blogger: Dan GoodwillGoodwill writes with anticipation about some of the trends he hopes to see in the new year. He feels that shippers will adapt supply chains to take advantage of multi-modal options since intermodal transportation has been on a growth curve and will continue to do so. He also expects an increase in demand for large container vessels since shippers and shipping lines are preparing for the completion of the $5.25 billion expansion of the Panama Canal that will be completed in 2014. This will lead to an increase in orders for “megavessels” that can carry 20,000 20-foot containers, more than double the capacity of today’s most common ships.

Furthermore, with global trade having increased by an estimated 11.4 percent in 2010, it is expected to increase by another seven percent in 2011. He feels that vessel freight rates will remain flat since slower economic growth and increasing ship capacity will result in expanded vessel space allowing shipping rates to remain flat.search tags: dan goodwill, megavessels, Panama Canal

transporting Hope: WFP Logistics In the Fight Against AIDsBlogger: World Food Program websiteA few months ago, WFP, a humanitarian agency fighting hunger worldwide, published a series called ‘The Longest

Road’. It was about the creation of 'wellness centers’ along transport corridors in Southern Africa in an effort to reduce the impact of AIDS on the transport sector. WFP Logistics in DR Congo initiated the “Transporting Hope” project in 2009, and are celebrating the opening of the first wellness clinic in Lukala on the Matadi/Kinshasa corridor, established in collaboration with the North Star Alliance who manages the wellness clinics program throughout Africa.

In addition to the HIV/AIDS prevention campaigns for transporters, the Transporting Hope program is also creating an interconnected “Wellness Clinics” network on vulnerable hotspots, which provide mobile transport workers basic healthcare and services such as HIV testing and medical treatment. search tags: hope, WPF, wellness centers, AIDS, Transporting Hope

study examines shippers' views on port performanceBlogger: toby GooleyInfrastructure improvements typically take many years to complete, while the needs of ports' customers—shippers, carriers, and other port facility users—may change very quickly. This raises a question: Do ports win and retain business based on their infrastructure and efficiency, or do customers use different measures to evaluate port service quality?search tags: toby gooley, port, shippers, pprn

— Compiled by Frewin Francis

BLoGosPHeRe


< PAnoRAmA

urbalis control system multi-Directional Reach trucks

Companies that maintain their own lift truck fleet have realized that battery man-

agement is crucial in sustaining truck uptime in their distribution centers.

In its endeavor to be environmentally friend-ly, Hitachi Rail along with East Japan Railway Company (JR-East) has developed a hybrid pro-pulsion system that combines an engine gener-ator, motor, and storage batteries. This system provides regenerative braking which has not been possible on conventional diesel-powered trains, thereby enabling increased energy sav-ings via regenerated energy.

The system uses a series-hybrid configura-tion that first converts the engine output into electrical power and uses only motors for pro-pulsion. The AC output generated by the engine is converted to a VVVF (variable voltage variable frequency) AC supply by the main converter to drive the induction motors. Storage batteries are located on the intermediate DC section of the main converter, and the charging and dis-charging of the storage batteries is controlled using output adjustment of the converter and inverter. The hybrid propulsion system also

utilizes constant-power converter control using electrical power in order to manage the energy balance of the DC section.

The output from the storage batteries and engine are controlled as follows according to the running conditions:

Accelerating: The storage batteries are used for acceleration at low speeds, and additional power is provided by the engine generator from the mid-speed range.

Braking: The engine is shut down and regen-erated power is stored in the batteries.

Constant-speed braking: Regenerated power is absorbed using engine braking to prevent over-charging on continuous downhill gradients.Key Features: 10 percent improvement of fuel consumption 60 percent reduction of the hazardous sub-stances in engine exhaust 30db reduction of noise in stopping at the station

Manufacturer: Hitachi Rail, JR-EastSelling Point: Provides regenerative braking not possible on diesel-powered trains.

Jungheinrich has launched a new series of multi-directional reach

trucks, the ETV Q series. It is ideal for stacking and retrieval at high lift heights and for long loads that need to be transported in narrow aisles. The electric all-wheel steer-ing enables the trucks to transport loads up to 26.2 feet long.

The truck has five travel pro-grams available, ranging from modified standard travel to rota-tional travel and all-wheel parallel

travel and facilitates 360° steering. Load weight display can check weights at the press of a button. The trucks also feature energy recovery during braking and opti-mal mast lowering to provide in-creased uptime.

The ETV Q series has 3-phase AC technology for drive; lift and steering motors help in quick ac-celeration, plugging and greater operational availability due to maintenance-free motors.Key Features: 3-phase AC technology 360° steering Transport loads up to 26.2 feet long

Manufacturer: JungheinrichSelling Point: Stacking and retrieval at high lift heights.

Urbalis is an advanced control solution from Alstom that addresses problems of

rail network congestion. This system for pilot-ing trains and operating urban and suburban lines integrates a radio-based Automatic Train Control system (also called CBTC – Communi-cation-based Train Control).

Urbalis improves passenger transport and network performance by continuous radio communication between trains, track, inter-locking systems and the control center. The control system optimizes traffic by reducing intervals between each train, thereby increas-ing the line’s capacity. The open architecture of Urbalis also makes it possible to integrate the transmission of information from trains to the control center.

The system has a quick and easy installa-tion, making the entry into service time easy, both for new lines and in the case of renova-tion of the train control and signaling system of an existing line. The renovation process can be led without disturbing operations and in a

short schedule of 24 to 36 months. Urbalis is also compatible with all types of rolling stock (metros, tramways, suburban trains), with or without a driver, built by Alstom or by other suppliers. Key Features: Radio-based Automatic Train Control systemInteroperability with solutions by competitors

Manufacturer: AlstomSelling Point: Helps improve passenger transport and network performance by continuous communi-cation between trains, track and the control center.

New Products, Technologies, Solutions LAuncHPAD

Hybrid Propulsion system

10

ServicesRental forklift trucksUsed forklift trucksAfter-sales servicesFinancial servicesFull-service programmeFleet managementDriver trainingJungheinrich PROFISHOP

Rack systemsCompartmentalised racksWide-span racksPallet racksCantilever racksWarehouse platforms

Logistics systemsComplete logistics solutionsMaterial flow systemsWarehouse management systems

Material handling equipmentHand pallet trucksElectric pedestrian pallet trucksElectric pedestrian-controlled trucksElectric three-wheel forklift trucksElectric four-wheel forklift trucksDiesel forklift trucksLPG forklift trucksReach trucksHorizontal order pickersVertical order pickersHigh-rack order pickersHigh-rack forklift trucksTow tractors

A one-stop shop for all your logistics needs.The right solution for any application.

Apart from traditional product offerings, Jungheinrich offers its customers tailored solutions for all areas of intralogistics operations (trucks, systems, processes)—from the initial consultation, budgeting and project planning, to system integration and service support for ongoing operations.

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Track 1: Challenges in Telecom Warehouse Management

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Telecom logisTics Embracing Change

LOG.INDIA presents a seminar on


< primer

ABC Analysis

Bill of Lading Enterprise Resource Planning (ERP)

Back to Basics

ABC Analysis is the classification of products in inventory as per its level

of importance, which is based on criteria such as volume of sales and purchase. In cases of large volume of inventory, catego-rizing them in A, B and C categories can help the warehouse manager organize it into groups. Inventory constituting high priority products are grouped under A, lesser priority under B and least priority under C.

The analysis is carried out by first de-termining the annual volume of sales and costs of each item. Each item’s annual vol-ume is then multiplied by its rupee value, and the percentage of total inventory in terms of annual sales is calculated. The

top 10 percent items having highest rupee percentage would be classified as A, next 20 percent as B and the re-maining 70 percent as C.

The advantage of ABC Analysis is that the company can reduce inventory costs by focusing on the classified category. Also the average inventory value can be kept constant by fixed ordering of B items. However, a drawback of this process is that importance is given to an item based on its annual consumption and cost value. To avoid this, the analysis should be re-viewed periodically so that changes in

price and consumption are taken into ac-count. The ABC Analysis is also criticized for neglecting other factors besides cost that might call for example in a situation, or for higher concentration on C items thus affecting the production process.

Bill of Lading is a legal document be-tween the shipper and the carrier of

a particular good that must essentially be signed by the carrier, the shipper and the receiver. The document details the terms and conditions between the shipper and carrier with information about the type of goods being carried, the quantity and the destination. It also serves as a receipt of shipment once the goods have been delivered.

For example, if a logistics company is transporting gasoline from a plant in Mumbai to a gas station in Pune with the help of a truck, a representative of the plant as well as the driver of the truck would be required to sign the Bill of Lading after the gas has been loaded. On delivery, the truck driver must en-sure that a representative at the station signs the document as well.

ERP is a class of software that consolidates all of a compa-

ny's departments and functions into a single system thus servic-ing each department's specific needs. The software helps per-sonnel in the chain maintain ef-ficiency in customer management and be effective in delivering on customer expectations.

The implementation of ERP in logistics strengthens coopera-tion between suppliers and cli-ents involved. With ERP, indicators such as number of stock units, date of delivery, and changes in the production line can be laid out and modified when required. Since ERP software makes a note of the movement of goods as and when they take place, there's no discrepancy in recording the status of goods and the information

can be cross-checked. Examples of ERP systems are the application suites from SAP, Oracle, PeopleSoft, among others.

For instance, Godrej Consumer Prod-ucts Ltd (GCPL) has opted for MFG/PRO for its ERP, as it has a decentralized structure and allows every factory, branch and CFA to operate the ERP on its own.

In this section, we revisit some basic concepts – everyday logistics and supply-chain terms that need a brush up (or update) every now and then.

Can you help us with more such terms – used everyday but seldom revisited? Please mail your suggestions to [email protected]. If chosen, we will be happy to publish your suggestion with due credit.

ERP

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FUEL SUPPLY 46Exploring oil-and-gas upstream and midstream supply-chain biz

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The HyperCity supply-chain team led by Lt Col. Vijay Nair (Retd) is putting up an inspired show >>

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Ericsson India Director (Head-Supply) Tej Nirmal Singh leads the exciting task of managing supply chain for the company in these demand-crazy times.

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In a business environment which is slowing edging towards positivity, The Warehouse Handbook will be a wel-come reference tool for the logistics and the supply-chain industry. Also, with the passage of the much-awaited GST in April 2010, warehouses will move several steps up to highly automated Distribution Centres which will impact industry’s bottom-line. The Handbook will thus give a new perspective on the subject and enable industry to stream-line its operations and processes.

The various chapters of the book have been written by noted special-ists in the industry with the sole pur-pose of removing nebulousness from major aspects of the logistics business. The handbook covers the entire gamut from the present state of the industry, site selection, design and processes of a

The Warehousehandbook

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warehouse, to storage and mate-rial handling, information tech-nology and automation of a ware-house and the grossly neglected area of security.

Whether you are in the board-room 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.

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< EVENTS

Februar y 2011

February 10 – 12, 2011InternatIonal engIneerIng & technology FaIr 2011Pragati Maidan, new DelhiInternational Engineering & Technology Fair 2011 is dedicated to engineering and manufacturing industry in India. The 19th edition of IETF will serve as a B2B event, offering an ultimate opportunity for industry professionals, decision makers, manufacturers and service providers to meet, establish network and generate business opportunities.

The industry professionals, attendees and exhibi-tors will get additional platform for various activities, which include technology promotion, demonstrations, meetings and preparing investment plans. The 19th International Engineering & Technology Fair 2011 will be a unique place for attendees to explore newest products, learn innovations, compare products and hear experts’ advices on these products.

The targeted exhibitors at the fair are compa-nies dealing in manufacturing, export, import and supply of engineering software, safety and secu-rity equipment, diesel & gas generators, chemical plants, desalination plants, welding equipment, storage equipment, waste disposal & treatment, among others.organized by: Confederation of Indian Industry (CII)Tel: +91 124 4014060-67

February 11 – 14, 2011MInerals Metals Metallurgy MaterIalsPragati Maidan, new DelhiMinerals Metals Metallurgy Materials 2011 is an excellent B2B platform for the companies dealing with minerals, metals, metallurgy and materials. The event is the eighth edition of this trade fair series, which is known for its highly specialized metallurgical technology, products & services. The exhibition has been organized by international trade and exhibition events.

India is naturally rich in mineral resources and it needs the best technologies in the world, so that it can transform its resources into assets.

Exhibitor’s are casting machines & technology; consulting, design and services; copper produc-tion, energy conservation, electrical engineering and process control technology, environmental protection and disposal

plant and equipment for casting and pouring of molten steel, research and development, rolling mills, safety technology, plant and equipment for casting and pouring of non-ferrous metals, plant and equip-ment for iron making, etc.organized by: International Trade & Exhibitions India Pvt Ltd.Tel: +91 11 40828282

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February 21 – 23, 2011InDIan busIness aVIatIon exPo 2011hotel shangri-la, new DelhiIndian Business Aviation Expo 2011 addresses a rapidly expanding and hugely untapped market of business jets. In the present time, Indian civil airports are already buckling under the pressure of handling increased number of air travelers and with the forecast that there will be 600 million visitors per annum in 2027, the pressure on the Indian aviation industry is unrelenting. The promo-tion and development of business aviation will be a step towards easing the pressure off an already choked civil aviation industry. This event will give an opportunity to the aircraft manufacturers and government representatives to come together under one roof and discuss the potential of business avia-tion industry.

Some of the exhibitors at the event will be aircraft manufacturers, flight planning, aircraft components, MRO organizations, IT systems & providers, Engines & engine systems, fuel systems, ground service suppli-ers & equipment, hydraulic systems and instrumenta-tion, etc. organized by: Exhibitions IndiaTel: +91 11 42795000/42795032

February 23 – 26 2011PharMa WorlD exPo & cheMtech WorlD exPobombay exhibition centre(bec), MumbaiOrganized by Chemtech Foundation, Pharma Bio World Expo is a prominent show for pharma and biotech industry in India. For four days, the show will be held at Bombay Exhibition Centre and will vest on an area more than 30,000 square meter.

Exhibitors expected to be present at the event are pharmaceutical processing plants & equipment, pharma packaging machinery & materials, API, bulk drugs, analytical laboratory supplies (instruments, glassware, lab. reagents / chemicals), environment control equipment & services, utility, utility services & maintenance, contractors - turnkey, and ISO/gMP consultancy service.

At the exhibition, Industry Automation & Control will also hold its exhibition for the automation and control industrial sector. Exhibitor’s present here will be factory automation, process automation, instru-mentation and controls, robotics, power plant & MCC automation, drive automation, emergency shutdown system & SIL certification, gas & liquid analyzers, safety and supply technology in the field of assembly, handling and robotics, complete factory automation systems, and turnkey system solutions in the field of industrial automation.organized by: Chemtech FoundationTel: +91 22 22874758

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