LOGISTICSSupply Chain

Shantanu Bhadkamkar

Regional ConferenceWIRC ICAI

Industry Growth, Opportunities, ChallengesGovernment Policies & InitiativesRole Of Chartered Accountants

“Logistics service providers should join logistics clusters and actively collaborate with transport

infrastructure operators, governments and academia. Players in the logistics arena should establish

and foster knowledge exchange and management across company borders.”

Transportation & Logistics 2030

Price Waterhouse Coopers 2010

LOGISTICS-Supply Chain

Govt. Policies/Initiatives, challenges and opportunities. The expectation is how is the industry growing, what are the opportunities, challenges and if chartered accountants can play roll.

• “Businesses no longer compete, its Supply Chains that compete!”• Professor Martin Christopher

• In 2010 Transport Intelligence identified India as the world’s most important growing logistics market

“the absence of a single logistics 'champion' (whether in form of a ministry or otherwise) in the

government (or industry) led to a disintegrated approach to development of the sector. Extensive

fragmentation meant the incapacity of industry players to develop the industry as a whole and poor

support infrastructure, such as roads, ports and telecoms, led to a situation where the opportunity to

create value is limited.”

Skill gaps in the Indian Logistics Sector

KPMG & CII 2007

“India will require a National Integrated Logistics Policy (NILP). Such a policy should target a greater

share of rail, reduce economic waste and improve energy efficiency. The policy will need to establish

and implement targeted national programmes including dedicated freight corridors, coastal freight

channels, national expressways, last-mile roads, last-mile rail, multi-modal logistics parks, road

maintenance, technology adoption, skills development, and equipment & service standards”

Transforming the Nations Infrastructure

McKinsey 2010

“Logistics service providers should join logistics clusters and actively collaborate with transport

infrastructure operators, governments and academia. Players in the logistics arena should establish

and foster knowledge exchange and management across company borders.”

Transportation & Logistics 2030

Price Waterhouse Coopers 2010

What is LOGISTICS

Tuesday, April 11, 2023SHANTANU BHADKAMKAR - ATC 8

Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

Reference: Council of Logistics Management, http://www.clm1.org/mission.html, 12 Feb 98

Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes.

Logistics (CEN)The planning, execution and control:• of the movement and placement of people and/or

goods• and of the supporting activities related to such

movement and placement within a system organised to achieve specific objectivesCEN : European Committee for Standardization (Comité Européen de Normalisation in French)

Tuesday, April 11, 2023SHANTANU BHADKAMKAR - ATC 9

Logistics ObjectivesRight Place

Right Documentation

Good Condition

Right Price

Right Time

Right Tariff

SmoothMovement

OnlineInformation

Outsource Logistics

• We want to outsource logistics :)

• Shippers never owned bullock carts, ships, railways etc

• What is envisaged is outsourced management.

ConsilienceJargon & Acronyms

1pl - xpl

Definition Depends on whom you ask

As many experts as many definitions

DISCLAIMER

You have 2 Economists, you have 3 Opinions.

Parties

• 1st Party: The Supplier

• 2nd Party: The Company buying the product that is being stored or shipped

• 3rd Party Logistics Provider (3PL): The company that provides warehousing and transportation outsourcing

• 4th Party Logistics Provider (4PL): The majority of people would agree that 4PL is little more than logistics consultant, but nevertheless here is the official definition courtesy of Accenture:

‘A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions.’

What is 5PL

• 5PL is the alignment of individual supply chains into a common network strategically managed by a single body• Therefore the fifth party itself is not (necessarily) a

physical entity but a system that informs a controlling party which in turn manages the various supply chains in the network on the basis of real time information and pre-aligned logistics facilities such as transport, shipping, storage etc.

Supply Chain

1

Supply Chain

2

Supply Chain

3

Supply Chain

4

Supply Chain

5RM

FINISHEDGOODS

CONSUMER

INTEGRATION

SUPPLY CHAIN LOGISTICS INTEGRATION

COST TIME

TRANSIT WAITING OBSTACLES

RELIABILITY RISKS

LOGISTICS INTEGRATION

• SEAMLESS MANAGENT• REAL TIME MONITORING• VISIBILITY• TRACEABILITY• SYNCHRONISATION• MULTI TIER

CHARACTERISTICS

• GLOBALISATION OF MARKETS• INCREASED COMPETITION• TECHNOLOGY• PARTNERSHIPS• INFRASTRUCTURE• VENDOR & CUSTOMER DEMANDS

DRIVERS

What Is 7 PL?

7PL = 3PL + 4PL

What Is 3PL + 4PL

3PL + 4PL = ?

Same as 3½PL

NONSENSE

OR

SOMETHING I DON’T KNOW YET

CHACustomer Definition

Why buy a cow, when the milk is free?

Heard in EuropeSome Bankrupt Forwarders are now

Consultants. They work on Commission based on COST REDUCTION.

They Call themselves 4PL

4PL = Asset Free

Is only asset free enough?

3PL Paved Way For Outsourcing

New BPO, Lead

Logistics

Focuses On Process

Rather Than Task

Fills Service Vacuum created by 3PL

4PL is Neutral Brings Value ReEngineered Approach

VISION• BUILD ON CORE

COMPETANCIES

KNOWLEDGE• KNOW HOW• EXPERIANCE

TECHNOLOGY

INVESTMENT• PEOPLE• PROCESSES

IMPLIMENTATION• NEUTRAL• COMMITMENT• PARTNERSHIP

RECIPE

3PL

Carriers• Airlines• Shipping Lines• Rail• Truckers• Courier• Post

Infrastructure• Port• CFS• Warehouses• IT

Customers• Buying Agents• Manufacturers• Merchants

Organisors• CHA• IATA• MTO• NVOCC• Liner Agents

Tuesday, April 11, 2023 SHANTANU BHADKAMKAR - ATC 22

CONVERGENCE IN LOGISTICS

SHANTANU BHADKAMKAR - ATC

Pricing, Costing,

Forecasting, Feed Back

MIS, Response

Management

Concept Selling & Enhanced Role Of

Marketing

Ability To Handle New Unexpected Situations

Dealing With Uncertainty

Global Alliances & Strategic

Networking

Better Management Of Finances

Strategic Global Vision

EMERGING TRADE & INDUSTRY ISSUES

Quicker Delivery

Lower Cost

Superior ServiceRange

Flexibility Visibility

Traceability

Integration

Tuesday, April 11, 202323

Influencing Factors

Technologies

• Information Management

• Full Integration with Customer’s ERP

• Middle Ware

• RFID, Bar Coding …

Enhanced Safety

Standards• Hazards• Accidents• Health

• Safety Culture

• Monitoring, Review & Audit

Security

• Domestic• Internation

al• Storage• Carriage• Personnel

Environmental Issues

• Statutory | Compliance

• Packing• Green

Logistics• Reverse

Logistics• Carbon

Credits

Fuel

• Costs: Rise & Volatility

• Particularly Fossil Fuels

• Peak Oil• Alternative

GLOBALISATION

• Opening Of Markets

• Global Manufacturing

• Various Local Laws

• Various International Conventions

Tuesday, April 11, 2023

SHANTANU BHADKAMKAR - ATC

24

4PL & 3PL OPPORTUNITIES

• Competition, cost worries and strict delivery schedules are forcing companies to focus on core competencies & outsource their logistics Management to third-party vendors.• About 75% of the companies in the US use 3PL

providers, while India has just made a start

OPPORTUNITIES

• GDP Growth ~ 5%

• Logistics Growth Rates Above GDP

• Above Average Market Valuations

• Integration With Supply Chains

• New Models, New Services, Emerging Field

• BRAND INDIA

Tuesday, April 11, 2023SHANTANU BHADKAMKAR - ATC 26

Marketing

• More Sales …

• Sales By Non Sales Personnel

• Brand Equity

• Increased Customer Focus

Cost Saving

• Discretionary Expenses

• Greater Efficiency

• Re-Engineering

Strategic Investments

• People -Talent Search

• New Services

• Assets• Up Value

Chain

Tuesday, April 11, 2023 SHANTANU BHADKAMKAR - ATC 27

READY FOR NEXT UPSWING

… but Competitors are also doing the same

CA

Credit Management• Bank !

ContractsPrudence• Risk

Mitigation• Viability

M & A

As Peter Drucker called 3 decades back is Logistics still

the last great unexplored continent of business?

SHANTANU BHADKAMKAR

THANKSGrowth – Opportunities - Challenges