AUGUST 2012
VIEWPOINTVIEWPOINT
AUGUST 2012 • SMAMAMAAAARTRTRTRTRTT LOGLOGLOGLOGLOGOGISTISTISTISTISTICSICSICSICSICS •• 555555
POLICY…MATTERS
Archana [email protected]
WHAT is the relevance of domestic policies when we operate in the global supply chain network? While we ponder over this question, it’s a reality that firms all over the world, including the emerging markets, are forever competing with newer economies & players on cost, quality and compliances…there...we found the answer to our rhetoric.
Domestic or national policies enable (and sometimes disable) companies to operate not only within the country but also the policies, norms and compliances that make global trade less painful and more fruitful for companies. Supply chain and logistics companies are no different; albeit, these policies are more crucial given the global playing fieldreality for the logisticians.
The March edition of Smart Logistics is dedicated to Progressive Policies, where we have reflected and analysedpolicies related to Ports, Rail, Road, Warehouse and Goods and Services Tax (GST), among others. Talking about GST, the government had taken a step ahead to phase out Central Sales Tax (CST) and introduce GST, anticipatedto revolutionise the entire warehousing segment. GST, with a consistent and standard tax-rate, is increasing revenueby maximising tax collections. It is also aiding the logistics sector in reorganisation.
Then again the implementation of Value Added Tax (VAT) played a momentous role in dipping logistics costs. VATwas initiated to steer clear of the cascading effects of tax as it was being paid at every level. However, a simplified taxsystem will help logistics players cater to several varied markets and tender end-to-end solutions far more efficiently and at much lower costs.
The coming into effect of the Warehousing Develoopment and Regulatory Authority (WDRA) made provisions for the development andd regulation of warehouses. The government commenced the Negotiable Warehouse RReceipts (NWR) system to help farmers increase access to loans from banks and perrmit the transfer of ownership of that commodity stored in a warehouse without hhaving to deliver the physical commodity. NWRs are negotiable under the Waarehouse (Development andRegulation) Act and are regulated by WDRA. These receipts are likely to perk up the borrowing capacity of farmers as well as the quaality of the bank’s loaning services in the agriculture sector. Also, it would boostt liquidity in rural areasas well as give confidence to better price risk manaagement in agriculturemerchandise.
A lot of initiatives are taken to improve the productivvity of the rail sector, for instance, Asian Development Bank (ADB) and the Government of India have agreed to implement Railway Sector Investmment Program, which is aimed at improving rail freight services and passennger transport routes. The initiative will further help India improve rail seervices along some of its busiest freight and passenger transport routes, provviding double-track for about 840 km of rail routes and electrifying about 6640 km. New signalling will also be installed. ADB will also support accountting reforms to improveoperational and financial efficiency at Indian Railwayss.
With all this and more, since March is the month of policy, we, at Smart Logistics, present this edition to the progressive llogisticians to gauge the prospect, gain from these policies & grow beyond bouundaries!
VOL. 03, NO. 12 MARCH 2013CONTENTS
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VIEWPOINT 5NEWS, VIEWS & ANALYSISLatest Happenings In The World Of Logistics 10NEWS ANALYSISDip in the IIPFMCG Bears The Brunt 15TECHNOLOGY & INNOVATIONSCutting-edge Solutions 17PRICE TRENDS 19EVENT CALENDAR 54TENDERS 58PRODUCT UPDATE 59PRODUCT & ADVERTISERS’ INDEX 64PRODUCT & ADVERTISERS’ INQUIRY FORM 65
ALSO IN THIS ISSUE
EVENT REPORTSEngineering Expo Aurangabad 2013Exhibiting Aurangabad’s Unparallel Potential 55Panel Discussion: AurangabadGauging Aurangabad On The Critical Parameters 57
IN CONVERSATION WITH‘We Are Now Looking At KWEality As The New Way To Defi ne Quality’ Chitra Shinde, President, Gati-KWE
20SPECIAL FOCUS: POLICY INITIATIVES
Rail SectorOn The Track To Prosperity 24
22Port & Shipping Policy Framing Goals & Guidelines Are Not Enough
Road ProjectsDriving India’s Economic Growth 26Air CargoAll Set To Take Off! 28‘Excise Functions Including EOUs & SEZs Should Be Linked Online And Should Promote E-processing’Taarek Hinedi, MD (India Operations), FedEx Express
30Government Initiatives In WarehousingSmart Measures Are The Best Policies 31GST ImplementationFuture In Doldrums? 34
SCM TRENDSSupply Chain VarietyDiligently Dealing With Diversity 39
FMCG
36Consumer Electronics & IT ProductsRedefi ning The Role Of Franchise
START-UP STRATEGIES
46GOR Butler SystemRendering A New Defi nition To Indian Warehousing
STRATEGY
50Transport Control TowersSimplifying Transportation Complexities
TIPS & TRICKS
53Reverse Logistics6 Ways To Optimally Generate Business
WAREHOUSING & DC
42Investment Opportunities In IndiaVenture Speculation: A Way Out For The Future
GOVERNMENT POLICIES
44Rail BudgetShowing Some Stark Emoticons
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10 • SMART LOGISTICS SMART LOGISTICS • MARCH 2013MARCH 2013
L A T E S T H A P P E N I N G S I N T H E W O R L D O F L O G I S T I C SNEWS, VIEWS & ANALYSISNEWS, VIEWS & ANALYSIS
THE logistics brand of DRS Group,‘Agarwal Packers and Movers’, has completed 25 years of service in the supply chain sector. The grand journey started with a single truck to transport goods under the banner of ‘Agarwal Tempo Transport’. Since its commencement, the company has shifted goods for more than 15 lakh homes.
The Group also caters to the requirements of large corporate clientslike MRF, Bridgestone, Infosys, Cognizant, JK Tyres, Samsung, etc. It generates a revenue of around `500crore per annum by rendering high-quality and cost-effective services.
It is the first company in India to launch new concepts like double door
carriers, portable home & perfect boxesetc., to enhance the profitability and,at the same time, offers a good quality service experience to its customers.
It has also provided the latest options to meet the increasing needsand demands of the customers by introducing plastic crates instead of cardboard boxes, wooden crate packing for electronic items, etc. It also provides hassle-free services to customers withits network of around 100 branchespan-India (including franchises), fleet of about 800 vehicles and a humanworkforce of around 2,000. The Group has moved on into warehousing business with 3 mn sqft space and has futureplans to acquire more lands across the country.
‘AGARWAL PACKERS & MOVERS’ CELEBRATES 25 GLORIOUS YEARS IN SCM
NATIONAL Collateral Management Services Ltd (NCML) has sought a big policy push in Budget 2013–14 for building warehousing and cold chain infrastructure in the country. It also sought service tax exemption for warehousing services and classificationof all warehouse receipt financing of agriculture produce as ‘priority sector’ lending. “The government needs to give the right signals to investors in the warehousing and cold chain infrastructure space. The major constraint in such infrastructureprojects is the lengthy payback period,”said Sanjay Kaul, CEO, NCML.
He said that the industry has beendemanding a special window to financesuch projects at a concessional rate of interest, with a loan repayment periodof at least 15 years. Stressing that cold chain infrastructure will requirethe government support in a big way to make it commercially viable, Kaulsaid, “Existing subsidies for standalonecold stores are inadequate and do not lead to an integrated cold chain acrossthe value chain.” He suggested that large-scale Public Private Partnership(PPP) projects need to be launchedon a viability gap funding basis tomodernise the country’s food chain.
WAREHOUSING SECTOR NEEDS A BIG PUSH IN BUDGET: NCML
BLUE Dart has inaugurated anarea office-cum-service centrein Jodhpur, Rajasthan. Withthis service centre, Blue Dart has strengthened its network inRajasthan.
The service centre is located at Crown Plaza, Transport Nagar andwas inaugurated by Sukhwinder Singh, Regional Head, NorthIndia. This is Blue Dart’s first owned set-up in Jodhpur and has adirect presence in the city now.
This strategic decision is in linewith the company’s strong focuson Tier II and III cities, whichare emerging as important nodesof production, consumption anddistribution.
The service centre is strategically located at a distance of 14 km fromthe airport, 7 km from the railway station, and in close proximity tothe industrial areas of Jodhpur.Commenting at the launch, Singhsaid, “Jodhpur is an important city in the western part of the country.We are more than happy to partner the city in its growth.”
“We are glad that the economicdevelopment of the city is ona fast track owing to which weforesee good volume of business.Going forward, we plan toposition Jodhpur as our base andexpand to other peripheral locationslike Bornnada SEZ, Balotra,Barmer and Jaislamer so that wecover the entire Jodhpur-Jaislamer belt,” he added.
Catering to Jodhpur, the BlueDart Centre will provide logisticsservice to sectors like banking,hotels, cottage industry, handicraft and textiles. Additionally, theopening up of reputed hospitals,educational institutes andagriculture processing zone will faneconomic growth in the region.
BLUE DART STRENGTHENSPRESENCE IN JODHPUR
ACCORDING to ARC Advisory Group’s research, the total warehouse management systems market in Asia is expected to grow at a CAGR of 13.5 percent during the five-year forecast period. ARC’s latest study, ‘WarehouseManagement Systems for Asia Market Research Study’ provides an in-depthanalysis of the WMS business in Asia. According to Neelam Singh, Sr Analyst,ARC Advisory Group India, and Co-author of this study, “Though the regionhas experienced above average growth, WMS suppliers have communicatedto ARC that low labour costs in some emerging markets have decreased theexpected return on investment from WMS purchase and implementation.”
The report also highlights the factors that influence the WMS market inAsia and its dynamics.
WMS MARKET CONTINUES UPWARD TREND IN ASIA
MARCHMARCH 2013 2013 • SMART LOGISTICS SMART LOGISTICS • 11
L A T E S T H A P P E N I N G S I N T H E W O R L D O F L O G I S T I C S
QUINTIQ, a global leader in Supply QQChain Planning & Optimisation(SCP&O) software, announced anexpansion in Europe, Middle East andAfrica (EMEA) operations in direct response to increased demand. Thecompany is expanding its number of Business Units (BUs) and departmentsto 15 in an effort to maintain focus onkey industry and solution areas. Thenewly expanded BU structure enablesQuintiq to maintain a small company atmosphere despite having grown towell over 600 people globally. The new organisation will provide customersthe specific knowledge and expertisethey have come to expect, focused onthe industries or market verticals inwhich their units specialise. A Quality Management Unit is also being
created to support all the departmentsin quality assurance and quality improvement. “Based on the current level of demand for our supply chainplanning and optimisation solutions,Quintiq has taken steps to meet theexciting growth we are seeing in theEMEA markets,” said COO, Quintiq.“This new alignment will ensure wemaintain our small company cultureand industry expertise while delivering world-class solutions to customersaround the world.” Gearing up for continued growth in EMEA and therest of the world, Quintiq is laying thegroundwork for further geographicaland vertical specialisation, including recent investments in its Düsseldorf and Zurich offices, which serve itsGerman-speaking markets.
QUINTIQ EXPANDS TO MEET GROWING DEMAND IN EMEA
DHL Global Forwarding continues to expand its global network of its direct Less than Container Load (LCL) service with the recent launch of two new services connecting Nhava Sheva in India with Lodz, Poland and Santos, Brazil. The introduction of these weekly direct LCL services not only ensures faster transportation of freight fromNhava Sheva to Lodz and Santos but also enables effective reductionin CO
2 emission by 17% and 9 %,
respectively, due to shorter distancesand reduced cargo handling.
By offering a substantial reductionin transit time of 29 days from Nhava Sheva to Lodz and 38 daysto Santos, DHL offers a consistent and cost-effective ocean freight solution accompanied by reliable management systems that control shipping transactions and give full tracking visibility to its customers. “Our new services demonstrate our commitment to strengthen our network and support the needs of our customers. By expanding our service offerings geographically, we ensure a timely and controlled delivery of door-to-door services, which include pick up at origin, consolidation and deconsolidation along with customs clearance,” saidThomas Tieber, CEO (South Asia), DHL Global Forwarding.
All LCL services areaccompanied by DHL’s first-class IT solutions such as DHL Track & Trace and other tools, allowing full visibility throughout the wholesupply chain. The company also facilitates insurance services to customers as a value-added service.DHL’s Shippers Interest Insurance(SII) covers losses or damages of all cargo transported by DHL, as wellas transportation costs.
DHL LAUNCHES DIRECT LCL SERVICES FROM INDIA TO
POLAND AND BRAZIL
AIR Menzies International (AMI) has recently commenced operations inIndia. The airline started functioning from Mumbai with the induction of air cargo wholesaling to the country for the first time. AMI, the world’s largest trade-only airfreight and express wholesaler, has created this regional divisionto begin its development in India. Before AMI India, air cargo wholesaleactivity in India had been limited to co-loading among freight agents. AMIIndia will direct import traffic from AMI branches in the US, the UK, Europe,South Africa, Asia and Australia to key destinations across India.
Trevor Saldanha, the Regional VP, will head AMI India’s operations in thecountry. Once the business is fully established in Mumbai, AMI India plans toopen branches in New Delhi, Chennai, Bengaluru and Hyderabad.
AMI COMMENCES OPERATIONS IN INDIA
SESA Goa has bagged the Supply Chain Technology Advancement Award at the second AsiaManufacturing Supply Chain Summit,for the successful implementation of RFID technology across its businessoperations in Goa and Karnataka.
Sesa Goa is the first mining company in India to implement automation using RFID technology tostreamline the supply chain, improving productivity by reducing transactiontime and human errors. The system,which identifies the vehicle using RFIDtags, links all the touch-points, i.e.,
security gates and weighbridges acrossthe operations in Goa & Karnatakaand consolidates the information,enabling analysis and reconciliation of a large number of transactions.
While interfacing with theenterprise’s central database andERP solution, it also interfaces withNational Informatics Centre and(n)-code websites, linking forest passesand Department of Mines and Geology permits with truck information. Thesystem has been implemented towithstand tough ambient conditionsassociated with mining operations.
SESA GOA BAGS SUPPLY CHAIN TECHNOLOGY ADVANCEMENT AWARD
12 • SMART LOGISTICS SMART LOGISTICS • MARCH 2013MARCH 2013
L A T E S T H A P P E N I N G S I N T H E W O R L D O F L O G I S T I C S
THE new harbour on the Hallaniyat Islands, which will improve the development of the economy for localsand create tourism opportunities for Oman, will be completed in a year’stime, said Bin Hamdoon Al Harthy,Undersecretary for Ports and MaritimeAffairs, Ministry of Transport and Communications.
Speaking to Times Business onthe sidelines of a press conferenceto announce the Gulf Cooperation Council (GCC) supply chain and logistics conference scheduled for April15 and 16 at the Al Bustan Palace, Muscat, under the theme ‘Oman’s
Strategic Role as GCC Gateway andIndian Ocean Rim Hub’, Al Harthy said all ports in the Sultanate areprogressing well.
He added, “A study on Shinas Port to develop facilities in accordance withinternational standards is currently underway. The proposed plan ispart of the government’s strategy tofurther develop Oman’s maritimeinfrastructure and help stimulateeconomic development.” Talking about the conference, Al Harthy asserted,“The government’s infrastructureprioritisation strategy will provide thecountry a solid platform.”
CONFEDERATION of IndianIndustry (CII) has called for speedy implementation of key railway projects,such as the Dedicated Freight Corridor,high-speed rail corridors, rolling stock and other capacity enhancement works.“Investments in rail infrastructure arehigh priority as they add efficienciesto national competitiveness and reducetransaction and supply chain costs,” said Chandrajit Banerjee, Director General, CII. Commending the recent increase in passenger and freight rates,Banerjee noted that higher revenues would offer more opportunities for targeting a zero-tolerance approach to issues in safety.
CII ADVISES TO FACILITATE PRIVATE INVESTMENTS THROUGH PPP
ROBOCOM Systems International recently announced the release of thelatest version of their R-WMS.net WMS with enhanced functionality for 3PL companies.
Bryan Wright, VP, Robocom, stated“3PL companies have very complexinventory tracking requirements along with the need to have flexible andconfigurable process flows for each of their customers. Robocom understandsthe demands these requirements placeon a 3PL business.”
Wright added, “We continue to invest in our warehouse management solution to address the needs of the3PL industry.”
ROBOCOM SYSTEMS TO INVEST IN WMS FOR 3PL INDUSTRY
HARBOUR AT HALLANIYAT ISLANDS TO OPEN IN 2014
GATI-KWE, India’s leader inexpress distribution and supply chainsolutions, was awarded for its effortsin the category of ‘Achievement inContinuous Improvement’ at the2nd Asia Manufacturing and Supply Chain Summit in Mumbai.
GATI-KWE has been a strong believer in innovation and strives togo beyond conventional boundariesto deliver quality service to itscustomers. GATI-KWE has alsoimplemented various innovationssuch as pre-planning tools,customer site process improvements(using mobile platform), Network Monitoring Cells (NMC), etc.,to help enhance the customersexperience. With these processes, thecustomer gets live updates about thestatus of the shipment, which givesthe customer a sense of security.These implementations have alsohelped reduce the process time. TheAsia Manufacturing Supply ChainSummit recently held in Mumbaiaims to bring together supply chain leaders across verticals with aview to innovate, strategise anduncover strategy and best practicesto help one another in today’scomplex and challenging businessenvironment.
Every year, over 200 leading manufacturers & decision makersacross different value chains of prestigious organisations areconvened at the summit. Theidea is to equip each other withthe latest information, impact of economic trends & strategies that can transform your organisation.
Various innovations haverecently been implemented,which have brought significant process improvements that havehelped reduce process times andsignificantly improve customer experiences.
GATI-KWE AWARDED FOR IMPROVEMENT EFFORTS
A second round of meeting of Air Cargo Logistic Promotion Board would beheld soon to address inter-ministerial issues and to coordinate with the stategovernments on handling of air cargo, informed a senior civil aviation official.
The first meeting of the Board, chaired by Civil Aviation Secretary, discussedin detail several areas of concern relating to air cargo, especially the missing and non-traceable cargo in domestic airports, said M Kannan, EconomicAdviser to Ministry of Civil Aviation. “We will be having the next meeting of the Board shortly. There has been some delay in the second meeting. It isprimarily to resolve inter-ministerial issues and to have co-ordinations withstate governments,” he informed at an interactive session on the aviation cargoindustry organised by Southern India Chamber of Commerce and Industry (SICCI) and Chennai Customs House Agents Association.
AIR CARGO BOARD TO MEET SHORTLY
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L A T E S T H A P P E N I N G S I N T H E W O R L D O F L O G I S T I C S
US-based logistics service provider Triangle Group andleading multi-channel cloud-based supply chain execution andWMS solution provider LogFire will be leveraging their valuein improving businesses’ supply chain operations and flow of goods at RILA Supply Chain Conference: Logistics 2013 at Orlando, Florida.
Triangle Group is much more than just a 3PL. With key operations on both the east and west coast of the US, TriangleGroup has decades of experience working with leading andemerging companies to help them manage the supply chainoperations. Its supply chain solutions and industry expertisehave given the company a successful edge over the competition,by understanding the retailer and manufacturer mindset, andproactively providing cost saving solutions designed to achievebetter efficiency and save bottom line dollars for their client-partners.
The Group offers a seamless end-to-end supply chain solution that is second to none. From freight forwarding andcustoms clearance to bonded facilities, as well as warehousing,fulfillment, and transportation to end users, Triangle Grouphas the assets to provide exceptional supply chain management for manufacturers, wholesalers, retailers and ecommercecompanies of all sizes.
AMAZON.COM Inc. recently announced a cloud data storage solution from Amazon Web Services (AWS), thus further expanding its cloud offerings. Amazon Redshift,as this new cloud-based data warehouse service is called, a low-cost solution for managing and automating common administrative tasks like provisioning, configuring, monitoring, taking backups and securing a data warehouse.
The company said that any AWS customer can launch a Redshift cluster from within the AWS management console for $1,000 per terabyte, per year. Earlier, companies incurred significant costs to build their own infrastructure for data storage. They had to make a substantial payment upfront, after which they would invest further to purchase additional storage space anticipating growing backup demand. This resulted in under-utilised capacity and unnecessary expenses. With Amazon Redshift, companies will not only be able to lower the cost of a data warehouse but also reduce the workload by analysing large amounts of data very quickly.
Currently, Amazon Redshift is only available in the US. Amazon is one of the leading players in the extremely fast-growing retail ecommerce market. Amazon is expected to benefit in the long term, given significant growth potential in domestic and more so in international ecommerce.
TRIANGLE GROUP OFFERS SEAMLESS END-TO-END SUPPLY CHAIN SOLUTION
AMAZON.COM INC. ANNOUNCES A CLOUD DATA STORAGE SOLUTION
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L A T E S T H A P P E N I N G S I N T H E W O R L D O F L O G I S T I C S
DAMCO, one of the world’s leading freight forwarding and logistics serviceproviders, recently reported a 19% increase in net revenue compared to2011–12. The net revenue in 2012–13 has increased to US$3272 mn, from UD$2752 in 2011–12. Gross profit saw a rise of 7% to US$807 mn in 2012.
“I am satisfied with our solid results for 2012. We continue to grow and develop our business, in spite of continued difficult market conditions.I am pleased that we have taken full advantage of our acquisition of NTS,and that all our products continueto grow organically faster than themarket,” said Rolf Habben-Jansen,CEO, Damco.
“In addition, we have made a number of strategic changes and
invested a lot in the future, whichmasks the underlying trading of our business that is better than purenumbers show, and it also gives us alot of confidence going into 2013–14.This stems from a lot of hard work from everybody across our network,”he added.
The volumes are also up for Damco as the company shipped 6%more ocean volumes compared to2011–12. Air freight tonnage almost doubled, recording a growth over last year of 91%. The rapid growth inair freight was partly due to the fullyear effect of the acquisition of NTSin August 2011, but also excluding that effect Damco’s growth in Air freight was well into double-digit percentages.
A bleak future is staring India’s shipping industry in the face. Depleting demand growth and lower charter rateshave made the sector too turbulent tooperate in. The third quarter turnedout to be one of the worst for industry players who have either incurred lossesor seen profits fall steeply due tosupply glut and higher bunker cost. The fourth quarter may turn out to bemuch worse, say industry officials, aswell as analysts.
Companies like Shipping Corporation of India (SCI), Mercator,Great Eastern Shipping Company,
Essar Shipping and Varun Shipping Company are all going through arough patch. The outlook of their counterparts abroad is similar.
G Shivakumar, CFO, Great Eastern Shipping Company, said ina post-result analyst conference call,“The freight rates had been challenging and Baltic dry index had fallen morethan 60% year-on-year. The outlook did not look very bright either. Therewas oversupply of vessels. And still,up to 15% of the vessels were to bedelivered in the crude, product and dry bulk segments.”
DAMCO RECORDS SIGNIFICANT GROWTH IN 2012–13
DEMAND WOES, LOW CHARTER RATES HIT SHIPPING INDUSTRY
SAP AG recently announcedthe general availability of the 9.0version of the SAP® TransportationManagement (SAP TM) application.The latest version of SAP TMdelivers important innovations for shippers and freight forwarders.Benefits of the new release includeimproved ocean & new air freight management, superior manual andautomated transportation planning,cost distribution, and additionaltransportation management analytics & reports.
Increased demand for acomprehensive transportationmanagement solution is spurring mass adoption of SAP TM globally,including key high-growth marketssuch as Latin America, Asia Pacificand Russia. Major transportationand shipping companies are already live on the new release of SAP TM.One such company, Australia-basedLinfox, implemented the latest version of SAP TM in record time.Linfox serves as the leading logisticsservice provider for the Asia-PacificJapan region, with over 6,000 vehiclesand 18,500 employees. In additionto Linfox and including 22 customer ramp-up projects, there are now over 100 customers for SAP TM. “Theearly availability of SAP TM 9.0provides us with highly anticipatedfreight planning capabilities,”said John Ansley, CIO, Linfox,adding, “We are now able toefficiently plan our road trains,leading to better asset usage,for example, cost cutting, andimproved customer service throughon-time delivery.”
SAP TM is part of the portfolioof SAP solutions for supply chainmanagement, which also includesSAP EWM and SAP Event Management.
LATEST VERSION OF SAP®TRANSPORTATION MANAGEMENT
TO DELIVER BETTER SERVICE
AIRPORT Authority of India (AAI) may go in for a new cargo terminal onoutsourcing model by revising its master plan for the Chennai Airport, as per the report by Centre for Asia Pacific Aviation (CAPA) on the modernisationof the airport.
“In our phase II development, we are open to have a new cargo terminal onoutsourcing model in the Chennai Airport,” said GK Chaukiyal, Sr Member –Operations, AAI, while addressing various stakeholders in an air cargo relatedevent titled ‘Aviation Cargo Industry: A vital link in logistics was organised by the Southern India Chamber of Commerce and Industry (SICCI) and ChennaiCustom House Agent’s Association, in association with Air Cargo AgentsAssociation of India.
AAI LOOKS AT MASTER PLAN REVIEW FOR CHENNAI AIRPORT
MARCH 2013 • SMART LOGISTICS • 15
DIP IN THE IIP NEWS ANALYSISNEWS ANALYSIS
THE IIP, the country’s chief barometer of factory output, releasednumbers for the month of December 2012. These state that the consumer durables output declined by 8.2%over the year-ago period. This is thesharpest fall seen in the 2012 calendar year. Numbers for the previousmonths were no better. According toChandrajit Banerjee, Director General,CII, “To say the least, the IIP figuresfor December are disappointing. Withthe exception of October 2012, thereis a secular trend developing, which is
the most disconcerting.”
A LOOK AT LAST YEAR...Last year in January, February andSeptember, the consumer durablesoutput declined by 7.5%, 6.2% and1.5%, respectively. The months of March, July, August and November 2012, saw growth in output between0.8% and 1.3%, which is paltry whencompared with the IIP data for 2011and 2010, respectively. Altogether,eight of 12 months in 2012 saw negative or low-single digit growth
in output, which is certainly not goodnews for companies operating in theFMCG space.
These concerns originate from themanufacturing sector itself.
“What is extremely worrisome is thenegative growth of the manufacturing sector driven by a sharp decline in demand conditions in the economy. This has happened at a time when the festive season was expected to boost consumption demand. The data indicates that upstream mining industries continues to show a contraction in output which, going forward, would lead to shortage of coal, ores and other industrial raw materials,” adds Banerjee.
WHAT CAN BE EXPECTED?It is evident that the FMCG sector is being adversely affected due to thesedipping numbers, but the consumer unknowingly is joining in the stride and adding to it by refraining from spending during the January jinx. Banerjee avers, “Given the situation, under normal circumstances, it wouldhave been natural for the industry to ask for a stimulus package. However, given that the government’s fiscal situation is quite serious, this could bean unreasonable demand. However, the least we expect is that the UnionBudget would not consider raising any taxes or duties and would refrain fromintroducing new taxes. Sentiments arealready reflected in the IIP figures and CII does not want to see any announcements, which would hurt theindustry’s confidence.”
“CII hopes that the Union Budget would take bold decisions to rejuvenatedemand and boost investor confidence,which, in turn, would stem the slide in industrial production. CII has already suggested to the Ministry of Financethat the Union Budget should be aimedat reviving growth. This would imply taking measures such as containing fiscal deficit, moving towards GST, providing accelerated depreciation onplant and machinery, abolishing MAT
PRATEEK SUR
The production of durable products, viz., refrigerators, washing machines,air conditioners and conventional television sets, is contracting in India.The Index of Industrial Production (IIP) is an indirect indicator of consumer demand. So, why are consumers not picking up durables like they earlier did?Why are the consumers lying low and why are FMCGs facing speed breakers?Here’s an attempt to fi nd the answers…
FMCG bears the bruntIll
ustra
tion
By
San
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Dal
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16 • SMART LOGISTICS • MARCH 2013
on SEZ, etc. The reform agenda brooks no delay,” Banerjee adds.
There certainly have been some reforms done by the government, which might be added by some more rules and sanctions during the upcoming Budget. “Some good has been done by the series of reform measures announced since September 2012; now, the Reserve Bank of India(RBI) has indicated monetary easing.We hope that the RBI would take note of the industrial situation and accelerate the reductions in interest rates. We hope that the calendar year would see at least a 150 bps cut in repo rate,” anticipates Banerjee.
WHAT IS BEING DONE?Durables is one market that the consumer has a hand in. The day-to-day consumer can ‘uplift’ the market by spending, not much, but consciously,logically and rationally and thereby help bring the dipping figures back to something worthwhile. Shantanu Dasgupta, VP – Corporate Affairs & Strategy, Whirlpool, believes, “The twin impact of shrinking disposable incomes as well as high cost of goodsis what is leading to a deferment in the purchase of consumer durables.” Typically, durable products are not perceived to be essential commodities;they are considered discretionary products.
George Menezes,COO, Godrej Appliances,adds, “When purchases canbe postponed, consumersopt to do just that.” Onan average, the replacement cycle for home appliances has increased from two to three years earlier to about four years. “This means that the consumers are not going for a change even four years after the purchase of their products. This naturally impacts sales,” adds Menezes.It does not help that the price of homeappliances has increased by 15–20% in the last one year as the rupee depreciated by 22%.
SUPPLYING THE SMART WAYThe maximum hit is the supply chain. The entire supply chain workson the customers’ response. A rise indemand would necessitate an increasein supply—a fact which would ensurethat the supply chain companiesremain in business. However, it isimportant to note here that the wholeprocess can be initiated only if thereis demand from the customers’ end.The dip in the IIP numbers wouldcall for doomsday, especially as they would throw the third-party logisticsservice providers out of business. Thecompanies also need to better their supply chains by accelerating their speed of delivery, lessening the number of damages and keeping a check on the ever-escalating delivery charges.
FROM MASTER BLASTERS TO BEARING THE BRUNTTo tide over the above stated issues,companies have been taking certainmeasures. For instance, air-conditioner makers, who have been the most hit owing to both weak sentiment aswell as uncertain weather (the last two summers have been cool hitting AC sales) have resorted to desperatemeasures such as launching knocked-down split air-conditioners for as low as `19,000, 32% lower than the priceof a regular split AC. “The attempt is
to provide an affordable option to first-time buyers as well as those residing in small towns,” says B Thiagarajan, President – Air-conditioning & Refrigeration Products Group, BlueStar.
Seconding his views was Suresh Kumar Bandi, Divisional Deputy MD, Panasonic, adding, “When entry barriers come down, consumers aremore likely to sample the product.”Panasonic has recently launched
low-cost split ACs under the brandname Cube. Besides Blue Star andPanasonic, Voltas is another company that has taken the low-cost route,launching stripped down ACs in a bid to boost sales this summer. Last year,the AC market fell 25%, according toindustry sources. It currently stands at three million units.
Manufacturers of TV sets tooare rapidly moving to the morelucrative flat panel TV segment asthe larger, conventional TV market simply stagnates. Conventional TVs,pegged at 10 million units, havebeen de-growing at the rate of about 10–15% in the last few years, thankslargely to obsolescence. But in thelast one year, the fall has been evensteeper at the rate of 20% as consumerssimply looked the other way owing toa general slowdown.
This de-growth has promptedplayers such as LG and Samsung totake their eye off the category. Bothcompanies have indicated that they nomore intend to invest in conventionalTVs, focusing their attention on flat panels, which, in the present day,constitute one-third of the total TV market pegged at 15 million units.Meanwhile, Onida is now attempting to convert itself into a lifestyle player,focusing its attention on kitchenand home appliances, moving away
therefore from the conventional TV market.
Only Videoconcontinues to operate in the market with a share of about 33%. According to
HS Bhatia, Chief Marketing Officer,Videocon Industries, the company hasno plans to vacate the category despiteits de-growth. “As a player, we arewell-entrenched in the category andhave no plans to step out of it,” informsBhatia. Besides the flagship brand, theVenugopal Dhoot-promoted company also makes conventional TVs under the brand name Sansui.
Durables is one market that the consumer has a hand in. The day-to-day consumer can ‘uplift’ the market by spending, not
much, but consciously, logically and rationally and thereby help bring the dipping fi gures back to something worthwhile.
Dip in the IIP, continued
MARCH 2013 • SMART LOGISTICS • 17
CUTTING-EDGE SOLUTIONSCUTTING-EDGE SOLUTIONS TECHNOLOGY & INNOVATIONSTECHNOLOGY & INNOVATIONS
A broad range of data collection andcommunication features in a mobilecomputer enables the adaptation of avariety of in-premise applications. It supports businesses in their pursuit toimprove their operational performancemetrics, simplify IT support and controloperating costs. It packs a breadth of capabilities into a slim case, allowing users to easily and comfortably adapt to the ever-changing data capture andcommunications needs.
Intermec has released its CK3 ‘Next Generation Series’ of ruggedmobile computers, claiming one of theindustry’s highest performing mobilecomputing options till date. For usein distribution centres, manufacturing and retail operations, the CK3 Next Generation Series comprises twomodels—the CK3X and CK3R—which utilise a 1GHZ OMAParchitecture to optimise workforceperformance through industry-leading battery life, enhanced barcode scanning,device health monitoring and a broadcompliance with emerging industry standards, such as HTML5. “For business-critical mobile applications,the need for mobile devices withreliable battery performance, datacapture configuration options, robust
security and enhancedprocessing power to support the increasingly sophisticatedapplications in a lightweight,ergonomic, yet ruggeddesign, is critical,” saidDavid Krebs, VP – Mobile& Wireless Practice, VDCResearch. “Intermec’s CK3Next Generation family of rugged handheld devicesdelivers these capabilitiesand is well designed tosupport mobile applicationsacross a variety of rigorouswarehouse, logistics andretail environments,” headded.
The CK3X is optimised for warehouse operations and is thematching migration option from thecurrent CK3B, while the CK3R isoptimised for light industrial and retailfront of store applications. Maintaining the current CK3B form factor andrugged design, legacy applicationsand backwards-compatible accessoriesallow customers to seamlessly migrateto the latest technology without anadditional investment in chargers,docking stations or scan handles. “TheCK3X and CK3R expand upon the
popular CK3B for continued best-in-class operations to support customer needs for increased productivity, flexibility and exceptional workforce performance,” said Earl Thompson, Sr VP – Mobile Solutions Business Unit, Intermec. “Designed specifically with the future in mind, the CK3 Next Generation Series is an exceptional choice for customers who need to support the ever-changing data capturerequirements and future-proof their supply chain, DC and in-store retailoperations,” he added.
MONITORING driving safety allowsorganisations to help mitigate risk by measuring safe driving habits, whichcan result in fewer crashes and lower insurance rates. The newly improvisedGeoManager Driver Safety systemallows transport organisations to manage and communicate driver behaviours & vehicle safety more effectively.
Trimble has made enhancements to the Trimble GeoManager Driver Safety, enabling organisations tomanage driving behaviours by identifying and rewarding gooddrivers. It also recognises and coachesdrivers who put companies at risk. Theupdates increase visibility for multiple
stakeholders within a business intoany risky driving behaviour via new report formats, an improved executivedashboard, driver scorecards, real-timedelivery of idling and speeding alerts.Driver safety provides reports on hardbraking, rapid acceleration, hard turns
and excessive speeding. These reportscan be configured for daily, weekly andmonthly use.
“With GeoManager Driver Safety,we are able to configure the safety needs of a fleet better. The latest enhancements, which include the Driver Safety’s executive dashboard, driver scorecards and exception alerts,can allow companies to improve driving patterns and optimise safety while reducing the liability,” said Mark Forrest, GM, Trimble Field Service Management. Driver Safety is part of the Trimble GeoManager portfolio, which includes Fleet Management andWork Management.
New Gen Mobile Computer To Optimise Warehouse Operations
New & Improved GeoManager Driver Safety System Effectively Manages Vehicle Safety
• Highly adaptable to meet ever-changing data capture and communication needs
• Built on a robust architecture required to successfully support in-premise applications
• Latest generation of imaging technology for outstanding scanning productivity
• Speech and voice functionality support today’s needs for increased productivity
• Loaded with SmartSystems™ for automatic, remote device management
• RFID enabled via snap-on reader handle
• Non-incendive option for hazardous locations (CK3N)
USPs
• It manages driving
• It recognises and teaches drivers who put companies at risk
• The alerts can be programmed for real-time feedback
USPs
18 • SMART LOGISTICS • MARCH 2013
TO give material handling a new definition, a pedestrian stacker has been introduced for the logistics sector,which is compact, easy to use and highly versatile. The new MitsubishiAXIA ES Pedestrian Stacker has been developed to deliver exceptionalproductivity in every setting.
This completely newly designed Mitsubishi Pedestrian Stacker comes with an ergonomic tiller arm, extremely compact powerhead and outstanding visibility. The AXIA ES ensures excellent manoeuvrability in tight spaces. The new Mitsubishi PedestrianStacker series include advanced and value-added features that deliver real customer benefits, particularly in terms of reliability and value for money. These featuresinclude:• A sealed chassis to offer protection
against dirt, dust and other particleslying around work site, which canreduce wear of the truck
• An incredible water-resistant design that diverts splashed moisture away from key electrical components for
longer truck life• The low centre of gravity aids
stability for safe operation• A powerful AC-drive motor, which
gives excellent traction and ramp performance. It also does smooth,
quiet and controlled operation, thus lowering the maintenance requirements
• It gives convenient extra groundclearance for driving on ramps andloading docks
• There are choices of twoperformance modes via the switchkey, which enhances safety, energy,efficiency and productivity
• A foldable driver platform offersa comfortable ride over longer distances.
REALISING the growing need for high-grade automation and IT systemfor the logistics sector across the world, a newly developed revolutionary solution has been recently introduced.KNAPP Hart bei Graz and SALT Solutions Würzburg have intensified their collaboration to offer logistics solutions based on SAP Extended Warehouse Management (EWM) through their common subsidiary, KNAPP IT Solutions GmbH. With about 200 SAP logistics experts, KNAPP and SALT are one of the leading international suppliers of SAP EWM
for manual, semi and fully automaticwarehouses. “The cumulative know-how of KNAPP and SALT from more than 1,500 logistics systems, more than150 WMS projects and more than
100 automation projects with SAP software allows us to realise complex logistics projects based on SAP. In particular,
our customers profit from theoptimal integration of the KNAPPautomation solutions, such asthe OSR Shuttle, into their SAPsystem landscape,” informed,Gerald Lassau, MD, KNAPP ITSolutions.
A cloud-based resource planning toolis set to be functional to give smallbusinesses a hand with supply chainchallenges. Unlike legacy vendorsin that sector—including SAP andNetsuite—the technology is specifically designed for departmental stores, retailchains and small boutiques, among others. The technology will soon be launched by New York-based BizSlate.BizSlate is ideal for companies that have ‘outgrown quickbooks’, but donot have ample resources at their disposal for IT, opined, Marc Kalman,Chief Executive, BizSlate.
IT behemoths, like SAP, madeEnterprise Resource Planning (ERP)tools popular, but they are an expensiveand complicated proposition for non-technical types. These tools bring
together and manage information about finances, accounting, manufacturing,sales and service, and marketing. Untilrecently, only large companies couldafford the packages and consulting contracts that take a sizable out of anIT budget. BizSlate claims it can offer its customers a competitive advantage.For example, a manager, at a conferenceor trade show, can view real-timeinventory from a tablet, iPhone, or Android device and place orders into a live system that could potentially pick,pack, and ship on same day, whichused take up to a week to processtraditionally. The company has enlistedabout 20 companies to take part in itsbeta test. The first customers will havean instrumental role in the design anddevelopment of the product.
Pedestrian Stacker Ensures Excellent Manoeuvrability In Tight Spaces
A Premium Solution For End-To-End Logistics With SAP
New Technology Provides Small Businesses
Assistance In SCM
• Its design is water resistant
• It provides stability for smooth operations
• It has lower maintenance requirements
USPs
• It can handle complex logistics projects
• It is an optimal integration of automation solution
USPs
• It focuses on small businesses
• The technology is less expensive
USPs
Compiled by Devyani P Korgaonkar
Cutting-edge solutions, continued
MARCH 2013 • SMART LOGISTICS • 19
PRICE TRENDS
Knowledge Partner: Transport Corporation of India (TCI); website: www.tcil.com; e-mail: irf [email protected]
Indian Road Freight Index (IRFI), a service introduced by Transport Corporation of India (TCI), is an index of weighted average lorry freight rates across various routes, calculated based on the route density and the dynamic freight rates of routes across the country.
IRFI Trend for February 2013
SMART LOGISTICS APRIL 2010
The RFI stood at 177 points in the month of February 2013, which is 3 points higher in comparison to thecorresponding period last year.
ZONAL FREIGHT TRENDSThe overall freight rates have increased by 0.44% as compared to last month. The freight rates from Kolkata registeredthe highest increase of 8.16% in comparison to last month because of shortage of vehicles at Kolkata. This was due toless incoming materials like hosiery and agricultural products from the south to Kolkata. The freight rates from Delhiregistered the maximum reduction of 5.06% in comparison to last month due to sufficient availability of vehicles andless movement of cargo from the North.
INDEX TREND FOR 5 YEARS:
COMMERCIAL VEHICLES DOMESTIC SALES: The overall Commercial Vehicles (CVs) segment registered a de-growth of -0.37% in April 2012–January 2013 ascompared to the corresponding period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) declinedby -21.37%, Light Commercial Vehicles (below 7.5 tonne) grew at 15.48%. In January 2013, M&HCVs’ sales further declined by -38.96% over January 2012.
FORECAST FOR MARCH 2013: The RFI in March 2012 was the same in comparison to March 2011. The freight rates in March 2013 are expectedto increase marginally because of the financial closing of many companies.
TRENDS FOR FEBRUARY (Y-o-Y)
180
178
176
174
172
170
168
1662008-09
171
175
174
177
2009-2010 2010-2011 2011-2012 2012-2013
172
20 • SMART LOGISTICS • MARCH 2013
N CONVERSATION WITHIN CONVERSATION WITH SHHHH NNNDD CHITRA SSSSSSS DDDDEEERA SSSS NNNNR SSSHHH EEEH S DDCCHITRA SHINDE
INDIAN LOGISTICS LANDSCAPE FROMTHEN TO NOW…Two decades ago in India, the landscapewas very different. Express distribution,courier and 3PL companies were in their nascent stage. We were the generation that introduced systems into transportation. It was a time whensupply chain was a term not used inIndia. Businesses focused on sales anddistribution through their Customs House Agent (CHA)/Carry ForwardAgent (CFA). The post office was themost reliable way to reach rural India.No one else had any reach beyond thelarge locations. Back then, businesseswere willing to spend additional amounts for speed and quality.
Today, things have evolved. Globally, express distribution is maturing. A lot of focus has shifted towards ensuring efficiency optimisation and consolidation of cost centres. Customers today expect speed,information and quality as part of thestandard product offering and look for a lot more customisation and working in partnership to drive costs out. Many customers understand supply chain and the value chain a lot better today.They link the physical, financial andinformation flow and understand well
the cost across all three. We also findfrom experience that it is not possibleto completely replace a distributor model. The distributor model providesextensive network and reach without making the investments in assets to access these markets. Some factors haveremained same though, for example,
the policies, permits, challenges inmanaging transportation, working conditions for drivers and handlers.Besides, the risk levels continue toremain high.
KWE’S MAJOR CONTRIBUTION TO THE JVKWE brings to the table both
financial and strategic partnership. Asa strategic partner, GATI-KWE hasaccess to KWE’s global customer base.It is also promoting and increasing itsnominated business to India. Japan’strade and manufacturing interests inIndia are on the rise. Additionally,Japan is the largest investor in
We are now looking at KWEality as the new way to define quality
“They do not expect to see Japan here; however, they expect that we will come close to providing world-class serviceswith best in class process, systems and service levels. They work very closely with our team to take us to the next levelof continuous improvement—the Japanese way,” avers Chitra Shinde, President, Gati-KWE, during an interaction with
Suprita Anupam. Excerpts...
MARCH 2013 • SMART LOGISTICS • 21
infrastructure investments in India.We also see a strong cultural alignment between the two organisations. Bothare conservative, process oriented,people and technology-drivencompanies. Perhaps, the largest contribution from KWE is raising the expectations of quality. They donot expect to see Japan here; however,they expect that we will come closeto providing world-class services withbest in class process, systems andservice levels. They work very closely with our team to take us to the next level of continuous improvement—theJapanese way.
LATEST TECHNOLOGIES @GATI-KWEWe take great pride in being aheadin the area of automation. We havesome exiting innovations. Recently, wereleased our new customer interfacetool, which has received a lot of positive feedback from our customers; we seek to incorporate their suggestions. Thefact that they use these tools createsthat close bond with us by going through the cycle of ‘learning to usethe tool’. Besides, the tool, the AutoSPR, also gives them a 3600 view of their distribution pattern, servicelevels, revenue, weight, outstanding,invoices and proof of delivery, among other features.
We have also launched our planning modules on pickup, delivery and loadplanning. These tools help improveefficiency levels so that we can keep thecosts low or manage higher volumes of business. These work on mobile apps,which are low cost and work acrossthe country. We are positive that thiswill improve our customer satisfactionlevels as well.
KEY INDUSTRY VERTICALS Automotive spares, after markets andpharmaceuticals continue to dominate.Recently, we have seen a lot of growth in retail and garments. We are alsofocusing on single brand companieswho cater to the upmarket segment.Reverse logistics is on the rise. There
is a lot of growth in E-commerce inthe ‘B’ to ‘C’ deliveries.
KEY GROWTH OPPORTUNITIES…We see growth opportunities inworking with our customers toprovide them supply chain solutionsacross the whole value chain fromdemand planning & procurement toinventory management, warehouseoperations, distribution and reverselogistics.
AS PER YOUR OPINION, WHICH ARE THE IDEAS THAT ARE YET TO BE IMPLEMENTED BY INDIAN LOGISTICSSECTOR Just like Fed Smith is known globally,our Founder and CEO MahendraAgarwal is considered as the ‘Father of Modern Express Distribution’ inIndia. Agarwal has contributed to at least 40 new words relating to logisticsthat are unique to India and Gati. Inthe time to come, you will see that these will continue to emerge.
We are now looking at KWEality as the new way to define quality. Wehave also rolled out G-force, which isa great internal tool to upskill our teamon principles of lean, sigma, problem
solving and analytics, among others.
RAIL LOGISTICS WITH REGARDS TO ROADWAYSRail has certainly been taken over by road transportation. Indian highways,in the last decade, have tremendously improved and rail is fast catching up to become a major ‘mover’ again with the dedicated freight corridors. And with roll-on-roll-off models, we should see railways pickup
momentum. At Gati, we have a large share of parcel movement on dedicatedtrains. A number of policies require some modifications. We are closely working with the authorities to permit amendments that facilitate the growthof rail operations.
CHALLENGES ENCOUNTERED The sector faces challenges such as regulatory controls, interstate permit requirements, ever-rising input costs and high interest rates, resulting in lower creation of vendor, margin erosion and shortage of skilled manpower.
Proud projects There are many. The most recent wouldbe the joint venture with KWE within 18months from initial discussions.
What has been your driving force and what inspires you the most?A sense of purpose and a determinedwill. Creating something of lasting legacy linked to quality and technology fascinates me the most.
As Lady Transport Personality of the Year, your message to the young lady logisticians to deliver better than the most…Today, women are excelling in all spheres of life. They travel in space, fly planes and run banks. The limitations no longer come from external environment, but from thosewe create for ourselves. In modern India, to the focused and determined, nothing canstop you; certainly, not gender. Logistics is no different to any other specialisation. At GATI-KWE, we offer equal opportunities and encourage women to take on positions of higher responsibility; but we do not find many takers. However, in front lineoperations, we have a very high number of women supervisors.
UP CLOSE & PERSONAL
22 • SMART LOGISTICS • MARCH 2013
SPECIAL FOCUS SPECIAL FOCUS PORT & SHIPPING POLICYPORT & SHIPPING POLICY
SUPRITA ANUPAM
AFTER the successful implementationRof many Public Private Partnership (PPP) projects at ports, the government has shown the green signal to a number of similar projects to give the port a face lift and enhanceits efficiency while ensuring that theculture of delivery leads from the top.However, the support of government authorities and executive management is a critical requirement to ensure its successful implementation.
The recent maritime agenda proposes investments of $25 billion in 424 projects in major ports and $33.5billion in non-major projects by 2020.More than 80% of the investments islikely to come from the private sector in the case of major ports, while,in the case of non-major ports, thefigure is likely to rise to 96%. The target seems to be ambitious andneeds thorough key considerationsand guidelines considering that the
initiative has developed from theinitial policy concept to avoid any delay. These include risk management,governance implementation, planning procurement and contract management stakeholder management, resourcescommunication and monitoring & review.
EXECUTION DELAYSWhile many PPP projects are being delayed owing to environmentalclearances, the slow bureaucraticprocedures at most major ports inpre-tendering and the post-awardstages such as delays in dredging, thelengthy tariff-fixing process and poor connectivity to the hinterland, tariff setting is swelling as another big hurdlelimiting private sector investments. ThePorts Regulatory Authority Bill is yet to address the private sector concerns.Land acquisition is another issueaffecting all the infrastructure sectors
including roads, ports, urban transport,etc. In most cases, the government ends up handling only 30–40% of theland and the responsibility of acquiring the remaining portion of the land isleft to the developers.
This was one of the biggest reasonswhy a port connectivity project in thesouthern region suffered delays onaccount of land acquisition leading tolosses in the form of liquidity damages.It also sought assistance from theShipping Ministry to expedite theprocess and the Public Investment Board had to approve project cost escalations from `3.95 billion to `5.57billion.
There are many other projectsthat will meet the same fate. The
Comptroller and Auditor General(CAG) has pulled up the OdishaGovernment over the loss of nearly `160 crore because of loopholesin resources and revenue sharing arrangement of port projects in thePPP route. In the 11th Five Year Plan, we failed to achieve the target investment by 54% of the target.However, those sitting at the helmare yet to learn from the mistakes.Union Shipping Minister GK Vasanannounced, “The government hasformulated a perspective plan for thedevelopment of the maritime sector,namely, ‘The Maritime Agenda2010–2020’. This plan has estimatedthe traffic projections and capacity additions at the Ports up to 2020.The Ministry has decided to takesteps for setting up a new major port each in Andhra Pradesh and West Bengal. Steps have been initiated toget the government approval for both
Framing goals & guidelines are not enoughThough the 13 major and 60 other operational non-major ports handle 95% of the country’s external trade by volume and 70% by value, many of the other fi gures are not as signifi cant. Also, the targets could not materialiseas planned. The insignifi cant inland water transport, level of containerisation, Custom procedures and insuffi cientconnectivity to their hinterlands all point out either to the lack of right policy initiatives or their execution.
SUSUSUUS PRPRPRPPRITITTITA A AAA ANANANANANANUPUPUPUPPPAMAMAMAMAM
MARCH 2013 • SMART LOGISTICS • 23
these ports. Development of minor ports comes under the purview of Maritime State Governments. Most of the capacity augmentation at all themajor ports is taken up with privateparticipation under the PPP mode.”
“To expedite the investment approval of PPP projects in the port sector, the government has recently enhanced the delegation of power tothe Shipping Ministry in line withthe National Highways Development Projects of the road sector. Steps havealso been taken to streamline security clearance procedures to expediteproject approvals,” he added. However,the figures suggest something else onground.
INLAND WATER TRANSPORT POLICYAccording to the Inland Water Authority of India (IWAI), the existing availability of vessels for Inland Water Transport (IWT) in the public andprivate sectors put together is less than400 vessels including tankers, bulk carriers, dumb barges and other vesselsof average capacity of 600 tonne. Tobring life into the transport system, theGovernment of India announced theInland Water Transport Policy under which it addressed some of the major issues such as:• Actively promoting the
IWT sector for it to take a reasonable sharein the intermodal mix of inland transport
• Increasing the coverageof national waterways and provision of necessary infrastructurefor shipping and navigation and in augmenting theIWT fleet
• Large-scale private sector participation for the creation of infrastructure and for fleet operations to supplement the government efforts
• To develop waterways for navigation with the necessary infrastructure such as fairway,
terminals, navigational aids andfleet so that the IWT modebecomes competitive and attractscargo dictated by market forces
• The government should act as aprovider, facilitator and regulator and, at the same time, offer variousconcessions to the private sector for its effective participation by way of investment for creation of enhanced IWT infrastructure andfleet operations.However, the major loopholes such
as land issues, rapid environmentalclearance, etc., were yet to besorted. Umesh Soni, VP & Head– Inland Water Transport Group,IL&FS Infrastructure Development Corporation Ltd, comments, “Inview of the nature of IWT projectsand the lack of private sector confidence in the sector, there is aneed to adopt a comprehensive project development approach. To ensurethat the legal/legislative frameworksare in place, the project is thoroughly prepared/evaluated, the technology options are evaluated, appropriatePSP options are selected and theconsultation process, involving variousstakeholders and institutions and soon, is carried out.”
NMDP INITIATIVESDue to National Maritime Development Program (NMDP, launched in 2005),the actual target surpassed the originaltarget by 63%; however, the 11th Planfailed to achieve by almost 50% andthe same is likely to happen in the 12th
Plan on ground. The reasons behindthe failure are that the programme didnot meet the investors’ expectations. It
failed to address the major concerns such as timely approval of documents fromgovernment authorities, simplification in contract procedures and so on.
As a result, of the 276 projects envisaged for the major ports, only 50, i.e., less than 20% of what was planned,were completed and only 74 were under progress by the end of FY10. After NMDP’s failure, the ‘Maritime Agenda’ was introduced. Under the Maritime Agenda, the government plans to invest `1,280 billion in major ports in 424 projects against 276 under the NMDP and develop non-major ports with an estimated investment of `1,680 billion. This is a 10-year plan; hence, it is difficult to predict the exact figures, but the last two years’ figuresagain failed to achieve the yearend target.
A GENUINE ENGAGEMENT FOR IMPLEMENTATION NEEDEDPPP projects comprise of local as wellas foreign investors. Private firms are least willing to tackle the land acquisition, security and other infra concerns. Guidelines are not enough.According to M Gunasekaran, Public Information Officer, Ennore Port, “Indian investors show better
investment figures when compared to foreign counterparts. If we talk about the policy initiativesbased on materials EXIM stats, then, except coal, nothing else gains significance on ground.”
Thus, the ground statslead to the conclusion that it is easy to make certain
guidelines, but the hardest thing to get right with implementation is to see whether rubber hits the ground with rolling out. Sooner or later, theauthorities will have to engage with the management to ensure genuine implementation.
(With inputs from FICCI infra report)
(Figure in ` billion)
Category Major Ports Non-Major Ports
Deepening of channels and berths 102 115
Construction/Reconstruction of berths/jetties 659 1,248
Procurement of equipment 62 103
Rail/Road connectivity works 79 93
Other works 379 121
Total 1,279 1,679
24 • SMART LOGISTICS • MARCH 2013
SPECIAL FOCUS SPECIAL FOCUS RAIL SECTORRAIL SECTOR
ARINDAM GHOSH
INDIA’S overall freight volumes are set to double from the existing 3 billion MT to around 6 billion MTby 2020. The Indian manufacturing sector has been witnessing strong growth, especially in the recent times,and the sector targets 25% share in thecountry’s GDP. Given such high levelsof anticipated growth, there is boundto be a huge opportunity for railways. Over the last few years, rail freight traffic has grown in the range of 7–11%annually. The figure for freight carriedby Indian Railways has increased from
670 million tonne in 2005–06 to 890million tonne of freight in 2009–10;by the end of the 12th Five Year Planperiod, Indian Railways is expected tocarry about 1.5 billion tonne of freight traffic. Since the privatisation of container rail movements in India, theefficiency that has been brought intothe system is highlighted by the fact that Indian Railways has achieved a higher growth in rail container freight market, which has grown by 15.8 % in fiscal year 2010–11 as compared to theoverall freight growth of 6.6%.
IMPLEMENTED MEASURESThe projected investment required
in the rail space for the 12th Plan is a whooping `750,000 crore. It will highly difficult for the government to solely raise funds, thus giving ahuge opportunity for the privatesector to invest in it. Since 2006–07, when private players were first permitted to enter and operate in thecontainer freight segment by state-run CONCOR, the share of the firmhas declined from 100% in fiscal year 2006 to about 77% in fiscal year 2010.Further, the Indian manufacturing sector has seen good growth in recent
times. Most of the bulk manufacturing industries like iron & steel and cement,have expansive capacity expansion planslined up in the near future. As most of these commodities are generally movedby rail, there is bound to be a hugeopportunity for the container trainoperators on the domestic front, whichopens up huge scope for business for the companies in the segment.
A combination of dearth in investment in the rail space and thecapital intensive nature of railwayshas strongly pushed for Public PrivatePartnership (PPP) agreements in thesector. It is fast being realised that PPP is a must for the sector to grow.
However, to encourage such modes of financing, it is crucial for the government to bring in more transparency andclarity along with investor-friendly norms. The government needs todesign models where the interests of the private player remains protected;it needs to implement a mechanismfor speedy implementation of projects,service quality, create a provision for capacity expansion and give customer interests utmost priority along withinvestor-friendly norms. If the shareof PPP investments has to come
anywhere close to the targeted one-third of the total plan outlay, thenIndian Railways will have to take somesignificant steps such as introducing investment-friendly policies andmaintaining consistency with existing policies. It needs to treat private playersas partners & not competitors in order to regain the lost confidence of privateinvestors. Such steps would play a key role in improving the participation of the private sector and may see a risein the figures for the total number of private firms operating in the railways.
According to ASSOCHAM,there is a strong need to focus onsafety and modernisation, along with
On the track to prosperityOn the track to prosperityGiven that today India is one of the fastest growing economies in the world, the country’s logistics sector is expected
to witness consistent yearly growth of around 10% during next 10 years. Additionally, India’s international trade is growing annually at 10–12%. Further, rail targets to increase its market share of freight movement in the country
from the current 35% to at least 50% by the end of this decade. According to industry players, to support the growth of railways, infrastructure creation, encouraging public private partnerships along with focus on modernisation &
safety will come as a boon in this direction.
MARCH 2013 • SMART LOGISTICS • 25
improvement of existing track androlling stock and separation of passenger and freight train lines. Speaking on theaspect, Rajkumar Dhoot, President,ASSOCHAM, said, “We have 63,974route km, 1,31,206 bridges, 9,000locomotives, 51,000 passenger coaches,2,19,931 freight cars operating 19,000trains each day transporting over twomillion tonne of freight and 23 millionpassengers everyday touching 7,083railway stations across the length andbreadth of this vast country, yet sadly lack corporate culture.”
POLICY INITIATIVES Dedicated Freight Corridor (DFC)Commenting on the importance of Dedicated Freight Corridor (DFC),RK Gupta, MD, Dedicated Freight Corridor Corporation of IndiaLtd (DFCCIL), says, “In order toaugment the rail transport capacity to meet the growing requirement of movement of freight traffic, IndianRailways has decided to developfreight corridors along its busy trunk routes. These corridors will result insignificant addition to the Railways’transportation capacity and immensely improve the efficiency of rail transport,which will have a major bearing on thelogistics costs in the economy.”
Countries such as Japan are playing a critical role in establishing theseprojects. Recently, Japan announcedloans of $2.26 billion for the secondphase of the ambitious Delhi-MumbaiFreight Corridor and also a thirdinfrastructural project in south India.Elaborating further, Gupta adds that the average speed of movement of thefreight would be increased to 70 km per hour from the present figure of about 25 km per hour, showing a three-foldincrease; it will dramatically reduce thetransit time and the clearances will bemuch faster. Further, special wagonswill be introduced; these will have highcarrying capacities with higher asset utilisation. This will open up hugebusiness scope for all the stakeholders.He avers that the implementation of
DFC is expected to generate two major impacts on the freight movement, viz:• Shift of freight from road and low
carbon-intensive mode rail transport • Improvement in energy-efficiency
of freight rail through adoption of improved technologies.As far as the latest development
on DFC is concerned, according toGupta, RITES will be completing thefeasibility study by December 2013for building four dedicated freight corridors, which is part of the proposedphase 11 of the DFC projects. `95,000crore has been set apart for the phase11 project and, from that, `60,000crore is for investment in the creationof network. Further, referring to thefunding pattern of the two corridors,Gupta informs that the easterncorridor is being funded by WorldBank and US$2.7 billion has already been committed and the WesternCorridor, being funded by the Japanesedevelopment agency, JAICO.
In addition, India and Chinahave signed an MoU on technicalcooperation in the railway sector. Under the agreement, both the countrieswill enhance mutual cooperationacross various areas of rail technology including high speed rail, heavy haulage and station development. Thetwo sides will, inter-alia, undertakeexchange of information on policies,training and exchange programmes,site visits, joint symposiums, etc.Schemes to attract private investmentsTo facilitate rapid development of anetwork of freight terminals withprivate investment to provide efficient and cost-effective logistics serviceswith warehousing solution to endusers, a new scheme—Private Freight Terminal (PFT)—was launched inMay 2010 by the government. Thescheme facilitates traffic handling at theterminals by private investors, thereby increasing Indian Railways’ market share. Further, in order to increase railshare in the commodities like fertilisers,molasses, edible oil, caustic soda,chemicals, petrochemicals, alumina,
bulk cement and fly ash, etc., wherethe rail coefficient is traditionally very low, a scheme namely Special Freight Train Operator Scheme has been launched to attract private investment in special purpose wagons required for transportation of these commodities.
CHUGGING AHEADSeveral initiatives have been taken to improve the productivity of the rail sector. For instance, Asian Development Bank (ADB) and the Government of India have agreed to implement Railway Sector Investment Program, which is aimed at improving rail freight services and passenger transport routes. The initiative will further help India improve rail servicesalong some of its busiest freight andpassenger transport routes, providing double track for about 840 km of railroutes and electrifying about 640 km.New signaling will also be installed. ADB will also support accounting reforms to improve operational and financial efficiency at Indian Railways.The programme will:• Reduce fuel consumption and
enhance energy efficiency• Reduce pollution• Enhance railway safety • Increase the line capacity, benefitting
consumers and producers of goodsand services
• Improve staff productivity• Incorporate innovating financing
modalities by pursuing carbon credits under UNFCCC.The total cost of the Railway Sector
Investment Program is US$1,144.6 million. Railways is trying to improveits performance levels through support from the government, but it continuesto face strong competition from the other modes of transportation like road and air. However, special attention must be paid to augment the carrying capacity of the trunk route, which accounts for only 16% of the network,but carries 50% of the traffic.
26 • SMART LOGISTICS • MARCH 2013
SPSPECECCIAAII LL FOFOCUCUSSSPECIAL FOCUS RROOOOAAAADD PROOJJECTSS ROAD PROJECTS
ARINDAM GHOSH
INDIA has the second largest road h h d l dnetwork in the world; however, it still lags behind the US and Chinawhen it comes to paved roads andnational highways or expressways.The country’s national highways constitute a mere 1.67% of the total road network, but they carry 40% of the road traffic. National and statehighways constitute less than 6% of thetotal road network, but they account for almost 80% of the road traffic. Theshortage of multi-lane highways, poor conditions and stoppage delays lead to congestions, accidents, breakdownsand high maintenance cost of roadsand vehicles.
India’s road freight volumes and thepopulation of vehicles are increasing at a CAGR of 9.08% and 10.76%,respectively; but the road length isincreasing at a CAGR of 4.01%. For
instance, a vehicle on Indian roads canh l I d dclock an average speed of only 20–25km per hour covering 250–400 km in aday, while in other developed countries,a vehicle can cover 700–800 km in aday. Annually, a truck on Indian roads covers only 60,000–1,00,000 km indeveloped countries, whereas a truck in the US can travel up to 4,00,000km in a year.
POLICY INITIATIVES REQUIREDWhile the government has been paying attention to the logistics sector andrapid growth of the Indian economy,it is not being adequately attentive tothe needs of the road infrastructure.Lack of funding for the development and maintenance of roads has not only hampered the development of new road infrastructure but has alsoled to the deterioration of existing
roads. The problems faced by roadsd Th bl f d b dtoday are multifarious and the issuesand concerns require a multi-prongedsolution.
Commenting on the current scenarioin India, Vineet Agarwal, Joint MD,TCI, says, “Logistics infrastructurecovering road, rail, waterways andair network is the backbone of theeconomy. As the Indian logisticssector is heavily dependent on roadsfor freight movement; improvement of road infrastructure becomes very important. In India, shortage of multi-lane highways coupled with poor road conditions and stoppage delaysincrease logistics costs by causing congestions, accidents, breakdownsand high maintenance cost of roads& vehicles.”
Elaborating on what is the needof the hour, he explains, “TCI
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development in the country. However, in such a scenario, the Government of India has taken various initiatives like DMIC, a target for construction of national highways at 20 km per day. Industry players recommend
that reducing burden on the road infrastructure by devising an appropriate multi-modal transportation model, along with greater FDI in key logistics infrastructure development areas like dredging, port connectivity, etc., and timely
execution of road sector projects will come as a boon for effective logistics and supply chain movement.
MARCH 2013 • SMART LOGISTICS • 27
recommends reducing burden onroad infrastructure by devising anappropriate multi-modal transportationmodel that not only encourages privateparticipation but is also efficient. Wealso recommend greater FDI in key logistics infrastructure development areas like dredging, port connectivity,etc., for proper development of multi-modal transportation in the country.”
He adds, “The government shouldtake adequate measures to encourageinvestment and ensure timely executionof large projects, including roaddevelopment projects. Implementationof these projects under the PublicPrivate Partnership (PPP) routeshould, therefore, be done on a priority basis apart from allocating long-termamount towards road infrastructuredevelopment through dedicated debt funds to ensure sustained development of the sector.”
He also points out, “Another important issue that needs attentionis wastage of time due to stoppageson national highways for cumbersomedocumentation process. This can beaddressed by bringing uniformity in thetoll charges through the introductionof a centralised toll mechanism,reducing documentation, checking unauthorised payments through agentsand development of access-controlledexpressways.”
MAJOR STEPS TAKENEarlier, the government had set atarget for the construction of nationalhighways at 20 km per day, whichtranslates into an annual constructionof more than 7,000 km. In the last 15 years, the network of nationalhighways has more than doubled.With increasing importance, plans areon to increase the network by 20% to85,000 km at the end of 12th Plan.The Plan is expected to see moreinvestment in roads with more privatesector participation.D e l h i - M u m b a i I n d u s t r i a l Corridor (DMIC)DMIC has completed all the master
plans and has got the necessary approvals. The land acquisition processfor the project is in various stages; inGujarat and Maharashtra, the progresshas been good. Other states such asHaryana and Rajasthan are also moving in the right direction. It is expected that in 2019, DMIC will be operational,initially in Gujarat and Maharashtra.Stating the effect the project will haveon the economy, Amitabh Kant, CEO& MD, Delhi-Mumbai IndustrialCorridor Development CorporationLtd (DMIDC) says that DMIC willdouble the employment potential inseven years; triple industrial output in nine years and quadruple exportsfrom the region in 8–9 years. He addsthat in the case of DMIC, given that this project connects both Delhi andMumbai—the two most important regions for economic activities in thecountry—it will come as a boon toattract investments. However, it isimportant to bear in mind that DMICand Dedicated Freight Corridor (DFC) projects will lead to enormousamount of traffic, which will requiregood quality roads, highways andexpressways.
Highlighting some of the major initiatives taken by the government,Agarwal informs, “The sector started
receiving greater government attentionsince the last decade when steps were taken to increase public funding for the sector in Five Year Plans with the launch of National Highway Development Program, Accelerated Road Development Programme for remote areas like North East region, etc.”
“The government is now also financing the development and maintenance of roads by creating a Central Road Fund (CRF). Steps to enhance sector capacity and improve efficiencies through a clear policy directive for greater private sector participation (PPP) are also leading to faster development of roads in India,”he continues.
“Despite all the measures taken by the government in the last decade andits benefits, roads in India has a long way to go to meet global standards,”Agarwal concludes.
PROGRESS IN THE PPP MODEAccording to a study, the highest number of projects under operation, under construction and under bidding in the PPP model in the country during the period is in roads. Thereare about 115 road projects worth over `21,600 crore under operation in the`̀PPP mode, besides 219 road projectsworth `1.65 lakh crore were under construction and about 98 projects worth over `51,000 crore were under bidding.
There are a total of about 881 projects worth over `5 lakh crore being carried out in the country as of August 2012. Additionally, there are about 230 projects worth about `70,000 crore under operation, about 432 projects worth over `3.8 lakh croreunder construction and 172 projects worth over `78,000 crore under bidding based on the PPP mode. Witha share of almost 65%, roads ranks on top with the highest share in projectsunder bidding in the PPP mode.
• Uttar Pradesh, with the highest share of over 33% among states, has 15 road projects worth over `55,000 crore under construction in the PPP model as on August 2012.
• Gujarat ranks second with a share of over 8% and has about 22 road projects worth over `13,600 croreunder construction in the PPP mode
• Tamil Nadu with 21 road projects worth over `12,700 crore under construction has the third highest share of about 7.7% followed by Maharashtra 7.3 % and Andhra Pradesh 5.8 %.
ASSOCHAM FACTS & FIGURES
28 • SMART LOGISTICS • MARCH 2013
SPECIAL FOCUS SPECIAL FOCUS AIR CARGO AIR CARGO
WITH 35% of goods’ value traded internationally, air cargo representsabout 10% of the airline industry’srevenue. In time, it has become the
country’s economic health manometer owing to the kind of goods traded,dependency on economic buoyancy and logistics service. So far, the rapid
growth of international trade hasboosted air cargo market prospectsin India. With trade growing at over 25.3% over the past five years,increased globalisation, manufacturing firms and IT services, the supply chainmarket has resulted in an accelerateddemand from Indian air cargo servicesmarket. But the lack of dedicatedcargo airports, infra facilities have beenposing a big threat to its growth.
According to the Working Group Report of the Ministry of Civil Aviation (MOCA), “There issignificant untapped potential for air cargo in India. An indication of thesame can be gauged from the fact that the total air cargo volume of 2.3million MT handled in FY11 by allIndian airports put together is less thanthat handled by individual airportslike those at Hong Kong, Memphis,Shanghai, Incheon, Anchorage andParis.” To keep up the pace, thegovernment has finally come up witha number of policies such as open sky policy and dedicated cargo airports that have acted as a sanjivani for the Indianair cargo industry. With the policy decision, India has been able to cater to the needs of rising opportunitiesto the cargo airlines and, at the sametime, benefit the consumers emanating from the competitive environment.
MOCA INITIATIVES The proportion of international cargohandled to the total cargo throughput handled is the highest at Chennaiairport (76%) followed by Mumbaiairport (70.2%). The proportion of domestic cargo throughput to the totalcargo handled is the highest at Kolkataairport (65.3%). After measuring air cargo logistics performance in terms of dwell time, transshipment, throughput efficiency, handling efficiency, cargoterminal facility and some other parameters, the Working Group notedsome of the major bottlenecks in thecargo logistics developments, such as: • Inadequate and overloadedinfrastructure facility
Celebrating 100 years of civil aviation, India has already reached the Top 10 aviation markets in the world; the vision is now to enter into the Top 3.According to AAI, the total freight traffi c handled by Indian airports increasedat a CAGR of 10.9% (while the international cargo traffi c grew by 15%) in lastfi ve years to reach 2.33 mmtpa by FY11. In spite of this, the current share of air cargo as compared to other modes of cargo transportation is fairly low in India. To improve the situation with CAGR of 14–16%, the governmenthas introduced some major policy initiatives such as open sky, inter-modal services, routing fl exibility and amendments on tariff, security, safety & codeshare arrangements.
SUPRITA ANUPAM
All set toTake Off!
MARCH 2013 • SMART LOGISTICS • 29
• Gaps in key facility infrastructure at cargo terminals in gateway airports• Bottlenecks in truck docking • Inadequate X-ray screening facilities• Lack of associated trained manpower• Absence of off-site facility such asAir Freight Station (AFS) for cargoprocessing• Lack of DG-qualified staff leading tohigh turnaround time• Security arrangements for the air cargo complex, special cargo infra, coldchain facility and so on.The operational hurdles included:• Operationalisation of AFS• Requirement of 100% export shipment examination leads to delay• Duplication of documentation,custom process and lack of inter-linkage of agencies.The Working Group has come upwith some major initiatives based onthose observations, viz:• Need for clear guidelines regarding
minimum infrastructure that an airport must mandatorily have for handling such shipment
• Enhancing the truck dock area andreducing dwell time by introducing a slot system for entry of goods could also be a solution to reduce or overcome the pile up at the export terminals and ensure that trucks enter the airport with a pre booking and do not un-necessarily congest the airport area.
• The number of X-ray screenersneeds to be increased so that the machines are manned for longer hours by different personnel. Further, on-site engineers must beintroduced so that they can provideimmediate solutions and reduce thedown time of these machines.
• There should be a Central singlebody clearance system for clearanceof all building proposals for air cargo complex. which should clear the proposal The report alsoindicates that initiatives need to betaken from Central Board of Exciseand Customs to solve the customcost recovery issue, to reduce delay
in processing of export cargo out of cargo terminals and introductionof digital signature to reduce paper work.
ESTABLISHING AIR CARGO LOGISTICSPROMOTION BOARDThe Civil Aviation Ministry has set up an Air Cargo Logistics PromotionBoard with objectives to resolve inter-ministerial issues that affect the air cargo operations in the country. TheBoard will review, on a continuousbasis, the general and sectoral policy regime governing air cargo logisticsoperations and remove the bottlenecksto efficiency. The Board has beenconstituted to match up with needto handle increased demand for air cargo transportation and ensure rapiddelivery of goods. According to CivilAviation Minister Ajit Singh, the17-member Board with representativesof the level of Joint Secretary and abovefrom various Central Ministries andDepartments will have the following broad framework of functions:• To resolve inter-ministerial issues
that affect the air cargo logisticsoperations in the country andachieve better efficiency
• To review, on a continuous basis,the general and sectoral policy regimes governing air cargo logisticsoperations with a view to removebottlenecks to efficiency
• To review and monitor thefunctioning of Cargo FacilitationCommittee headed by Airport Directors of AAI and other private/JV airports with a view to review the effectiveness of these bodies
• To lay down policy guidelines for setting up of air cargo facilities at airports, air freight stations/cargovillages including guidelines for public private partnership model of development of these facilities
• To act as a coordinating agency to ensure expeditious clearanceof the proposals for setting upof air cargo facilities at airports,AFS/cargo villages in the country
subject to fulfillment of all statutory requirements
• To lay down performance standards relating to quality of service in theair cargo logistics supply chain to be monitored by the Airports Economic Regulatory Authority (AERA) for implementation
• To review the progress on development of major gateway airports as cargo hubs through facilitating transshipment
• To review periodical ly implementation of the proposals cleared by the Board.
APAO RECOMMENDATIONSAppreciating the required initiatives indicated by the Working Group Report, the Association of Private Airport Operators has further submitted some concern over some of the initiatives. Some of which are:• The Board and MOCA’s decisions
are bound to affect the risk factor and operationability of air cargo operators. The roles of each member within the Board must be well-defined with a meaningful and comprehensive functionality; otherwise it will dilute its essenceand objective
• Setting up AFS outside the airport is bound to increase the requirement of resources of customs, other regulatory agencies as well as facilitatory agencies. Hence, before taking up such decisions, a comprehensive analysis must be done based on its present capacity and future requirement whether separate AFS is required.
• The proposed ground handling policy is contradictory in nature.
• The issue of whether express cargo is aeronautical activity or ancilliary is a contentious issue. Policies should not be based on such opinions that go against the letter and spirit of OMDA and concession agreements.
30 • SMART LOGISTICS • MARCH 2013
OPINIONS & MORE OPINIONS & MORE TAAREK HINEDTAAREK HINEDI
CUSTOM DUTY CHALLENGES The existing Customs Duty structure in India is very complex due to the multiple components of various dutiesinvolved. The layered tax structure is a challenge that adds to the cost and delivery time in the distribution of goods.Another aspect that is a challenge with regards to Customs is the frequent alterations in the Customs notifications.Many a times, this creates confusion for importers/CHAs. This can be avoided if the Board for Customs Duties publishes a master notification/circular comprising all the notifications issued during the financial year. The master notification shall supersede all previous notifications issuedon the subject in past. This will greatly aid importers/CHAs and hence, avoid confusions.
THE SOLUTIONThere is an urgent need to modernise rules and regulations to cope with changing times. Inefficient use
of technology and inadequateinfrastructural support are major issues faced by expressservice providers. Frequent Customs system outage at the
various airports across India is an example. The system outage impacts the clearance dwelltime, resulting in an increase in transaction cost. Systemupdates could take place during the night and not in theday. Excessive detentions and examinations also drive upthe costs & dwell times and defeat the purpose of the express. When compared to slower cargo movements, theexpress has to be handled speedily since it is intended for time definite transactions that enable commerce globally.
To overcome the issues currently faced, advancementsin infrastructure and technology are extremely crucial. At FedEx, we believe that technology advancement canplay a huge role in overcoming some of the challengesthat the air cargo industry is faced with. Our various technological investments have enabled us to automate many processes to save time, increase productivity, improveoperational efficiencies, customer relations and reduce cost.For example, FedEx has introduced automation at the
clearance operations at the gateway in Delhi. This systemincludes automated conveyor belts, supported by scanning devices that can produce clearance type information on alabel used for efficient sorting. The introduction of thissystem has led to considerable savings in costs and time.
MORE INITIATIVES THAT NEED TO BE TAKEN INTO ACCOUNTFedEx Express works with the Customs authorities & various regulatory bodies to improve and streamline customs clearance. The Customs authority should continueto be the facilitator. Procedures must be simplified so that they do not add to transactional costs and delivery time.There should be no differentiator between import-export express shipment. Most shipment in the express industry are door-to-door, time definite and therefore, should undergo the same express clearance processes. Exceptionscould always be considered. Currently, for imports-exportsin India, there are a high number of shipment currently forced to undergo a non-express clearance mode (cargo),leading to delays and increased costs.
Some of the efforts, which will hasten the clearanceprocess and reduce the clearance dwell time and transactioncost substantially are:• Support regulatory functions like Additional Drug
Controller (ADC), Wild Life Range Officer (WLRO)and Archaeological Survey of India (ASI) being madeavailable on all working days
• Maintaining a record of additional documents, which is a mandate for certain industries like pharma, chemicals,leather and textiles will help duplication of efforts
• Customs should promote and encourage e-clearance and e-paperwork in all major transactions
• Customs should adopt the e-freight and e-DO concept and follow international best practices
• Decision on permissions from importers/exporters/airline/custodians need to be revisited by the Customsauthorities
• Excise functions including Export Oriented Units (EOUs) & Special Economic Zones (SEZs) shouldbe linked online with the Customs system through thee-trade platform. This will prevent manual interventionsand therefore, delays with regard to submission of export proofs to respective excise zones of EOUs & SEZs.
Taarek Hinedi, MD (India Operations), FedEx Express, highlights the policy initiatives desired in the Indian air cargo industry.
Excise functions including EOUs & SEZs should be linked online and should promote e-processing
MARCH 2013 • SMART LOGISTICS • 31
GOVERNMENT INITIATIVES IN WAREHOUSINGGOVERNMENT INITIATIVES IN WAREHOUSING SPECIAL FOCUSSPECIAL FOCUS
PRATEEK SUR
WE, as individuuals, always complain about the government not taking proper measures and creating policies for controlling inflattion and helping tthe common public. BBut this assumption is not completely truue. The government is always on its toes. With respect to warehousing and distribution cenntres, the government helps by aiding in the forrmation of Free Trade Waarehousing Zones (FTWZs)), logistics parks, etc.
FREE TRADE WAREHHOUSING ZONES FTWZs were esstablished by the government to build infrastructure tofacilitate import and export of goods & services with the liberty to accomplishtrade dealings via free currency. Thesezones are located close to seaports, airports or dry ports, so that they canbe effortlessly accessed by road, rail, air and water.
The Special Economic Zones Act 2005 pronounces a FTWZ to be a special kind of Special Economic Zone (SEZ) that is governed by the necessities of the SEC Act. FTWZs are foreign territories to continue business and are predicted to be integrated zones to be used as global trading hubs. The minimum area of development under an FTWZ is 0.1 million sqm, with 100% Foreign Direct Investment (FDI) approved.
With FTWZs, the government anticipates to spawn more employment prospects as a consequence of enlargedorganised warehousing activity due to better competitiveness among industries, sequentially enhancing theeconomy.
LOGISTICS PARKSA logistics park is a predetermined area that smoothens the progress of native and overseas trade by providing services such as warehousing, cold storage, multi-modal transport facility, Container Freight Stations
nd Container Depot (CFS), Inlantc. Logistics parks (ICD), etloading & unloading facilitate
go for distribution, of cargtr ibut ion, and redisaging & repackaging. packa
ey are developed in Theenvirons of budding the
dustrial hubs. Specialty indgistics parks are being logected for industries erech as automobile,suca r m a c e u t i c a l ,p hculture, electronic agricware and aerohardwry. These parks are industrhrough well-laid rail linked thmulti-modal transport links and mgistics parks are similar facilities. Logwever, unlike FTWZs,to FTWZs; how
to the indigenous they also cater market.
WAREHOUSING (DEVELOPMENT AND REGULATION) ACTIn spite of the significance of agriculture in the financial system, no sufficient steps have been taken to safeguard the agricultural produceof the nation. The coming into effect of the Warehousing Development and Regulatory Authority (WDRA) made provisions for the development and regulation of warehouses. The government commenced the Negotiable Warehouse Receipts (NWR) system to help farmers increase access to loans from banks and permit the transfer of ownershipof that commodity stored in a warehouse without having to deliver the physical commodity. NWRs are negotiable under the Warehouse (Development and Regulation) Act and are regulated by WRDA. Thesereceipts are likely to perk up the borrowing capacity of farmers as wellas the quality of the bank’s loaning services in the agriculture sector. Also,it would boost liquidity in rural areasas well as give confidence to better
The General Elections are knocking on the door and this Budget might be the last Budget that this Cabinetwould formulate. If they want to winhearts and hold the reins, then they would want to put their best footforward. So, while taking cautioussteps, they would want to look be-fore they take leaps towards glory.Warehousing might be a small seg-ment, but it forms a major chunk of the entire industrial sector votebank. There have been some goodpolicies and regulations that havecome up for this sector and thereare some more that would help bet-ter the profi ts for the farmers, easethe infl ation on the common manand fi ll the banks while satisfying the national state treasury.
32 • SMART LOGISTICS • MARCH 2013
price risk management in agriculturemerchandise.
The provisions of WDRA also lead to amplified efficiencies in the lending portfolios of banks, as well as further enhance the interests of lending institutions in ensuring credit with reference to goods in warehouses.The NWRs will enable the transfer of ownership of agricultural commoditiesstored in warehouses without having to deliver physical commodities to thefinancial institution. This, in turn, islikely to lessen the wastage/pilferage of goods during their transport fromthe place of production to the custody of banks/financial institutions. The implementation of warehousing receipts under the supervisionof WDRA ensures the effortless functioning of the system to promotethe development of warehousing in India.
NEW TAX POLICIES TO REDUCE SUPPLY CHAIN COSTSThe government has launched goodtax structures to lessen supply chainexpenditure and also to egg onthe partaking of private players in the system. Octroi was one of the traditional taxes initiated by thegovernment. This was establishedwith a view to develop warehouses and transshipment hubs outside octroi/state boundaries. However, it got stiff opposition from logistics organisationssince they tolerate delays at the octroicheckpost as they guarantee that only goods which require to enter theoctroi zone do so. Further delays arealso implicated in pre-paying octroi on other goods and accumulating therefunds later.
The implementation of VAT playeda momentous role in dipping logisticscosts. VAT was initiated to steer clear of the cascading effects of tax as it wasbeing paid at every level. However, asimplified tax system will help logisticsplayers cater to several varied marketsand tender end-to-end solutions far more efficiently and at much lower
costs. Private sector participation playsan imperative role in the emergent path of the warehousing sector swiftly.Illegal warehousing can be restrictedby the government by putting forwardstricter and clearer rules. This willfacilitate deeper diffusion by globaland indigenous players into thewarehousing sector. The traditional taxpolicies to promote this proved futileas they had a cascading effect on thedownstream industry, which, in turn,led to higher cost for such industries.
The government had then taken astep ahead to phase out Central SalesTax (CST) and introduce Goods andServices Tax (GST), anticipated torevolutionise the complete warehousing sector. GST, with a consistent andstandard tax rate, will increase revenueby maximising tax collections. It will also aid the logistics sector toreorganise itself. Additionally, it willfacilitate manufacturers to store anddistribute goods across the country.This tax structure will integrate thecountry economically and also makecheaper goods available to the commonman.
INDIAN WAREHOUSE IN THE GLOBALMARKETIndian warehouses are not in a very ‘worldly prepared’ state; they are stilldisaster prone.
According to Devdip Purkayastha,President, CHEP-India, “Indianwarehouses are not disaster proof.In fact, only an estimated 15% of warehousing space is categorised under organised players, the remaining 85%is a mix of unorganised players, foodgrain warehouses and other privateplayers.”
Elaborating on where Indianwarehouses stand in the global market,Purkayastha adds, “Frankly speaking,we are not in the best position toprovide an answer on where warehousesin India stand compared to globalstandards. In India, we have seen thebest in class and worst of warehouses.We are convinced that we have thecapability to achieve the best standards.Currently, it is driven by market forcesthat dictate the price, quality and other parameters of warehouses.”
To achieve the standards of aglobally renowned warehouse, Indiastill needs to go a long way. Therules and regulations formulated by the government should be addressing the roadblocks present in front of the industry. Purkayastha adds, “Thebiggest roadblock right now is ‘whowill pay the cost?’ The investor/developer/3PL is concerned about whether they will get customers whowill pay for a ‘state-of-the-art disaster-proof warehouse’ or will it end-up asa high cost unviable ‘white elephant’?It is surely a thin line between having world-class facilities and still managing costs to remain competitive.”
The government needs to bemindful of such obstacles in thepath and thereby uplift the sector.There are some things that should bedone with utmost importance. “Thereis a need to elevate our status—createan environment where the industry starts talking on storage norms,warehousing standards, food handling laws, safety norms even beforethey think of cost. There is a clear need to shift in focus and priorities,which has to be driven by the industry,”says Purkayastha.
Government initiatives in warehousing, continued
• Customised categorisedwarehouses for industries such aschemicals, food, electronics andoil, among others.
• Sophisticated freezer/cooler facilities
• Break bulk, containerised and dry cargo storage facilities
• Controlled humidity warehouses• Enhanced transportation facilities• World-class information system
for cargo tracking, etc.• Offi ce space• Support facilities and amenities
like medical facility, canteenservices and business centres
FEATURES OF FTWZs
MARCH 2013 • SMART LOGISTICS • 33
PLANS, STRATEGIES AND HURDLES TO TAP THE RURAL POTENTIALThe government is not the only responsible for the upliftment of ruralparts; the working class should alsobetter themselves—as and when they improve, the sector would improve.
Purkayastha opines, “India is a lucrative business destination for most global companies; its vast ruralmarkets actually attracts them to acountry which is not very high onvarious performance indexes. Most organisations have specific ruralfocused business strategies in play as this is a very large market at thebottom of the pyramid. The peculiarity of this segment is the price sensitiveplay, which defines success andhence, cost control is the key performance indicator.”
There are several factors that drive the rural warehouse industries.Making a warehouse requires hugespace and thus the shift from citiesto rural areas. There are many driving factors, which boost this shift andthe government should makes rulesand policies that would help thesmooth transition of the same. “Ruralmarkets are driven by volumes andthus warehousing, transportation andmonsoon protection plays a pivotalrole in ensuring lower product damages& shrinkages helping in lowering overall delivery costs. These hugevolumes require bigger warehousing facilities with the ability for fast turnaround times.
Modernised and automated warehouses with mechanised materialhandling facility, multi-tier racking and palletised loads will effectively address the problems to ensure faster time to market, avoiding stock outsand the ability to ensure product freshness on the shelves. All thesefactors will lead to cost controls andhence, competitive price advantage for success,” avers Purkayastha.
The prime hurdles faced in the sector would have to be well exposedby 3PLs so that it comes to the
notice of the governing authoritiesand therefore, required rules andregulations can be formulated over the same. “While we have focusedon inbound goods movement, thebiggest problem in the rural sector isoutbound logistics. Movement of freshproduce including foods, fruits andvegetables from the rural sector to theurban areas is a huge challenge with an estimated 30% wastage,” explainsPurkayastha
“Ironically, most of this wasteis due to rotting caused by water contamination, a resource whichis the very lifeline of this sector.The focus has to be on proper packaging in Foldable Plastic Crates,palletising the load, proper cold chainwarehousing and efficient handling systems. Improvement in this ruralend-to-end distribution environment will drive out the huge amount of wastage and inefficiencies, elevating rural prosperity leading to economic& social development of the country,”adds Purkayastha.
TAX RECOMMENDATIONSThe 13th Finance Commission had recommended the following measuresfor 2010–15:• It categorically stated that the
tax on vehicles and tax on goods and passengers levied by the stategovernments should be submitted in the GST.
• The task force felt that all transport equipment and all forms of servicesfor transportation of goods and services by rail, air, road and sea must form an integral part of the comprehensive GST base recommended by the task force over which both the Central and state governments would have concurrent jurisdiction.
• The tax regime for transport equipment and services should be the same as in the case of any other goods.
• The task force stated that it is not necessary to levy a higher rate of tax on vehicles as is the existing practice since it is proposed to subject the use of these vehicles to tax at higher rates through excise onemission fuels.
PANDEMONIUM OVER GST GST will make the Indian manufacturing sector internationally competitive and will encourage entrepreneurial initiatives and economicactivity throughout the sector. A majority of manufacturers have put up regional warehouses of their ownto circumvent interstate taxes. GST allows them to restructure, simplify and streamline their operations.
Also, it helps outsource their operations to 3PLs to save up to 20%. This is also expected to encourage the creation of centralised warehouses at prime strategic locationsthat can operate on the hub-and-spoke model, in turn outsourcing logistics activity to the organised segment.
• Minimum area to be developed under an FTWZ is 40 hectare with a built-up area of not less than0.5 million sqm
• Minimum outlay for development is over `9 billion
• Supply of material into FTWZ to be treated as physical exports for the Domestic Tariff Area (DTA) suppliers
• 100% FDI allowed for the development of these zones
• Duty-free import/domestic procurement of goods
• Packing or re-packing without processing and labelling as per customer or marketing requirements to be undertakenwithin the FTWZ
• Principally governed by the SEZ Act 2005 and SEZ rules 2006
• Free foreign exchange currency transactions
REQUIREMENTS/STIPULATIONS FOR FTWZs
34 • SMART LOGISTICS • MARCH 2013
SPECIAL FOCUS SPECIAL FOCUS GST IMPLEMENTATIONGST IMPLEMENTATION
ACCORDING to the Ministry of tFinance, if Value Added Tax (VAT)is considered a major improvement over the pre-existing Central exciseduty at the national level and thesales tax system at the state level, thenthe Goods and Services Tax (GST) will be a significant breakthrough—the next logical step—towards acomprehensive indirect tax reform in the country. Keeping this overallobjective in mind, an announcement was made by the then Hon’ble UnionFinance Minister Shri P Chidambaramin the Central Budget (2007–08) to the effect that GST would beintroduced from April 1, 2010. But this is yet to materialise.
According to the government, the introduction of GST at the Central level will not only include comprehensively more indirect Centraltaxes and integrate goods and service
es for the purpose of set-off taxes forelief but may also lead to revenuer lgain for the Centre through widening of the dealer base by capturing valueaddition in the distributive trade andincreased compliance.
WHAT LED TO THE UNCERTAINTIES?The two committees—set up to look at the debatable issues of compensationto states for loss of revenue on account
of Central Sales Tax (CST) and thefinal design of GST—were originally expected to submit their reportsby December 31, 2012, but it wasextended till January 21, 2013. This left the Ministry of Finance with very littletime to consider the recommendationsand discuss them with the StateFinance Ministers before the Budget.
Further, by seeking a review of the final design itself, the Ministry of Finance may have to make major changes to the Constitutional
Futurein doldrums?
Goodss and Services Tax (GST) was originally saidid t too bebe iimpmplelememe tntnt deded iiinn 02020 01010. BuButt ununtitill 20200909, nono oonene t tooookk mumuchch nn totice.
Then, inin 2009, everyone got extremely excited about this reform that was just a few months away, at the time. However,
GST was not implemented in 2010, or in the next two years. Possibly, GST has been surrounded by uncertainties with
as not implemented in 2010, or in the next two years. Possibly, GST has been surrounded by uncertainties with
the govevernment having barely a couple of years left in its current term.
NISHI RATHH
• It will boost India’s economic unifi cation, assist in better conformity & revenueresilience and evade the cascading effect in indirect tax regime
• In GST system, both Central and state taxes will be collected at the point of sale.Both components (the Central and state GST) will be charged on the manufacturing cost
• Reduce the tax burden for consumers• Result in a simple, transparent and easy tax structure, merging all levies on
goods & services into one GST• Bring uniformity in tax rates with only one or two tax rates across the supply
chain• Increase tax collections due to a wide coverage of goods and services• Reduce transaction costs for taxpayers through simplifi ed tax compliance• Increased tax collections due to wider tax base and better conformity
GST ADVANTAGES FOR INDIA
MARCH 2013 • SMART LOGISTICS • 35
Amendment Bill. After theconstitutional amendments areapproved, the government will then berequired to introduce another Bill toprovide for a GST law.
According to experts, first, the Constitution of India has to be amendedto provide a legal basis for the new law. Therefore, irrespective of what is being done, GST implementationcannot progress beyond the drawing board until the Constitution has beenbmended. This does not end here;am
GST implementation requires not GS
only amending the Constitution but also enactment of a state GST law by each of the states in India. Therefore,even after the Constitution has beenamended, the enactment of a law by a number of states is likely to be aprocess that would take a minimum of 2–3 years, say experts.
HOW GST IMPLEMENTATION CAN HELP?The implementation of a welldesigned GST could stabilise the fieldof indirect taxation and mitigate, toa large extent, the complexities under the existing indirect tax regime.Introducing GST will help the GDPgrow as almost all indirect tax evasionwill cease to exist. GST will also boost
exports tremendously. According toan expert, “Under GST, the taxationburden will be divided rightly betweenmanufacturing and services, througha lower tax rate by increasing the taxbase and minimising exemptions.”
Implementation of the muchawaited GST is also expected tohelp build a transparent andcorruption-free tax administration.Here are the benefits: Benefit to the Centre and states: It is expected that India will gain$15 billion a year by implementing
GST as it would promote exports,raise employment levels and boost growth. Further, it will dividethe tax burden equitably betweenmanufacturing and services.Benefits to individuals and companies:In the GST system, both Centraland state taxes will be collected at the point of sale. Both components(the Central and state GST) will becharged on the manufacturing cost.This will benefit individuals, as theprices are likely to come down. Lower prices will lead to more consumption,thereby helping companies.
GST EFFECT ON LOGISTICSLogistics re-arrangement: GST will
allow manufacturers to aggregate every 4–6 small state-level warehousesinto one large, regional warehouse andadopt the hub and spoke distributionmodel that will offer proven cost and operational efficiencies in large markets. Apart from this, it will incentivise logistics companies and 3PL service providers to invest in scale, service focus & technology and align their service offerings to the widely changing supply chains of their customers.Inventory costs: If GST is implemented,it would come across as a major benefit to FMCG and consumer durables companies. The implementation would lead to reduction in the inventory costs. At present, the Central Value Added Tax (CENVAT)is included in their inventory costs, which has to be financed by them. But under the new structure, GST paid on inventory would be fully recoverable immediately as input tax credit, thus reducing the inventory financing costs.
IS GST POSSIBLE AFTER NEXT GENERAL ELECTIONS?The government has billed GST andthe Direct Taxes Code (DTC) as top priority for several months now. After Shri Chidambaram returned to the Finance Ministry on September 1,there has been some attempt to pushfor the two legislations.
When it comes to GST, while BJP-ruled states are not onboard on the design, compensation for the lossof CST has proved to be a major bone of contention on which the Centre haschanged its stance. It is expected that talk of GST would possibly start againafter the next general elections. At some stage, the Constitution would beamended. Though many say that theConstitution is amended in 2015, wecan possibly expect GST to become reality in 2016.
(With inputs from the Ministry of Finance)
Hon’ble Union Finance Minister Shri P Chidambaram is likely to announce a broadoutline of the GST in Budget 2013–14. An empowered group comprising StateFinance Ministers broadly agreed on the central sales tax compensation issue at a meeting recently held in Bhubaneswar. The empowered group, headed by Bihar’s Deputy Chief Minister Shri Sushil Kumar Modi, has set up three committees to deliberate on other aspects of GST, such as threshold limits for exemption, administrative control and GST rates.The proposed tax reform that seeks to replace all the indirect taxes like centralsales tax, state-level sales tax, excise duty, service tax and Value Added Tax (VAT) with a single and uniform tax rate across the country has missed several deadlines.If implemented, GST will be a game changer for the economy and will act as a permanent stimulus, enhancing competitiveness of both the manufacturing sector and exports.As per the data recently released by the Central Statistics Offi ce (CSO), India’s GDP is expected to grow at 5% in the fi nancial year ending March 31. This will be the worst performance of the Indian economy since 2002–03 when growth was recorded at 4%.
IMPLEMENTATION OF GST IN THE BUDGET?
36 • SMART LOGISTICS • MARCH 2013
FMCGFMCG CONSUMER ELECTRONICS & IT PRODUCTSCONSUMER ELECTRONICS & IT PRODUCTS
DEVYANI P KORGAONKAR
PLAN, source, make, deliver & return- these are the five basic components of Supply Chain Management (SCM)adhered to by top Indian franchises. The growing retail operation of electronics and computer parts across India is forcing the franchises to play a highly proficient role in the SCM. The domains of warehousemanagement, services and logistics are already outsized. And hence,most leading distributors across the world including India, have either established a separate entity to handleSCM activities, else have outsourced it entirely to an efficient SCM firm.
EFFICIENCY AND EFFECTIVENESS OF PRODUCT HANDLINGA recent study on the existing supply chains shows that distributors have been strongly focusing on constant improvements in terms of efficiency and improving effectiveness. Distributor firms handle all ranges of products including monitor, CPU to high-end servers, storage racks,networking equipment, systemperipherals and telecom equipment etc. Dr R Arunachalam, GM, ProConnect, the outsourced SCMcompany of Redington India Ltd—one of the top three distributors inIndia—informs that his company handles products varying from 50 gmto 5 MT. “We handle products that are shock sensitive. We deal with digital printing products, IT hardware& software, mobile phones, telecom equipment, consumer durables such as washing & cooling appliances of various kinds & ranges. Capital goods manufacturers both in India and abroad have leveraged on our expertise,” Arunachalam adds.
EXEMPLARY INVENTORY OPERATION India’s numero uno distributor in termsof revenue, HCL Infosystems has a network of over 30 state-of-the-art warehouses pan-India inter-connected
through their ERP systems. HCL’sinventory norms, however, are very stringent. The company sources revealthat their Digilife Distribution andMarketing Services (DDMS) connect with 136,000 retail outlets across Indiafor consumer products. The businesshas warehouse operations across 33states in India including the NorthEast and Kashmir that handle complexlogistics of seven million units every month. DDMS has the widest channelreach across modern trade telecom, IT,TV shopping and online.
ProConnect, on the other hand, uses
one of the best of breed WarehouseManagement Systems (WMS), whichprovides online real-time inventory visibility. Automated customisedinventory reports flow back to clients,while operational tasks are performedthrough handheld devices. ProConnect enhances its operational efficiency through Automated DistributionCentres (ADCs) which have state-of-the-art Very Narrow Aisle (VNA)racking systems and materialshandling equipment, according to Dr Arunachalam. ProConnect’s uniqueoperating process enables handling as
Redefining theRole of Franchise
Franchises-cum-distributors, currently are the key route between themanufacturers and consumers in the capital goods industry of India. Though,mostly unknown to the end-user, it is the distributor, whose role is reckonedas the most signifi cant one. With an aggressive approach, powerful successmantras and strategies, they add value to the products and its services.Here’s a functional analysis of few ace Indian franchises dealing withconsumer electronics and IT products to understand the change in the supply chain dynamics of our country.
VNA Racking System
MARCH 2013 • SMART LOGISTICS • 37
many as 12,000 Stock Keeping Units(SKUs) with transactional accuracy and 100,000 MT with on time delivery to 30,000 customer locations. Giving safety as prime importance, ADCsare equipped with fire detecting andfighting systems. All operations aredone under CCTV surveillance.
HANDLING THE SPARE PARTSDISTRIBUTIONIn the electronics & IT serviceindustry, the importance of SpareParts Management (SPM) cannot be underestimated. SPM is one of the most essential component of anefficient service organisation to ensuretimely resolutions. The activity involvesbalancing inventory levels with ServiceLevel Agreements (SLAs). “Weensure a great deal of high-precision forecasting and high infrastructurecapabilities to manage SPMmore effectively. Unpredictabledemand and infrastructure conditionscoupled with exacting SLAs makeprecision forecasting extremely important for us,” informs Sanjay Pandita, GM, F1 Info Solutions andServices Pvt Ltd, the erstwhile after-sales arm of Neoteric InfomatiqueLtd, while commenting on their SPMservices. “Out of a pan-India network of more than 100 service centres,F1 has 40 of its own. There are 77Application Service Provider (ASP)locations for keeping spare parts totake care of present IT service needs,”says Pandita, adding, “We have twocentralised national hubs—one in Vasai(an Octroi-free zone near Mumbai)and the other at Okhla in Delhi.”The company has deployed integratedonline-based CRM software, whichensures great transparent visibility of inventory across pan-India servicecentres for cost-effective and efficient SPM.
“On a continuous basis, we have adedicated team, which works on SPMto analyse the failures on a monthly basis, based on which the SPMprocess takes place. Sufficient spares
parts are distributed to pan-Indialocations to take care of the warranty & post warranty services. Also, weimport spare parts from the principlecompanies of countries like China & Taiwan, as part of SPM process togarner maximum customer satisfactionin this competitive environment.”
On the other hand, according toNassar Abdul, GM – SCM, RedingtonService, the company has an end-to-end solution for their clients, whichdeliver a high level of customer satisfaction with an optimised cost.
According to Abdul, the key strengths that differentiate Redingtonfrom its competitors are:• IT system• Online integrated system that
provides complete visibility
• Data integrity• Customised reports for analysis &
decision making • Highly skilled manpower.
Radington India, like, one of thetop distributor companies in theworld has facilities like state-of-the-art warehouses and collection hubs,identification and traceability throughauto binning system and 100%insurance coverage.
EFFICIENT REVERSED LOGISTICS SERVICES Reverse logistics stands for alloperations related to the reuse of products and materials. It is theprocess of planning, implementing and controlling the efficient, cost-
effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of originfor the purpose of recapturing value or proper disposal. With the increasing volumes in electronics and related industries, reverse logistics now playsa crucial role.
Dr Arunachalam declares, “In a market where reverse logistics had not evolved, we were the earliest to venture successfully into the space. Wehave a customised end-to-end single window solution. Our system ensurescollection of defective units across India, consolidation and ‘return to manufacturers’ centres abroad.”
The logistics solution service of F1Info Solutions and Service’s reverse
is also organised. The company has set up several segments to execute it.These include:Defective Return Management: It has a set of processes to collect defective products from pan-India service centres, get them converted into working units/parts by repairing themand slotting them into inventory for further use.Warehouse Repair & Refurbishment: The company converts all the defectiveproducts that it receives into working units/parts and then, transfers the sameto working inventory management. Before transferring the same, the company tests each product at different stages (viz., visual inspectionand functional testing). After
Figure 1: Redington Service’s Supply Chain Management Flowchart
38 • SMART LOGISTICS • MARCH 2013
qualifying, the product is transferred to the working inventory. Three is a process called Quality Monitoring Cell(QMC) in place to test each and every aspect of the product, hence qualifying the same.Part Cannibalisation: When a product cannot be repaired or refurbished, thecompany works to maximise its valueeconomically by extracting valuable parts. The part is then reused for repairing other products. A transparent visibility CRM platform enables the firm to track these parts and managelogistics to bring them back into thespare parts cycle for field repair activity.Resource Management Act (RMA) Activity: The company also manages the process of returning high-value products or parts to the vendor for credit RMA activity.E-waste Extraction & Disposal: At the last stage of value extraction, the company also manages e-waste extraction and disposal process. Beforetransferring any product or part to e-waste, the company has a dedicated team, which works on the products
at an advance level to make themfunctional by repairing or taking out all valuable running parts.
AFTER SALES SERVICESAfter sales service makes sure that products and services meet or surpassthe expectations of the customers.HCL Infosystems goes an extra mileto offer customised service solutions toits customers through quality serviceprocesses, infrastructure and technically skilled resources. HCL Infosystemsoffers a 24X7 service support.According to company sources, HCLCare along with Life Cycle Services(LCS) has its reach to over 4,000-pluscities. With as many as 505 HCL-owned and manned service locationsacross the country, the service providesmultilingual remote support in 11different languages.
While, according to information given by Abdul, Redington India is anauthorised service provider for variousleading brands in the IT, telecomand lifestyle products. “We providewarranty & post-warranty services,
onsite & return to bench support.Redington has presence in around200+ cities across the country througha network of 70 own service centresand around 220+ partners,” he informs.
On the other hand, F1 InfoSolutions and Service provides servicesto ODM/OEM and direct & indirect customers. It has a dedicated teamof over 300 trained professionals, apan-India network of 117 servicecentres covering 230 locations, 500field support locations through its 40branches and 77 ASP service centres.F1 Info Solutions and Service isaligned with an endeavour to becomethe globally preferred service provider by bringing global expertise, new technology, knowledge, processes andindustry best practices.
“F1 Info Solutions and Service’svision is to be the customer‘s most trusted choice for service throughcontinuous improvement, ethicalpractices and commitment towardsachieving the highest levels of customer satisfaction,” informs Pandita. Theservices encompass IT repairs, electronicsecurity, managed services, terminalbusiness and helpdesk services, among others. The company’s target marketscomprise SMEs, large corporate andindividual users of IT, telecom, security equipment or gadgets. From the serviceindustry, its target groups are channelpartners, system integrators, corporatesand end customers.
ON A PROGRESSIVE PATHThe performance of the supply chainis determined by the achievement.The franchises, indeed, have developedtechniques engaging the capabilitiesand enthusiasm along the supply chain to enhance the value of thefinal consumable. As the activitiesand performance suggest, the NationalDistributors (NDs) of capital goodsin India are a few of the key drivers to build and transform India into apowerful economy.
HCL Infosystems Ltd has a long-standing history of being involved ever since theinception of the IT industry in the country. Today, HCL Infosystems has become one of the leading System Integration companies in the country, implementing severalturnkey System and Networking Integration projects nationwide and across most of the vertical business segments. Ingram Micro’s global regions provide distribution of technology products and services, market development services and supply chain management services tonearly 170,000 technology solution providers and 1,400 manufacturers.Redington India Ltd along with its subsidiaries is in the business of end-to-end supply chain management of IT and non-IT products in various potential geographies of South Asia, Middle East and Africa. With a large distributionnetwork and a market penetration of more than 18 countries, Redington isamongst the largest supply chain solution providers to over 75 leading manufacturers of Information Technology, Telecom, Lifestyle and Consumer Electronics Products, worldwide.Neoteric Informatique Ltd has been a trendsetter and always strived to bring tomorrow’s technology today. The vision, reach, go-to-market strategy, performance-driven innovative initiatives ensure a unique experience, a feeling that is truly neoteric. Savex Computers Ltd, with over two decades of expertise and experience indistribution, Savex offers its vendors access to more than 5,000 Channel Partners,Retailers, Corporate Resellers, VARs and System Integrators.
TOP 5 NATIONAL DISTRIBUTORS OF INDIA (IN TERMS OF EXPERTISE)
Consumer Electronics & IT Products, continued
MARCH 2013 • SMART LOGISTICS • 39
SUPPLY CHAIN VARIETY SUPPLY CHAIN VARIETY SCM TRENDSSCM TRENDS
WORKING with fashion companieshas made it evident that even thecolour black is not one shade! Thereare at least 10 different types of black shades. On the face of it, it appearscrazy, but once you place all theshades (of a product category likefabric) before a customer, who prefers black colour, he will understand thenuances and select the one he likes.Simultaneously, he will be able toidentify the shades which do not matchhis preference. This means that if hehad not seen the 10 different shadesof black, he would not have known hisown preferences. Similarly, there willbe other customers, who prefer black and will zero in on a different versionof black. This means that exposure tovariety creates new niche need-basedsegments in the market. But, at thesame time, the demand for black,which would have aggregated under one shade, now gets disaggregatedacross 10 different shades. Theexplosion of variety is causing what canbe seen as ‘disaggregation of demand’.Such demand disaggregation is seen inalmost every product category bittenby the variety bug. With competitionreacting with more variety, consumersare now seeing an explosion variety in many product categories such asgarments, shoes, furniture, consumer durables, automobile, electronics,books, music and even some industrialproducts.
Demand disaggregation leads to the formation of what Chris Andersoncalls the ‘long tail’ of demand.Anderson, in his bestseller, ‘The Long Tail’, identified the problem acrossproduct categories. It is no longer therule of Pareto where 20% of Stock Keeping Units (SKUs) are supposed tocover 80% of sales. Now, 20% of SKUscover just about 30–40% sales and theremaining 60% of sales comes fromaddition of small volumes of sale, eachfrom many SKUs, thus creating a long tail of demand.
CHALLENGES FOR PRODUCTION AND
DISTRIBUTIONDesegregation of demand offers ahuge challenge for both productionas well as distribution. With a largevariety increasing over the years,production facilities are being loadedwith less and less volume per SKU.At the same time, with more variety,the demand for individual SKU alsobecomes erratic. The tussle betweenmarketing and production is growing over the years, as production wouldwant to meet their efficiency targetsand prefer bigger batches per SKU,
but marketing would want less volumeper SKU to meet the requirement of channel partners since the total volumesold by the company does not increasedramatically.
In distribution, the issue of erraticdemand multiplies, as the disaggregatedvariety is further ‘pushed’ to the downstream side to channel partners like distributers and retailers. With increasing variety, and regular push of SKUs to the downstream links, demand becomes even more erratic (multiplier effect of disaggregation of
Henry Ford once remarked; “You can have any colour of car, as long as it is black”. The statement highlighted what Ford had to offer, as a choice set, to its customers in the early 20th century. The Model T was produced in only black colour. Today, no marketer can dare make such a statement; they know that the customers of 21st century are already spoilt for choice. As more & more categories and products are moving away from being mere utility products to being a differentiated, preferred brand, marketers of competing brands are trying to beat each other, while trying to overwhelm the customer with choice.
Diligently dealingwith Diversity
40 • SMART LOGISTICS • MARCH 2013
Supply chain variety, continued
demand). This results in deteriorationof inventory turns of the channel partners. With time, and increasing variety, the turns are bound to deteriorate. With reducing inventory turns, the purchasing power [Open ToBuy (OTB) Budget] will deteriorate over a period of time.
STATISTICALLY SPEAKING…The best place to hold and sell a widevariety is a central warehouse, whichcan serve not just as a warehouse location but also as a selling location.This means that if we cannot stop thedemand disaggregation due to variety,
we can prevent the deterioration (themultiplier effect) by holding it at one place. If by a magic wand, we could get all customers of a country to visit the warehouse and buy fromit, they would not only get the best variety but the inventory turns of themanufacturer will also be the best, dueto aggregation benefits.
However, there are many product categories where buying decisions involves the actual ‘look’, ‘feel’ or ‘trials’ with the physical product. Most customers would prefer to buy many products after experiencing it in terms of ‘look’, ‘feel’ and ‘trials’ like garments, consumer electronics, etc. So, producers of many such categorieswill have to depend on channel partners to reach out to the retail counters. So, these industries have tosend the variety to the downstream links of the supply chain. But, can weprevent the multiplier effect of demanddisaggregation with this inventory
movement? Is there a way to move theinventory downstream to the point of sale without suffering from problemsof deterioration of inventory turns?
THREE-PRONGED STRATEGY TO DEALWITH VARIETY The way to deal with variety at point of sales has to be a combination of a three-pronged strategy depending onthe type of product and industry.Supply Chain Strategy: From Push ToPullIf one has to have variety and suffer from desegregated demand, the least one can do is stop taking actions
that could deteriorate the situationfurther. So, if inventory has to movedownstream, we should move as less aspossible and hold more at the centrallocation. This means that companieshave to shift from a push mode to pullmode. The lead time of supply has tocome down and we should developcapabilities to replenish frequently and small quantities per SKU. This isthe only pragmatic approach, as withincreasing variety, most forecasting toolwill fail miserably, trying to forecast desegregated and erratic demandpatterns. So, instead of forecast, pushinventory based on forecast. Weshould move inventory only based onconsumption, while ensuring that thereplenishment lead time is shorteneddramatically from the current levels.
However, with implementation of perfect pull systems, we do not expect the problem to disappear. At a retail point, the inventory of evenone unit of an SKU can turn out to
be the inventory for many months!This means that we need to not only have fast replenishment but also rapidreplacement to take back what isnot selling at the desired frequency.Taking back slow moving inventory at one store provides an opportunity to make it available to another storewhere it can be fast selling. Theextra freight costs will be more thancompensated with increased sales andreduced inventory.Bounded Creativity: Differential Supply ChainsNow comes the million dollar question: Do we actually need somuch variety to excite the customer?On one hand, we know that increasein variety creates new niche segments,which gets formed only after thecustomer is actually exposed to variety.This definitely helps in beating competition and diverting demand toone’s products. But the pressure toadd more and more variety also leadsto situations where more variety doesnot create more niche segments or,even worse, the customer becomesindifferent to the variety. This meansthat the variety beyond a point doesnot create new niche segments, but just desegregates the demand.
Today, most designers are under pressure to display variety. Hence, they are also churning out designs in masses,just to meet the numbers. So, thereare designs that create disaggregationwithout creating new niche customer segments. At the same time, it is alsodifficult to predict which designs willbe a hit or a flop. Nobody knowsthe point where increase in variety becomes irrelevant to customers. Thebest way out of the conflict is to takethe intuition of designers and integratedesign strategy with the supply chainstrategy.
Most fashion products have plants,which are ‘V’ types (many end itemsare created from few common raw material and as we progress in themanufacturing flow, each step inmanufacturing creates more variety
MARCH 2013 • SMART LOGISTICS • 41
using the WIP sent from the previousdepartment), or ‘T’ plants (wherevariety is created at the assembly point in manufacturing as a mix and matchof common components).
The way to integrate designs withsupply chain strategy is to limit theboundary of creativity of designers by limiting the pallet of designs fromthe divergent point of ‘V’ plant or the common component pallet of the‘T’ plant. Awareness of designers of the supply chain advantages will helpthem take better decisions on how touse the ingredients for a final product.However, they are also allowed tocreate new designs from the start of the manufacturing process, fully aware that this adds to the lead timeof supply. Our experience shows that sheer awareness of supply chain impact on decisions helps designers makeeffective choices.
The same strategy of differential lead times can be implemented withthe decision of different stocking points of SKUs in the supply chainhierarchy. Some items can be storedand replenished only at the centralwarehouse, while others are availablenot just in the central warehousebut also at downstream points. Therule of consumption-based ‘pull’replenishment (instead of forecast based push) is implemented for any stock movement between any twopoints in the supply chain.
In case of books/retailing, the differential lead time can beimplemented with some items stored at the central warehouse andreplenished to the shops, which the customer can pick up instantly,while for others, which are only at the central warehouse and solddirectly through the Internet, thecustomer has to wait for a period. The differential lead time shouldhelp in aggregation of demand into a ‘meaningful’ variety, whichalways enjoys the best service. Theother additional variety is availablebut only with a higher lead time of
delivery. This approach also requiresthe ability to move products betweenthe two categories based on whichitems sell more and an ability to exit from products based on sale rates.Managing Merchandise: Selling without the inventoryThe decision to offer differing servicelevels to different products offersa challenge in selling, particularly in cases where the product is storedonly at the aggregated location. Theproblem gets aggravated, particularly in cases where the product has to beexperienced before the actual sale.
The buying experience usually consists of the following threecomponents for decision-making:Look: The customer prefers to havea physical look at the product beforebuying. The look has to help himunderstand how the product will fit inhis environment.Feel: The customer prefers to touchand get a feel of the product beforebuying.Sample: The customer wants to use theproduct as a sample before deciding.
Buying a consumer product involvesone or more combination of the abovethree factors. In many products, theactual inventory of the SKU is used toprovide the experience. If we are ableto provide the above three experienceswithout having the specific inventory,then we can afford to keep theinventory at the central location, whilehaving effective props to provide theexperience to the customer at the time
of the purchase decision.Our work with furniture retail
companies has shown that such propscan be easily developed. For example, in case of furniture, the retail point has one furniture type, but the variety of different upholstery options is shown to customers by having fairly large fabric pieces, which can be placed on the sofa, which the user can look and as well feel. This prop is different from a catalogue because a catalogue may not be able to provide the ‘real’ experience. Not only do we have to have props but theretail store sales people also have to be trained to sell such items. They have to be confident of the availability of such items at the central location. Remember that a retail sales man is always wary of selling items whose availability is not reliable. He is always the first point of contact for any immediate bad experience of the customer. The sales team should be confident of availability of such items; else it is impossible to expect the sales of ‘virtual’ variety at theretail point. The supply chain has to be tuned to ensure high availability allthe time regardless of SKU’s designatedstorage location. Once the salesmen aretrained to sell ‘virtual’ variety, we willget to know the true demand of such items. If they pick up volumes, we can decide to move the items physically to the retail point.
The variety war between marketing and supply chain managers is chronicin many supply chains. The way out of this conflict is not a unilateral
decision to trim SKUs. The only way to trim SKUs is to allow it complete opportunity to stand thetest of the market. The opportunity is provided to the end customer toexperience the product at point of sale. The above approaches help provide the experience while preventing the problem of high inventories.
Kiran Kothekar, Founding Director,
Vector Consulting Group
Email: [email protected]
42 • SMART LOGISTICS • MARCH 2013
WAREHOUSING & DC INVESTMENT OPPORTUNITIES IN INDIA
Imagine if someday you go to a market and fi nd that there are no vegetablesavailable? The reason: Unavailability of warehouses to store farmers’produce. This scenario could actually be harmful for both customers aswell as producers of the goods. So, an effective warehouse is of primevalimportance. Warehouses are scarce in India and there is a need for signifi cantinvestments in this segment. If this situation is not repaired any sooner, the day is not far when every household would be forced to grow its own food.
Venture Speculation:A way out for the future
PRATEEK SUR
INVESTMENTS in Indian warehouses have become a priority for any logistics player. Investmentsare required in the warehousing sector in India to offer organised capitalto attain a top-notch infrastructureplatform and to prop up superior sophistication in services. Credit Rating Information Services of IndiaLtd (CRISIL) Research projectsinvestments amounting to $170–190billion in warehouses by 2013–14 inIndia. This amount would be investednot only in the existing warehouses but also in the building of new warehouses.A noteworthy share of investments inwarehousing is envisioned in the FreeTrade Warehousing Zones (FTWZs)and logistics parks. Emphasis is being laid on building numerous logisticsparks spread across the nation. Thedevelopment will be motivated by organised warehousing, changing tax structure and potential savings incarrying costs.
PERFORMANCE INDICATORThe warehousing segment’sperformance meter takes intoaccount its intensification andescalation prospects and returns. Thisconsiders the probable investment inwarehousing, given the investment strength, development phase andventure cycle. These, if well predicted,will give the exact amount of venturecapital that needs to be spent in thissector. The segment has witnessed
a Compound Annual Growth Rate(CAGR) of 10–12% in the past few years. Moving ahead, it is anticipated topost a CAGR of 8–10% in the years tocome. Along with this, revenue and net profits of key players are additionally projected to rise over the medium termdue to superior intensification in Fast Moving Consumer Goods (FMCG)sectors and projected implementationof the Goods and Services Tax (GST).
The principal cost to build awarehouse unit of 0.15 mn sqft is$140–150 million (including land cost).The whole cost will, however, differ depending upon accurate location,immediacy to the port/industrial hub,road/rail infrastructure, etc. CRISILResearch estimates the capital cost of a typical warehousing player, with apan-India presence, to be in the rangeof $700–750 million.
FUNDING SOURCEThe last few years have seensubstantial increase in investmentsthrough the Public Equity (PE) andMergers & Acquisitions (M&A) deals in logistics, ports, warehouses andContainer Freight Stations (CFS)in India. FTWZs, freight stationsand cold chains are gradually being seen as striking targets in the present day. Asset-heavy investments in theIndian logistics sector have mostly been pragmatic to be PE investmentsand asset-light have frequently beentactical M&As.
MARCH 2013 • SMART LOGISTICS • 43
The warehousing segment’s exceedingly patchy nature is saidto draw PE funds, which haveplayed an imperative role in industry consolidation by focusing on amassing smaller players and building scalethrough acquisitions. Discussing the strategies to increase warehouseefficiencies, Atul Agarwal, CEO & Co-Founder, www.teesort.com, says,“Our kind of business does not needdistributed offices and hence, weoperate out of our single office basedout of New Delhi. We will, however,have distributed warehousing tofurther reduce delivery times.” Suchdistributed offices help logistics playersplan their start-to-finish product linein a smoother and more sophisticatedway. Such distributed offices requirebetter M&As and PE funding fromthe investors.
PRESENT SCENARIOLogistics parks and FTWZs are stillin a nascent stage in India. Investorsin these sectors will have to bring in the suitable savoir faire frommore mature markets. Moving ahead, investors in the warehousing segment and cold chains in Indiawill have to aid players in reshuffling operations, building business plans,increasing technical proficiency andobtaining skilled manpower, to becomemore viable.
International logist ics companies have come to the Indianmarket; most international port operators are operating terminalsacross the Indian coastline and PEinvestors have made investments across infrastructure and services categories. The logistics sector, onan expansion drive, suggests strong and free cash flow coupled withlow capital expenditure for possibleinvestors. Moving forward in thisdirection, YES Bank and NationalCollateral Management Services Ltd (NCMSL) have united to provide security management andwarehousing services.
ESCALATING THE MAGNETISM FORPOTENTIAL INVESTORSSome PE funds are still wary of investing in warehousing because of thesmall size of companies, which result inlower investment ticket sizes. Concernslinger over the stamina of the economicrecovery in many developed markets.The complex ownership organisationsof warehousing companies in Indiaand weak commercial governanceprinciples also act as hinderances for latent investors looking for investmentsin the Indian warehousing sector.Elaborating on the global preparednessof the Indian warehouses for disasters,Asim Behera, GM, Swisslog-India,discusses, “Even globally, warehousesare typically not designed to be disaster proof unless you are storing radioactivematerials, or ammunitions. But the warehouse design is very regionspecific. In Europe, many warehousesare 20+ metre high—a 1,000,000 sqft warehouse is not uncommon in theUS; in the last decade, in China, wewitnessed significant demands for automated warehouses. When youcompare India, we have a long way to go before we truly understand what a warehouse is; we are still in thegodown mode.”
“Necessity is the mother of invention;soon, sufficient environmental factorssuch as multi-brand Foreign Direct Investment (FDI) and hopefully, GST
will force us to relook at how we do business today and make planning and foresight a habit rather than an option. I sincerely believe automation in warehousing will leapfrog us to global standards,” Behera adds.
PRIME LOOKOUTThe key to more investments in this sector is, thus, to let loose the remarkable scope for development in Indian warehousing. Most of this willbe driven by infrastructure upgrades. As investments into India’s infrastructuresector gain pace, investors will also look to put more money into warehousing and freight transport.
Investments in agri-warehousing are perilously lacking in India. The knowledge and input from the fund management team will help additionalexpansion of the investee company’s agri-warehousing and collateral management actions. The investment will help intensify the commodities market in India while also facilitating the liquidity of warehouse receipts and spiraling price risk management abilities of diverse stakeholders acrossthe value chain, right from farmers to processors.
Healthier capital markets, which carry on to recuperate from their post-leverage bubble hangover, enhanced credit market conditions anda superior environment for financial
investors indicate that many largestrategic investors will be in better position to engage in new deals in 2013–14. The focus on liquidity and de-leveraging throughout therecession has resulted in better balance sheets with lessened debt ratios and considerable increases in middling cash positions. Thus,by focusing on these improvement prospects, Indian warehousing players can be better positioned to draw the right investors that canfurther help them in maximising their competitiveness.
• Acquiring clarity on the vision and growthstrategy of the acquirer
• Standardising and streamlining processeswithin the warehouses
• Ensuring appropriate tax planning• Enhancing the use of appropriate technology• Entering new and untapped target customer
segments• Building synergistic products and services for
integrated solutions across the value chain• Innovating operating models• Offering value-added services• Providing shorter lead times & differentiated
services and products
What Indian Warehousing Players Need To Concentrate On
44 • SMART LOGISTICS • MARCH 2013
GOVERNMENT POLICIES GOVERNMENT POLICIES RAIL BUDGETRAIL BUDGET
WITH g p yfreight tariff as the primary milch cow plus `600 crore Public PrivateParticipation (PPP) investments,Hon’ble Railway Minister Shri PawanKumar Bansal has shown a balanceof `12,506 crore to be generated in 2013–14. While he announced IndianRailways’ entry into the 1 billiontonne freight club of China Russia and the US, the Rail Budget failed to impress the share market and theSensex reeled by 319 points the very same day. However, apart from the Fuel Adjustment Component (FAC) and the revamped policy initiatives for PPP investments, the Rail Minister hasproposed a 5.79% increase in rail freight as per Railway Budget 2013–14 along with some green policies, electrificationand dedicated freight tracks.
MAJOR ACHIEVEMENTS & INITIATIVES• FAC concept to be implemented
Showing some stark emoticonst ahead of the General Elections 2014,Keeping voters’ backlash in countan Kumar Bansal continued to let people Hon’ble Railway Minister Shri Pawadable prices was their right, with partial think that travelling by rail at afforment Component to be imposed on freightderegulation of fair. The Fuel Adjustmone fetch additional revenue of Rs4,200tariff from April 1, 2013, would aloegative impact on many industries, suchcrore. However, there might be a nee price hike on the products. While in theas cement & coal, with a reasonableget for doubling and gauge conversion, it11th Plan, Railways fell short of targlementation of the 2020 plans instead of would be interesting to see the implmade.the proposals the Rail Minister has
SUPRITA ANUPAMCII welcomes the Railway Budget. Under the given economic conditions,
the Minister has presented a very balanced set of proposals for the Railways. The emphasis of the Railway Minister on fi nancial viability and fi scal discipline of the Railways is the most reassuring. Financial discipline, safety and passenger amenities are inherent to the health and condition of this mode of transport, which is availed by the common man and the Minister has paid due attention to each. With fuel prices getting deregulated, linking of freight rates to increase in diesel prices is the correct direction to take and CII commends the government for taking this step. Lower operational ratio announced by the Minister would help provide for the much needed funds, which can help modernisation. The prioritisation of 347 projects with assured funding is a very credible move. CII looks forward to a clear roadmap on PPP for taking forward some of the more capital-intensive projects. Chandrajit Banerjee, Director General, CII
While linking of freight charges to the fuel prices seems logical, at the same time, the government must also improve the operating ratios and resist from affecting the competitiveness of India Inc by passing on its ineffi ciency. It would have been better had the quick corrective action in the capacity addition and tariff areas been taken with the required pragmatism considering the current slowdown of the domestic economic activity. The effective monopoly enjoyed by Indian Railways in moving loose bulk commodities (like coal, iron ore for export) over long distances has contributed to supply constraints. However, there could have been more focus on the implementation aspect of stronger policies, as policies that are already in place to address this issue are not seeing much progress.Rajkumar Dhoot, President, ASSOCHAM
RAIL BUDGET REACTIONS
Illus
tratio
nB
y S
anja
y D
alvi
t linking tariffs with the movemene of fuel prices; the prices will benrevised twice a year depending upon
the diesel/electricity unit pricey • Proposal for setting up a Railwayy Tariff Regulatory Authority-formulated and at an inter-
ministerial consultation stage• Indian Railways enters the 1 billion
tonne Select Club joining Chinese,Russian and the US Railways
• Indian Railways joins Select Clubrunning freight trains of more than10,000-tonne load
MARCH 2013 • SMART LOGISTICS • 45
Railway Budget 2013–14 has been a mixed bag for both passengers and the logistics sector. The Minister deserves special kudos for continuing with the modernisation drive despite the Finance Ministry clearly hinting spending cuts across various sectors. The move, we believe, will go a long way in reinstating the faith of passengers and India Inc in the Indian Railways as a safe, comfortable and reliable mode of transportation. We welcome the Ministry’s decision to appoint a Freight Regulator to decide on freight rates. This will lead to justifi ed freight rates, thus giving a boost to PPP projects by encouraging investment by private players in the logistics sector. No announcement to introduce high-speed trains has come as a disappointment for the logistics sector. We hope that the continuous push to electrifi cation, gauge conversion and new lines will make the railways and the logistics sector effi cient. Vineet Agarwal, Joint MD, Transport Corporation of India
The Railway Budget marked a departure from the recent past as it was a shrewd balance between populism and pragmatism, though overall, it lacked insight to improve Railways’ revenues as there was no clear roadmap to augment its capacity and overall rail infrastructure. No doubt the paradigm shift in freight tariff as from now on it will be fuel-linked freight charge revision, 5% increase in freight rates from April 1, 2013, will generate higher revenues to railways, but it also runs the risk of losing its already dwindling market share to roads & highways. As far as rail infrastructure is concerned, though land acquisition for the Dedicated Freight Corridor is almost complete, construction contract will only be awarded by the end of next fi scal. Also, there is no clear mapping on how the private investment will be utilised for some PPP projects announced. While improvement of connectivity to mines is a welcome step, increase in freight will not only push up steel prices it will also add to infl ationary pressures. Overall, there is hardly any initiative in the Budget that could bring a smile on the faces of either the passengers or the industry.Dilip Oommen
The key to moving forward will be execution of the projects announced by the Minister in his Budget speech. This year’s Rail Budget refl ects the diffi cult economic scenario and contains several proposals which, if implemented, would set a growth multiplier in motion. Even though the record of PPP in railways has been far from encouraging so far, it is imperative that greater private investments are infused into this sector. In order to realise the target of Rs1 lakh crore through PPP route during the 12th Plan, it is necessary that specifi c project-wise targets be set up and monitored.Dr A Didar Singh, Secretary General, FICCI
With inputs from Arindam Ghosh, Prateek Sur and Devyani Korgaonkar
• `1,000 crore has been fixed for RailLand Development Authority and Indian Railway Station Development Corporation separately to be raisedthrough PPP in 2013–14
• A new Forged Wheel Factory to beset up at Rae Bareli in collaborationwith Rashtriya Ispat Nigam Ltd. Among the others are greenfield Mainline Electrical Multiple Units (MEMU) manufacturing facility at Bhilwara (Rajasthan) in collaboration with the State Government and BHEL, a coach manufacturing unit in Haryana’s Sonepat district in collaboration with the State Government, Bikaner and Pratapgarh workshopsto undertake POH of BG wagons,and a workshop for repair and rehabilitation of motorised bogies at Misrod in Madhya Pradesh.
GREEN INITIATIVES• Setting up of Railway Energy
Management Company (REMC) to harness the potential of solar andwind energy
• Setting up of a chair at The Energy and Resources Institute (TERI) promoting railway-related research to reduce carbon footprint
• Setting up of 75-MW capacity windmill plants and energising 1,000-level crossings with solar power
• Additional usage of agro-based & recycled paper and ban on the useof plastic in catering
TECH-INITIATIVES• Rail Time Information System
covering a large number of trains• Provision of announcement facility
& electronic display boards in trains• Provision of free Wi-Fi facilities on
several trains• Implementation of Train Collision
Avoidance System• Introduction of 160/200 kmph Self
Propelled Accident Relief Trains• Introduction of Train Protection
Warning System on Automatic
Signaling Systems
BUDGET ESTIMATIONS 2013–14• Freight loading of 1,047 MT, 40
MT more than 2012–13• Gross Traffic Receipts: `1,43,742
crore, i.e., an increase of `18,062crore over RE, 2012–13
• Ordinary Working Expenses: `96,500crore
• Appropriation to DRF at `7,500crore and to Pension Fund at `22,000 crore`̀
• Dividend payment estimated at `6,249 crore
• Operating Ratio to be 87.8%• Fund Balances to exceed `12,000
crore
46 • SMART LOGISTICS • MARCH 2013
START-UP STRATEGIES START-UP STRATEGIES GOR BUTLER SYSTEMGOR BUTLER SYSTEM
ACCORDING to the latest global trends, automation and digitalisationare impacting every aspect of theindustrial supply chain. And highly developed warehouses, in termsof technology, is the need of thepresent ‘industrial age’. Though on thegrowth path, the Indian logistics sector is experiencing a dearth of efficiency on many fronts. An observation of thecurrent Indian warehousing scenario, brings to the fore the fact that it isalmost impossible to scale back-end operation to match the growth rate. About 90% of the worker’s time getswasted in searching and fetching goods, resulting in decreasing overallefficiency. Moreover, a worker, on an average, picks 11 products per hour.And then there are other factors suchas increasing inventory, labour theft
and wrong shipment that have takena toll on the company’s balance sheet.
Today, every company wants to havea centralised operation to minimiseinventory cost. However, it is not possible because human labour cannot support such high-volume warehouses.In such a scenario, the GOR Butler System offers a ray of hope. Insteadof wasting time in searching andfetching, GOR Butler System offersa much efficient solution. It helps indelivering world-class productivity,accuracy and flexibility by multiplying the capacity of work, reducing labour cost and efficient space management,thereby eliminating the possibilities of product shrinkage.
THE BIRTH OF ‘BUTLER’ There is a huge requirement for
automation facilities in Indianwarehouses. This is one of themajor reasons why Samay Kohli, theCreator & CEO, GOR (Grey OrangeRobotics) and Akash Gupta, CTO,GOR (Grey Orange Robotics), decidedto intervene and make a valuablecontribution to Indian warehousing.According to Kohli, “We have beeninto robotics for about 10 yearsand have observed warehouses andstorage, car manufacturing plants, etc.,during our stay in the US, Germany and South Korea. During this time,we always felt that warehouses werenormal and just like the ones we saw in the movies and on YouTube videos.But when we returned to India andvisited a couple of warehouses, we wereshocked to notice the big difference.We observed that the efficiency levels
Indian warehousingOnline shopping in India is estimated to cross $30 billion by 2015 with more than 300 million
online users; the car manufacturing industry is growing at one of the fastest pace in the
world. Hence, the necessity to enhance warehouse effi ciency systems is also on the rise.
Realising the need of the hour, Samay Kohli and Akash Gupta, two engineering students
came up with robot GOR Butler. This invention aims to facilitate Indian warehousing and
logistics sector and enhance its effi ciency. This fi rst-of-its-kind, pure, young Indian venture
promises to augment Indian supply chain with its ground-breaking strategies.
DEVYANI P KORGAONKAR
Rendering a new definition to
Rendering a new definition to
MARCH 2013 • SMART LOGISTICS • 47
of warehouses in our country are very low. Many were actually looking for solutions in warehouse automation. That’s probably why we planned to create ‘Butler’.”
WINNING @ ROBOLYMPICS Earlier, Kohli and his
partner Gupta led their team at BirlaInstitute of Technology & Science (BITS),Pilani, to design & develop India’s very first indigenoushumanoid robot, which won numerousrobotic competitionsaround the worldat universities likeStanford, Berkeley and other peer institutions across inn countries. “We sevenen participating inhave beell around the worldcompetitions allouple of developed and worked in a co
biggest event where wecountries. The biggehave been awarded was Robolympicshave bee(Olympics for robots), held in the USevery year. After bagging sixth prize(out of 30 countries), we managed towin the bronze prize; it was only in 2009 that we actually got a gold medalthere. It was India’s first gold medalin Robolympics. We have also won similar prizes in Turkey, Germany, South Korea, etc.,” Kohli adds.
INVESTING WITH A LONG-TERM GOAL IN MINDLeaving a promising career abroad, the two young robot engineers decided toserve the country with their invention.“While staying abroad, we were offeredgood jobs in the US and South Korea;however, we decided to stay closer to home. Robotics has a very good opportunity abroad; in India, it has huge scope for expansion. That is why we started Grey Orange Robotics,” Kohli explains.
As a capital investment, Kohli and
Gupta had put in their savings for the venture. “We invested `10–12lakh from our own savings to start thecompany and we began churning profitsin the first six months itself,” saysKohli, adding, “We have started raising venture capital to grow our company faster.” Kohli believes that a businessshould have long-term goal. Affirming the same, Kohli avers, “Investing inshort-term goals or making quick money will not help a business sustainfor long. I think a new business should have a long-term vision and goal and astart-up business should have a vision for at least 5–10 years.”
WINNING TRUST OF THE INVESTORSGOR’s innovative approach has
helped it attract investors from acrossthe globe. The company has raised aventure capital from Blume Venturesand BITS Spark Angels as part of theinvestment. Abhinav Khushraj will be aBoard Observer representing the BITSSpark Angels Group. Elaborating further, Sanja Nath, Managing Partner, Blume Ventures, India,explains, “GOR systems has changedthe traditional methods of trade. Our investment in GOR follows the ‘first cheque’ investment thesis of Blume,whereby we invest between $50,000and $250,000 in our first cheques andupto $1 million in a follow on chequesto portfolio winners. Our faith in theteam was vindicated by investment into the company high-quality angels
This 26-year-old is the CEO and Co-founder of GOR Previous Experiences: • Project Lead, Team BITSIMO, Centre for Robotics &
Intelligent Systems, (2006–07)• Core Member, Tecnology Team, Center for Entrepreneurial
Leadership (CEL), BITS Pilani (2005–06)• Project Lead, Stimulus: Center for Entrepreneurial
Leadership (CEL), BITS Pilani (2005–06) Education: BE (Hons), Mechanical, from Birla Institute of Technology and Science (2005–09) and Birla Institute of Technology and Science and MSc (Hons) in EconomicsInterests: Gadgets, cutting-edge technology, movies, robotics, simulation, management, crisis management, planning and team building
This 23-year-old is theCTO of GOR Previous Experiences: Team Leader of Project Acyut, Centre for Roboticsand Intelligent SystemsEducation: Bachelor of Engineering (BE), Mechanical Engineering from Birla Institute of Technology and Science(2008–12) Interests: Gadgets, robotics and engineering.
Meet The Innovators’
Akash Gupta Samay Kohli
48 • SMART LOGISTICS • MARCH 2013
such as Dr Wolfgang Hoeltgen from Germany and the BITS Spark Angels.”
INSPIRATIONS The duo does not have a single inspiration, but are inspired by people who have been into product development like Steve Jobs, late Founder Chairman of Apple Inc. “We want to be a product company focused on warehouse automationand will be coming upwith products. In fact,we are researching ona couple of products and will soon create complementary products so that we can be a holistic supplier for warehouse segment,” highlights Kohli.
BENEFITS ACCRUED BY WAREHOUSE AND LOGISTICSGOR keeps a close watch on the warehousing and logistics sector. Samay opines, “I foresee a lot of consolidationsand investments in technology and strongly believe that we have had uncontrolled and unimaginable growthtill date. Probably, that is why peopleare not concentrating on generating good efficiency.” Inspired by the e-commerce boom, Kohli believes, “Ina couple of years, online and offline retail will manage a majority of the shipment and logistics. This is going to be the driving force to regularise and improve their courier and materialhandling system.”
According to Kohli, ‘Butler’ has a lot of benefits to offer. These include:Wide applicability ‘Butler’ is useful in other segments apart from warehouses. GOR has been approached by a couple of car manufacturing plants for application in material handling on the shop
shores. According to Kohli, “Wehave been approached by some key car manufacturers here and are alsoexploring this option. The robots arehighly flexible as long as their weight
capacity is in control.These are very usefulwhenever a repetitiveand complexedmaterial movement isrequired.”High-level efficiency‘Butler’ helps a worker pick 500 products per hour as compared to40 products in thenormal course. Thesystem indicates theright items to bepicked in the correct order, thus enabling the worker to process16-plus orderssimultaneously.C o s t - e f f e c t i v esolutionThe initial investment
for a company is about `2.7–Rs4 crore`̀depending upon the number of robotsbought. “We actually provide an entirepackage deal. The only infrastructurewe need is an empty floor space as
GOR Butler System, continued
GOR Butler system is a unique high-tech material handling system that simultaneously improves speed, accuracy, productivity and fl exibility. Every distribution centre strives to attain fl exible and effi cient order fulfi llment, but struggles with the limitations of traditional tools. GOR Butler creates innovativeorder execution solutions that eliminate the constraints of existing warehouseautomation and puts you back in control. It can pick faster, pack correct and ship on time!Inward ProcessGOR Butler has three components, viz., small-wheeled retrieval robots, tall upright racks and human workers. The human worker stands in the designated area andscans the new inventory. The GOR material handling system selects an appropriate empty rack/shelf location for storing this inventory. GOR Butler rolls in with thedesignated rack and a laser pointer points to the location at which these itemsneed to be stored. Once the worker has scanned and stored the inventory, GOR Butler stores the rack at an appropriate location based on the product’s previousdemand. Once the system receives an order to process, it designates a pick stationbased on availability.Outward ProcessA fl eet of GOR Butler robots roll in with racks containing the correct products and a laser points to the correct items to be picked (every pick/put process is doubly confi rmed by scanning barcodes and the system ensures that the wrong productsare not picked or put). After the GOR system determines that the correct item hasbeen picked, it illuminates the correct pick-put-to-light unit corresponding to the order and GOR Butler robots takes the racks to a new storage location.
The Technology
MARCH 2013 • SMART LOGISTICS • 49
per the stocking requirements,”informs Kohli. A similar product imported costs around `12–`– 15 crore.Comparatively, GOR is 3–4 times lessexpensive.The quality of being IndianRealising the need for an enhancedefficient technology, a large number of Indian warehouse management companies are opting for the product.Apart from the cost benefits, GOR has a major advantage of being anIndian company. “We can support our products very well in India. Onthe other hand, imported productsdo not have a good support base in India.” GOR boasts of a significant customer base from some of India’slargest e-commerce players including Flipkart, Flipkart Logistics andYebhi, among others. A number of automobile manufacturers such asMahindra Navistar, Tata Motors andcompanies like Lenskart have sought GOR’s help for their spare partsdistribution warehouses, reveals Kohli.
EXPANSION PLANS & MARKETING STRATEGIES GOR has no expansion plans for now.“We intend to remain a concentratedcompany for some time and do not have plans to spread our wings beyondlogistics and warehouse management,”
states Kohli. The company expectsto build its clientele in the short run,this year. In 2014, GOR plans to goglobal and sell its robotic solution inthe international market. Divulging the details, Kohli informs, “We intendto focus on Germany and other EU countries. While we will have adifferent market, we might face somekind of completion abroad.”
Presently, GOR is not investing much in marketing. “We are satisfiedwith our achievements and do not believe in quick sales; we are positiveabout responses. Simultaneously,our marketing strategies are morecore to referrals at the moment. Weare concentrating on one customer,getting good referrals, and moving onfrom there.”
ULTIMATE SOLUTION FOR INDIANWAREHOUSESToday’s warehouse activities includecross docking, palletising, kitting,tagging, identifying products aswell as efficiently storing them in
quick time and limited space. As a result, warehouse automation, now, has a direct bearing on a company’s supply chain efficiency. Lack of real estate space for logistics hubs and warehousing companies is also a concern. Herein lies the scope for a product like GOR Butler to enter the market space. GOR provides companies key solutions to utilise their warehouses in a more efficient manner, thereby saving time and realestate costs.
Butler helps in delivering world-class productivity, accuracy and flexibility by multiplying capacity of work, reducing labour cost, ensuring efficient space management,eliminating possibilities of product shrinkage (like breakage or theft of products), improving control capacity & productivity, facilitating material flow, while ensuring operational safety, increased reliability and reducedrunning & low life cycle cost.
Set up in 2009, Grey Orange Robotics is a Birla Institute of Technology and Science (BITS)-ian start-up by young engineers Samay Kohli and Akash Gupta. They invented India’s fi rst indigenously developed humanoid robot ‘Butler’.The company has established itself in the fi eld of humanoid robotics in India as well as abroad. It has won numerous international accolades.The company assists some of India’slargest online retailers to automatetheir warehouses and set to work with the major car manufacturers as well in this regard.
About Grey Orange Robotics
• Supports dynamic bi-directional growth space to store moreinventory, add racks
• Very high rate of accuracy and reliability
• Fast and effi cient product fl ow resulting in no wastage of time[dispatching up to 600 items/hr/per picker (worker)]
• Reduction of labour and operational costs, guaranteeing prompt return on investment (1–2 years payback)
• Eliminate theft and damage to product from multiple handling, location errors and shrinkage
• Order traceability resulting in better customer service• Highly fl exible and fully upgradable in real time• Flexibility to work in multiple shifts with same infrastructure, pace and fl ow • Helps to increase response time to customer demands, especially in peak
periods • Maintains up-to-the-minute inventory records at the storage bin level using
real-time continuous inventory techniques• Shift from one warehouse to another bigger/different warehouse without
shifting down
Butler’s USPs
50 • SMART LOGISTICS • MARCH 2013
STRATEGY STRATEGY TRANSPORT CONTROL TOWERSTRANSPORT CONTROL TOWERS
TRANSPORTATION is complex business. Large companies need to support the complex distribution networks of multiple manufacturing locations, warehouses, distributors, supplier and customers. The network may include inbound moves from suppliers to the plants, outbound movesto distribution centres, re-packers, co-packers, secondary movement to regional warehouses, distributors and shipment to direct customers. This network can have thousands of lane combination options and shipment to be managed on a daily basis. Each lane or shipment can use multiple modes and carriers, creating infinite feasible combinations that make managing transportation in an optimalway highly complex. Additionally, lack of world-class infrastructure, carrier performance variability and unavailability of updated & accurate data further complicates transportationmanagement. This inadvertently leadsto ad-hoc exception management andhigh maverick spends, contributing to high logistics costs.
LOCALISED OPERATIONS LEAD TOHIGHER COSTSMost Indian organisations manage transport operations at the local/regional level. Managing andcontrolling operations at the local level
reduces the complexity of the problemby dividing the more complexproblems into comparatively simpler ones. It makes the operations handling manageable and provides scope for implementing localised solutions;but there are multiple limitations to
this approach. Localised operations management does not provide an enterprise-wise visibility for control or risk management. In terms of cost management, any optimisation at a localised level will lead to higher local optima rather than lower global optima. There are multiple opportunities such as centralised high-volume sourcing or managing continuous move routes within wider geographies, which cannot be exploited in such an environment, thusleading to leakages and higher logisticscosts. Additionally, communication gets layered in localised operations andexceptions management is provisionalrather than being business-rule driven.
TRANSPORT CONTROL TOWERSA centralised transport control tower approach is essentially driven from air traffic control towers, which are set up to organise and expedite the flow of traffic, to prevent collisions and to provide information and other support for pilots when required. Transport control towers enable organisations to centralise planning into a single physical or virtual planning hub. A transport control tower may have few or all of the following components:Strategic Planning
• Supply Chain Network Design:Though supply chain
n e t w o r k
SimplifyingTransportation Complexities
Transportation in India will continue to grow and offer signifi cant opportunities. However, rising transportation costs will put additional pressure on organisations, which will lead to the evolvement of MTS providers. MTS provides will bring in local know-how, global methodologies and best in class optimisation & collaboration tools to help companies cut costs across the supply chain. These MTS providers will not only provide shippers and carriers a common platform for interaction but will also facilitate the setting-up of standard transport benchmarks in the industry.
TRANSPORTCONTROL
TOWER
MARCH 2013 • SMART LOGISTICS • 51
design extends to other strategic factos as well,this enables organisationsto look cost-to-serve as awhole and plan sourcing matrix and transportationnetwork, which is in best strategic interests.Tactical Planning• Transport Planning • Transport Spend Analysis• Transport Sourcing Operational Planning• Load Building• Freight Allocation • Transport Route &
Schedule Planning • Dock Scheduling • Transport Execution
Management• Track & Trace • Invoice & Payment Management • Freight Collaboration Management• Analytics Driven BI System
A transport tower, in its true sense, takes control of the shipment whileenabling & ensuring delivery withminimum logistics cost with acceptedservice levels. Additionally, it providesreal-time visibility and strong analyticsto ensure continuous improvement.Transport control towers are built through several integrated ITsystems, which bring together best in class optimisation technology withcentralised execution management systems and strong analytics layer.
HOW CAN TRANSPORT CONTROLTOWERS HELP?Drivers for the setting up a transport control tower such as cost reduction,service level improvement, risk management, market penetration,etc., vary from one organisation to theother. Transport control towers canhelp develop and implement standardcontract management practices,implement centralised freight bill audit and payment system. These commandcentres support the implementationof centralised planning and execution. Other objectives for a control tower
may include:• Rapid what-if scenario/simulation
capability• Aggregate carriers spend through
centralised procurement• Improve vehicle utilisation and
therefore, reduce fleet size• Reduce empty miles (multi-
customer consolidation, backhauls)• Reduce miles travelled to lower
costs and support the company’sgreen policies
• Enable the logistics organisation to
act as a lead provider in aconsistent manner• Implement a platform for
continuous innovationand improvement
• Rigorous compliancemanagement andreal-time basis KPImanagement
RELEVANCE TO INDIAInfrastructure constraints:The low average truck speedof 30–40 kmph against theglobal average of 60–80kmph can be attributed tothe constrained and poor quality of the country’sroad network, which, inturn, increases the overall
transportation costs. Additionally,poor access to roads and infrastructurein rural areas necessitate that collaboration & innovation is requiredto penetrate this market.High level of fragmentation: About 75%of truck operators in India own lessthan five trucks and make up 80%of the revenues. This fragmentedownership structure triggers intenseprice competitiveness and impacts theoverall economics of transportation.Rising fuel prices: Fuel is estimated to
Source: ISEIndia research report on logistics update by MsSandhyaTungatkar.
52 • SMART LOGISTICS • MARCH 2013
constitute 40–50% of the total transportation expenditure.In the last three years, the cost of diesel has risen by 35%, thus putting additional pressure on logisticians inthe organisation to look for alternate methods to containcosts.Investments in technology: In India, specifically for logisticsand transport systems, investments in technology are onthe rise. Though most Indian companies are still in thePhase I & II of the evolution curve, the potential of such technologies is now well recognised.Lack of transporter benchmarking: India lacks an acceptedmodel of benchmarking transporters in terms of various KPIs such as cost, reliability and service levels.Unfortunately, most of this data remains buried within anorganisation. Moreover, lack of common benchmarking models or indices obstruct the evolution of this data intoinvaluable information.Growth of 3PLs: The need to focus on core competenciesand keeping logistics costs in control is driving the growthof 3PLs & 4PLs in India. The contribution of 3PLs in the overall logistics market is likely to increase from ~1.5–2%in 2008–09 to ~3.5–4% by 2013–14 as per an ISE Indiaresearch report. Growth of 3PLs in the organisation addsmultiple layers of control. This necessitates the need tocollaborate to create a single layer of visibility for logisticsoperations efficiency & cost control.
Due to some of the factors mentioned above, logisticscosts in India (as part of GDP) are much higher than inmany developed countries. This is driving organisations toadopt best in class practices across the world to managethe costs.
WORKING WITH AN MTS PROVIDERRealisation of the benefits of a transport control tower has led to the growth of Managed Transport Services(MTS) providers across the globe. These providers invest in IT & infrastructure and have extensive know-how of transportation to offer a unique value propositions for theindustry.
MTS providers may offer the following benefits toorganisations vs. setting up an internal control tower:• Low upfront investment • Pick & choose relevant pieces: Pay as you use model• Multi-company collaboration• Access to cost & performance benchmarking• Strong carrier network• Shift from management of information to govern of
information• Faster and non-disruptive implementation• Creation of virtual think-tank
Yuvnish Dhamija, Senior Consultant, ThinkLink SCS Ltd.
Email: [email protected]
Transport control towers, continued
Statement about ownership and other particulars about newspaper/periodical, namely Smart Logistics, as required to be published in the fi rst
issue of every year after the last day of February.
Form IV (See Rule 8) (Press and Reg. of Books Act, 1867)
1 Place of Publication: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West), Mumbai - 400 028
2. Periodicity of Publication: Monthly 3. Printer’s Name: Mr Mohan Gajria Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West),
Mumbai - 400 0284. Publisher’s Name: Mr Lakshmi Narasimhan Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West),
Mumbai - 400 0285. Editor’s Name: Ms Archana Tiwari-Nayudu Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West),
Mumbai - 400 0286. Names and addresses of individuals who own the newspaper & partners
or shareholders holding more than 1% of the total capital: Network18Media & Investments Limited** is the owner of the publication, namely Smart Logistics, having its registered offi ce at 503, 504 & 507, 5th Floor, Mercantile House, 15, K G Marg, New Delhi - 110 001.
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a. RRB Mediasoft Private Limited, 403, Prabhat Kiran, 17, Rajendra Place,
New Delhi - 110 008
b. RB Mediasoft Private Limited, 403, Prabhat Kiran, 17, Rajendra Place,
New Delhi - 110 008
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Place, New Delhi - 110 008
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Place, New Delhi - 110 008
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Place, New Delhi - 110 008
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Marg, Dhobitalao, Mumbai - 400 002
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Mohali, Punjab - 160 055
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Chambers, 89, Nehru Place, New Delhi - 110 019
j. Acacia Banyan Partners, Citibank N A, Custody Services, 3rd Floor, Trentd
House, G Block, Plot No. 60, BKC, Bandra (East), Mumbai - 400 051
k. Independent Media Trust (held in the name of its trustee), Empire
Complex 1st Floor, 414, Senapati, Bapat Marg, Lower Parel, t
Mumbai - 400 013
l. Network18 Media Trust (held in the name of its trustee), 503, 504 & 507,
5th Floor Mercantile House, 15 Kasturba Gandhi Marg, Delhi - 110 001 m. Network18 Group Senior Professional Welfare Trust (held in the name of its trustee), 503, 504 & 507, 5th Floor Mercantile House, 15 Kasturba Gandhi Marg, Delhi - 110 001
I, Lakshmi Narasimhan, hereby declare that all particulars given above aretrue to the best of my knowledge and belief.
Dated: 20th February 2013
LAKSHMI NARASIMHANSignature of the publisher
** ownership of this magazine stands transferred from Infomedia Press Limited(formerly known as Infomedia18 Limited) (hereinafter “Infomedia”) to Network18Media & Investments Limited (Network18) in pursuance of the scheme of arrangement between Network18 and Infomedia and their respective shareholders and creditors, asapproved by the Hon’ble High Court of Delhi and the necessary approval of Ministry of Information and Broadcasting is being obtained.
MARCH 2013 • SMART LOGISTICS • 53
REVERSE LOGISTICS REVERSE LOGISTICS TIPS & TRICKSTIPS & TRICKS
1UNDERSTAND THE REVERSE LOGISTICS SPECTRUM Many companies compare the essential parameters
such as time & money and conclude that reverse logistics is not a ‘crème service’ that could yield good results withgreater Return on Investments (RoI). However, the fact fileshighlight that for most companies, reverse logistics costs areless than 4% of the total supply chain costs. Hence, it is important to consider all the essentialities of reverse logisticsthat form the spectrum of the business. The products that fall in this business include recalled products, end-of-life products, seasonal returns & parts, their valuation, inbound returns, visibility accountancy, disposition and sortation, return to stock/OEM/recycle and so on.
2EVALUATE REVERSE LOGISTICS BENEFITSReverse logistics factors can affect more than 5% of
the total revenue. It is necessary to analyse these factors to boost overall revenue as reverse logistics complements themain business. After drawing a Reverse Logistics Spectrum (RLS), one must be able to gauge the returns & value on returns, assess the infrastructure accordingly and the commitment that runs on these basis.
3 CENTRALISE THE RETURN OPERATIONSUnlike the main logistics, which has become hybrid
and distributed by nature, in reverse logistics, the returnedproducts must be operated by a centrally managed group, which can improvise the cornerstone for change and success.The data collected in this manner will have foolproof authenticity, providing management the capacity to modelany reverse logistics programme accordingly.
4PROVIDE ONE-MAN AUTHORITYReturned products are mainly due to “the other person’s
fault”. Further, it is comparatively uncertain where the
product should be sent—the factory, for disposal or simply to the warehouse? All these affect the supply chain service.In such a scenario, it is wise to depute a higher authority, who can manage these operations.
5LEARN TO GENERATE REVERSE LOGISTICS OPPORTUNITYThe experience defines the reverse logistics problem.
While the primary objective of the model developed is to provide a cost efficient way to help manufacturers reclaim products for remanufacturing, the supply of products—which have been disposed of at the end of their lives—isfinite. Shortages in this supply are eminent which, in turn,lead to possible shortages in the supply of components for remanufacturing. This, in turn, generates a simultaneous need for component supply for the manufacturer and a back window opportunity for the logistics service provider.
6IMPROVE CUSTOMER EXPERIENCEThe creation of return orders is directly from the original
order. This provides a comprehensive history of the order life cycle, thus allowing the customer service representativeto provide knowledgeable assistance to virtually all customersirrespective of the channel used to originally purchase theitem.
THINK ABOUT THE BUSINESS, INSTEAD OF THE PROCESSA business-oriented staff manages numerous escalated issues rather than handling them. While both are intended to sort the issues and time-consuming customer problems, once you finish the process, the methodology might affect your business. Therefore, it is always suggested to be wise whilemanaging the aspects in reverse logistics even though it canbe cumbersome.
66optimally generate business optimally generate business
TA ANUPAM SUPRIT
reverse logistics may pose new problems to the sector and needs someSCM in rresh approaches. The problems like end-of-life products, their numbers new or fring specifi c time period to fulfi l the demand of various components are and fi ndhe few factors that must be programmed based on an entirely different among t
Here are some ways to optimise reverse logistics…model. H
ways to ways to
54 • SMART LOGISTICS • MARCH 2013
EVENT LISTEVENT LIST TRADE SHOW TRACKERTRADE SHOW TRACKER
ABROAD
15-17 MAY 2013EUROPEAN SUPPLY CHAIN & LOGISTICS SUMMIT 2013Focus: Cutting supply chain costsWhere: Park Plaza Amsterdam Airport, Amsterdam, The NetherlandsTel: +1 630.574.0985Fax: +1 630.574.0989Email: [email protected]
21- 23 MAY 2013GARTNER SUPPLY CHAIN EXECUTIVE CONFERENCEFocus: Supply chainWhere: JW Marriott Desert Ridge, Phoenix, ArizonaTel: +61 2 8569 7622 Email: [email protected]
29-30 MAY 20139TH TRANS MIDDLE EAST 2013 Focus: Port authorities, terminal operating companies, shipping lines and logisticscompanies throughout The Middle East regionWhere: Phoenicia InterContinental Hotel, Beirut, LebanonTel: +60 87 426 022Fax: +60 87 426 223Email: [email protected]
ABROAD
4-5 APRIL 2013APICS ASIA SUPPLY CHAIN & OPERATIONS 2013Focus: Move beyond better, faster, cheaperWhere: Hyatt Regency, MumbaiTel: +1-773-867-1777Email: [email protected]
16-18 APRIL 2013COOL LOGISTICS AFRICAFocus: Perishable logisticsWhere: Vineyard Hotel & Spa, Cape TownTel: +44 20 8279 9403Fax: +44 20 8279 9405Website: http://www.coollogisticsafrica.com/
21-24 APRIL 2013NASSTRAC LOGISTICS CONFERENCE & EXPOFocus: Transport and logisticsWhere: Rosen Shingle Creek, Orlando, USATel: +1-615-6961870 Email: [email protected]
NATIONAL
ABROAD
26-28 JUNE 2013PHARMA SUPPLY CHAIN MANAGEMENT INDIAFocus: Pharma supply chain managementWhere: Mumbai, IndiaTel : +91 22 6172 7272Fax : +91 22 6172 7273Email: [email protected]
4-7 JUNE 2013TRANSPORT LOGISTICS 2013Focus: Transport logisticsWhere: Messe München, Munich, Germany Tel: +49 89 949-11368 Fax: +49 89 949-11369 Email: [email protected]
18-20 JUNE 2013REVERSE LOGISTICS ASSOCIATIONS CONFERENCE & EXPOFocus: Reverse logisticsWhere: Mövenpick Hotel Amsterdam City Centre, Amsterdam, EuropeTel: +31 (0) 20 519 1200 Fax: +31 (0) 20 519 123Email: [email protected]
NATIONAL
Tel: +91-022-30034651 • E-mail: [email protected] • Web: www.engg-expo.com
HYDERABAD 31 May-3 Jun 2013
LUDHIANA 20-23 Dec 2013
AHMEDABAD 27-30 Sep 2013
INDORE 10-13 Jan 2014
PUNE 18-21 Oct 2013
AURANGABAD 31 Jan-3 Feb 2014
CHENNAI 14-17 Nov 2013
KOLKATA 21-24 Feb 2014
JAIPUR 29 Nov-2 Dec 2013
RUDRAPUR 7-10 Mar 2014
MARCH 2013 • SMART LOGISTICS • 55
ENGINEERING EXPOENGINEERING EXPO AURANGABADAURANGABAD 2013 20132013 EVENTEVENT REPORTREPORT
NISHI RATH
IT was in 1960 that the regionof Marathwada was merged withMaharashtra. This was the timewhen the industrial development of Marathwada began. Over time, the Maharashtra IndustrialDevelopment Corporation (MIDC)acquired land and set up industrialestates, which provided a boost tothe region’s tremendous growth.Aurangabad is now one of the classicexamples of efforts towards balancedindustrialisation with factors such asavailability of labour, comparatively lower cost for setting up base and adeveloping market attracting an array of industries to the city. Additionally,the presence of renowned MNCs anddomestic giants in Aurangabad hasfurther catalysed the city’s industrialgrowth by offering Small & MediumEnterprises (SMEs) a boost.
Reflecting the city’s industrial growth was the second edition of Engineering Expo Aurangabad. Heldduring February 22–25, 2013, at Ayodhya Nagari Grounds, the four-day Expo was inaugurated in thepresence of an esteemed set of Guestsof Honour including Kala Ojha,Mayor, Aurangabad; Sanjay Shirsat,MLA, Aurangabad West; PradeepJaiswal, MLA, Aurangabad Assembly Constituency; GM Ambhore,Director, MSME Development Institute; P Udayakumar, Director,The National Small IndustriesCorporation; Sudhanva Jategaonkar,
Associate Vice President, Network 18 Publishing and Vijay N Jaiswal,President, Aurangabad IndustrialSuppliers Association (AISA).
The inauguration also witnessed thepresence of Sunil Raithatha, President,Chamber of Marathwada Industriesand Agriculture (CMIA); Dr Uday Girdhari, President, MarathwadaAssociation Of Small Scale Industriesand Agriculture (MASSIA); AdeshPalsingh Chabda, President,Aurangabad Zilla Vyapari Mahasang and Mansingh Pawar, Past President,MASSIA, among others.
OFFICIALLY APPROVED Organised by Network18 Publishing with AISA as supporting partners,the Expo played host to variousindustry giants and market leaderswho showcased their best productsand services at the trade show. ShriBalasaheb Thorat, Hon’ble Minister of
Revenue, Government of Maharashtra,also graced the Expo. He said, “Engineering Expo Aurangabad has become a platform for new industries developing in the region. It has alsoproved to be the best platform for students as it gives them exposure to the real industrial world. I feel more events on similar lines should be organised in the near future.” Shri Rajendra Darda, MLA & Minister of School Education, Government of Maharashtra, also marked his presencein Engineering Expo Aurangabad. “The whole experience here was worththe visit. The Expo was well organisedand provided a platform for local entrepreneurs. We look forward to many more such events,” he said.
BRIGHT FUTURE FOR SMEsAccording to experts, the historical background of the place helps attract foreign investors. Aurangabad also
Since the last few years, Aurangabad has emerged as one of the fastest growing industrial hubs. The region already has a huge industrial presence with a large number of engineering services, auto ancillary and pharmaceutical research companies setting up facilities here. The ever-evolving industrial scenario and the entrepreneurial spirit of its entrepreneurs have helped Aurangabad grow into an industrial area of repute. Taking it further, Engineering Expo Aurangabad 2013 proved to be the right ‘growth tonic’ for boosting the region’s industrial might. A report...
Exhibiting Aurangabad’s unparallel potential
Dignitaries unveil the Exhibitors’ Directory at the inauguration of Engineering Expo Aurangabad 2013
AURANGABADFebruary 22-25, 2013Ayodhya Nagari Grounds
56 • SMART LOGISTICS • MARCH 2013
boasts of a very strong brigade of young and enthusiastic first-generationentrepreneurs, who not only implement new ideas but also steer the growth.“Aurangabad has a lot of potential when it comes to the industries. Thesmall scale industries here have a great future. They are keen to grow andplay a key role in the growth of any particular region,” said Udayakumar.
Engineering Expo Aurangabad focused on providing SMEs anopportunity to demonstrate their capabilities, to offer a platform toindustries across the country and enable exhibitors to formalise business alliances for mutual growth. “The tradeshow truly opened up a new world of opportunities for the small and medium scale industries here. The enthusiasmamong exhibitors was very encouraging.It was a good experience to be a part of this grand show,” said Shirshat.
UPBEAT EXHIBITORSThe exhibitors were overwhelmed by the positive response they receivedfrom the visitors. They were looking forward to generating more businessgauging from the enquiries that they received at the Expo. Manoj Kumar,Director, Apex Group, who exhibitedat the trade show, said, “We have hada lot of enquiries; I cannot gauge how many will turn out to be good businessleads, but yes, I am pleased with all the enquiries. It proves that we havemanaged to attract the target customers
and create our brand visibility.”Another exhibitor, Nitin
Bagul, Director, TechnovisionInstrumentation Solution Pvt Ltd,expressed, “We have participated inEngineering Expo Aurangabad last year as well; it has helped us build goodcontacts. Aurangabad is an industrialhub and the number of industries isincreasing by the day. This is a goodplace for such an event; only awarenessamong the masses has to be increased.”
Anand Pahade, Proprietor, Chintamani Electricals, who alsoexhibited at the trade show, said, “Weparticipated in this trade show as wewanted to create our brand image onwhich customers can bank on. Theresponse we have received has beenmixed. Expos such as these shouldwork towards creating awarenessamong the masses in Aurangabad.”
INITIATIVES IN ACTION…Engineering Expo Aurangabadsaw some great initiatives in action.The ‘National Vendor Development Programme’ acted as a crowd puller both in terms of exhibitors andvisitors. Organised by the MSMEDevelopment Institute, Government of India, Ministry of MSME, theevent became an instant hit. It saw participation from organisations likeWestern Railways, State Transport,Hindustan Petroleum CorporationLtd, Indo German Tool Roomand Central Institute of Plastics
Engineering and Technology.Speaking at the event, Ambhore
informed, “Our main objective isto identify and explore the businessopportunities in the highly competitivearea. We also encourage benchmarking for meeting the challenges in the best way.”
Engineering Expo Aurangabadwas not all about exhibitors but it alsooffered a lot to the visitors.
VISITORS MAKE THE MOST OF EXPOCommenting on how an Expo of thisstature acts as a growth catalyst, Mayur Parikh, Sr Manager Marketing, SahPetroleum Ltd, explained, “Exhibiting companies fully utilised this platformat the Expo. Such trade shows alwayshelp the industrial circuit of a particular region. Though we are not exhibiting this year, it was great to be part of theExpo as a visitor.”
Another visitor opined that theturnout despite of the recessionwas commendable. “Taking intoconsideration the recession, the turnout was good. Engineering Expo is a great platform for small and medium scaleindustries to connect and understandthe market requirements,” averredAbhay Sharma, Director, Extreme RoSystem Pvt Ltd.
Students too had a great chance togets hands on experience at the Expo.Starting from market trends to new technology, the Expo turned out to bea helpful lesson for them. “Studentscan learn a lot here; where else canthey find the latest technologies andmachines at one place?” said Ojha.
MARKING A NEW BEGINNINGAdding another feather to its cap,Engineering Expo came to an end witha promise to come back with moreenthusiasm and better opportunitiesfor Aurangabad. The next editionof Engineering Expo will be held inHyderabad, Andhra Pradesh, during May 31 to June 3, 2013.
Engineering Expo Aurangabad 2013, continued
Shri Balasaheb Thorat, Minister of Revenue, Government of Maharashtra, being felicitated with amomento by Network18 Publishing & AISA team
MARCH 2013 • SMART LOGISTICS • 57
PANEL DISCUSSION: AURANGABADPANEL DISCUSSION: AURANGABAD EVENTEVENT REPORTREPORT
Gauging Aurangabad on the Critical ParametersA panel discussion was organisedon the sidelines of Engineering Expo Aurangabad 2013. Held on February 22, 2013, the paneldiscussion focused on the topic,‘Trade, Trends and Technologies:Gauging Aurangabad on the Critical Parameters’. A report…
AURANGABAD has carved a nichefor itself among the industrial leaders inthe country. In the era of liberalisationand intensive competition, Aurangabadis resolutely addressing the challenge of moving to a higher growth trajectory in the industry.
Taking a peek into this growth story,Network18 Publishing with support from Aurangabad Industrial SuppliersAssociation (AISA) organised apanel discussion on the sidelines of Engineering Expo Aurangabad 2013.Held at Taj Presidency on February 22, 2013, the panel discussion servedas food for thought for more than 150industry leaders and professionals.
Some of leading industry experts like Ram Bhogale, Director, UmasonsAuto Compo Pvt Ltd; SG Rajput,GM, District Industries Center (DIC)& Superintendent Industries Officer,Aurangabad; Mukund Kulkarni,Director, Expert Global Solutions andEx-President Chamber of MarathwadaIndustries and Agriculture (CMIA); PUdayakumar, Director, The NationalSmall Industries Corporation (NSIC)and Maithilee Tambolkar, Director,Sanjeev Auto Parts Manufacturers Pvt Ltd, enlightened the audience on theopportunities Aurangabad can provide.The panel discussion was moderatedby Archana Tiwari-Nayudu, Editor,Network18 Publishing.
IS AURANGABAD UNDERRATED?The first non-stick pan came fromAurangabad, one of the best white
goods brands and electronics is offeredby this city, it also supplies the best microfinishing machines, whichalso compete with the world’s best.However, it seems to lack visibility.“We export to 72 countries and, inthe last two years, Aurangabad-basedorganisations have done acquisitionsoverseas. But we are still understatedbecause we have been underestimating ourselves. It is high time we moveahead,” said Kulkarni.
“We have created brands, but were never given that status. This isbecause we were overshadowed by major industrial hubs like Mumbai andPune. But I think it is time for us tocome out of that shadow and proveour calibre,” observed Bhogale.
Taking the discussion ahead,Tambolkar added, “There is nodenying that Aurangabad is underratedas a manufacturing hub, one of thereasons being the presence of variousfirst-generation entrepreneurs. Every business has to go through a cycle andmost of them are completing the cyclenow. So, this is the time.”
Giving the discussion a twist,Udayakumar said, “I look at it in avery positive way. In the age of competition, it can be seen as anopportunity. Entrepreneurs can focus
on their resources and future plans, when no one looks at you as a threat.”
TECHNOLOGY TAKES THE LEADAccording to the panelists, investing in technology and innovation will takeAurangabad to a new level. “What we have focussed on is right investment and right technology; investing in thelatest technology will always pay back in the long term. This strategy has helped us too,” added Tambolkar.
Speaking up for technology, Bhogaleadded, “Investing in technology is oneof the reasons why we have witnessedgrowth. Aurangabad is a good mix of innovation and tradition. There are people who have innovatively managed their traditional ways. That has given them a competitive edge,” said Bhogale. “Investing in the best technology is key; the short-term costs may be higher, but the long term gain is what people should be looking at. Managing time, quality, productivity and safety will also makeus competitive,” added Kulkarni.
The panel discussion received an overwhelming response from the industry, who actively participated as the audience. The insightful discussionwas followed by a lively question and answer session.
(L-R) Maithilee Tambolkar, Director, Sanjeev Auto Parts Manufacturers Pvt Ltd; SG Rajput, GM, DIC &Superintendent Industries Offi cer, Aurangabad; Archana Tiwari-Nayudu, Editor, Network18 Publishing;Ram Bhogale, Director, Umasons Auto Compo Pvt Ltd; P Udayakumar, Director, NSIC and Mukund Kulkarni, Director, Expert Global Solutions & Ex-President, CMIA, voice their views at the panel discussion
NISHI RATH
58 • SMART LOGISTICS • MARCH 2013
TENDERSTENDERS
Latest Popular Tenders brought to you by www.tendersinfo.com
Org: Organisation’s Name, TRN: Tendersinfo Ref No, Desc: Description, DSLD: Doc Sale Last Date, BOD: Bid Opening Date, Loc: Location, BT: Bidding Type.
INFORMATION COURTESY: TENDERSINFO.COM
1, Arch Gold, Next to MTNL Exchange, Poisar, SV Road, Kandivali (W), Mumbai - 400067, Maharashtra, India
Tel: +91-22-28666134 • Fax: +91-22-28013817 • Email: [email protected]
HYDRAULIC MOBILE PICK & CARRY CRANE
Org : Central Coalfield Ltd
TRN : 14810924
Desc : Supply of hydraulic mobile pick & carry crane of 12 tonne capacity
BOD : March 20, 2013
Loc : Ranchi, Jharkhand
BT : Domestic (NCB)
MOBILE CRANE
Org : CCI Du Var
TRN : 14809343
Desc : Supply of mobile crane
BOD : March 20, 2013
Loc : France
BT : Global (ICB)
ELECTRIC FORKLIFT
Org : Royal Canadian Mounted Police
TRN : 14761276
Desc : Provision of electric forklift
BOD : March 21, 2013
Loc : Ottawa
BT : Global (ICB)
DIESEL-OPERATED FORKLIFT TRUCK
Org : Ordnance Factory Board
TRN : 14502699
Desc : Design, manufacture, supply, erection and commissioning of two nos. 10-tonne capacity diesel operated forklift trucks along with accessories and spares on a turnkey basis
BOD : March 25, 2013
Loc : Ishapore, West Bengal
BT : Domestic (NCB)
CRANE TRUCK
Org : Botkyrka Kommun
TRN : 14809769
Desc : Purchase of piece crane truck
BOD : March 25, 2013
Loc : Tumba, Sweden
BT : Global (ICB)
HAAKARMAUTO WITH HYDRAULIC LOADING AND UNLOADING CRANE
Org : Gemeente Putten
TRN : 14645133
Desc : Purchase haakarmauto with hydraulic loading and unloading crane
BOD : March 22, 2013
Loc : Putten, The Netherlands
BT : Global (ICB)
VEHICLES EQUIPPED WITH HYDRAULIC TIPPER AND CRANE
Org : Amiat Azienda Multiservizi Igiene Ambientale Torino s.p.a.
TRN : 14409527
Desc : Supply of 7 vehicles equipped with hydraulic tipper and crane 26 t gvw maintenance service full service
BOD : April 10, 2013
Loc : Torino, Italy
BT : Global (ICB)
PROJECTS
RAJAHMUNDRY AIRPORT EXPANSION
Org : Airport Authority of India
PT : New facility
Project News : The airport is located on a 366-acre land. The government has sanctioned approximately `80 crore for its expansion. Airport Authority of India had suggested for acquisition of 657 acre of land for the airport’s expansion to facilitate night landing and to provide other amenities for the benefit of passengers.
Loc : India
Implementation Stage : Planning
Project Cost : `80 crore
Contact : Airport Authority of India Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi – 110003.
Tel : 08832007838, 0949074205
Fax : 08832487852
Email : [email protected]
MARCH 2013 • SMART LOGISTICS • 59
PRODUCT UPDATEPRODUCT UPDATE
This section gives information about products, equipment and services available in the market. If you know what you want. . .refer to Product Index on Page 64 to find it quickly
STACK-A-DRUM PALLET RACK
Stack-a-drum pallet rack is
designed ergonomically to y
store two drums per pallet.
It is easy to move and can be
moved individually or with the
help of stack and a forklift truck.
It has a high load-bearing
strength and the cradles of the product are made from mild steel
pressed channels that can be shipped in knockdown condition.
Th e product can be availed in only standard size with a capacity
of 200 litres. Th e salient features are: stacking up to 4 units high,
quickest, easiest, safest method of handling steel drums and
easily accessible from all four sides.
Stakall
Thane, Maharashtra
Tel: 250 -2456970, 2452433, 08600047373
Fax: 250 – 2452530
Website: www.stakall.in
ADJUSTABLE PALLET RACKS
Adjustable pallet racking is
widely specifi ed in
virtually every industry
and can easily adapt to the vast
range of products to be stored.
Th ey are the most popular and
widely used of all heavy duty
storage systems which incorporate
racks. It features low maintenance
and easy installability with low
down time. Th ey are manufactured using superior quality raw
material which is high tensile strength steel and they can easily
store large and bulky items. Th e range can store commodities of
diff erent sizes. Benefi ts of the racks are high levels of storage
density, automatic stock rotation. It is useful for pharma
industries, warehousing, logistic companies, etc.
Dewas Techno products Pvt Ltd
Dewas, Madhya Pradesh
Tel: 7272- 259044,259294
Fax: 7272-259044
Email: [email protected]
Website: www.giraffestorage.com
barcode readers are unaff ected by variations in lighting, marking
method, code quality or surface fi nish. “2DMax+ is a proven
breakthrough in 2-D decoding. Th is functionality is especially
helpful in pharmaceuticals, food, beverage and consumer goods
packaging sectors. Barcode
reading in these industries are
often challenging due to poor
print quality, varying part sizes,
curved surfaces and labels
damaged by environmental
factors or supply chain activity.
2DMax+ helps these users
achieve the highest reading yields and maximise throughput.
2DMax+ can read Data Matrix codes even when critical elements
are missing. It can also locate and decode Data Matrix codes that
are over exposed or underexposed, without requiring multiple
retries. Th is improves throughput, speed and overall reliability.
Cognex Sensors India Pvt
Pune, Maharashtra
Tel: 2040147840
Email: [email protected]
Website: www.cognex.com
BARCODE READER
Using barcode reader with 2DMax+ technology, readers
can identify and decode severely damaged or poorly
marked 2-D matrix codes. Most importantly, the
PALLET TRUCK
The model AGHL-100 high-
lift pallet truck is specially
designed for raising pallets to
medium heights up to 800 mm. Th is
pallet truck is used for stacking 2 to 3
pallets. Pallet used in the hydraulic
hand high lift trolleys is used in
various types of work in plant and
maintenance shops. Technical
specifi cations include capacity of
1,000 kg, minimum height of 90 mm,
overall width of 560 mm, fork width
measuring 152 mm, fork length of 1,220 mm, and raised height
of 800 mm.
Agromec
Meerut, Uttar Pradesh
Tel: 0121-2440660, 3098766, 09313159058
Email: [email protected]
Web: www.agromecindia.net
WOODEN PALLETS
Wooden pallets are compatible with existing supply
chain infrastructure. It helps achieve greater
effi ciencies during transport and storage with 2-way
60 • SMART LOGISTICS • MARCH 2013
Product update, continued
or 4-way entry design. It
also helps reduce
occupational health and
safety risks to the
workforce through the
ability to safely rack and
carry heavy loads. Pooled
wood pallets are durable,
cost eff ective and
environmentally sustainable.
Chep India Pvt Ltd
Mumbai, Maharashtra
Tel: 022 - 67839400
Email: [email protected]
Website: www.chep.com
AUTOMOTIVE PART TRACKING
Automotive part tracking system is self-contained with
patented ID Max and ID quick decoding algorithms. It
is omni-directional and can read codes presented at any
angle even if there are
variations in the part position.
It integrates directly to the
factory network with the
Cognex Connect™ suite of
supported industrial protocols
which ensures that the PC is
no longer required between
the reader and the factory network. It reduces the overheads of
many systems used in the factory and also provides ethernet
connection to transfer the data directly to the factory’s server. It
has expandable system capacity of 700 units/shift and it provides
complete traceability through supply channel.
Cognex Sensors India Pvt Ltd
Pune, Maharashtra
Tel: 020- 40147840, 09881466003
Fax: 020- 66280011
Email: [email protected]
Website: www.cognex.com
DOCK LEVELER
The dock-leveler has whole
drive unit contained in a
wall box, which is installed
on a wall inside the warehouse, at
eye level. It allows for easy and
economical maintenance, without
the necessity to maneuver under the platform or inside the pit
where traditional power packs and controls are usually installed.
Depending on the type of installation it can hydraulically power
several dock-levelers with only one consolle (drive unit). Each
dock-leveler is controlled separately by its own control pad. Th ey
can also work simultaneously. Reducing the electric mains supply
points to one per consolle instead of one per dock-leveler helps
from the economic point of view. Th ere is a 65% reduction in
dock-leveler installations and about 75% in dock-leveler and
powered sectional door installations. Th is reduction normally
results in important economies while installing the mains
distribution box. Consequently by reducing the number of motors
there is a dramatic saving on electricity costs, as the global mains
power engagement is radically reduced.
Gandhi Automations Pvt Ltd
Mumbai, Maharashtra
Tel: 022-66720200/66720300
Fax: 022-66720201
Email: [email protected]
Website: www.geapl.co.in
HYDRO MECH VERTICAL LIFTER
The ATL vertical lifter is a
telescopic lifting device for use
with an XA workstation crane.
It can lift loads up to 1,600 kilos
outside the centre of gravity. Th is is
available in either pneumatic or electric
chain hoist models; this vertical lifting
equipment is easily adaptable to one’s
lifting needs. Th e telescopic guides
allow sway-free lifting. A smaller cycle
time noticeably improves the productivity. Frequently recurring
load manipulations can be performed easily, quickly, and with a
very high level of precision.
Konecranes India Pvt Ltd
Pune, Maharashtra
Tel: 020-40047470
Email: [email protected]
Website: www.konecranes.com
DATA LOGGER
8/16 channel universal digital process
data recorder comprises of user
interface module and process interface
module. Th e user interface module is panel
mounting unit that facilitates viewing and
setting up the process values and parameters.
Th e process interface module is wall
mounting unit that accepts process signals
from sensors / transmitters and converts
them in high resolution digital values. Th e
two modules are connected using 2- wire
communication cable. Th e modular design simplifi es process
cabling for easy and convenient installation. It has 8 / 16
MARCH 2013 • SMART LOGISTICS • 61
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alarm. It is mounted on patented “FUTURE” fl oor stand. It has
an adopted PVC belt for smooth and effi cient conveying. Th e
fl oor stand is height adjustable. It has an angle adjustable
function with a range of 0°~25°. Sidewalls for PNL series is 75
mm respectively. It has a speed adjustor with 0~6 m/min
adjusting range. Power supply requirement is 1, 230V,
50/60Hz.
Shini Plastics Technologies India Pvt Ltd
Thane, Maharashtra
Tel: 250-3021166(88)
Fax: 250-3021100
Email: [email protected]
Website: www.shini.com
channel universal process monitoring with alarms. Recording of
process values and alarm status is possible. Continuous / time
slot batch recording with programmable recording interval date
/ time stamped records is also possible. Its features are: High
data storage capacity upto 2 GB memory, storage of
approximately 38,56,000 records, direct data transfer to pc via
pen-drive memory stick, CSV (comma separated values)
formatted records facility for direct view in excel sheet or
notepad.
Process Precision Instruments
Thane, Maharashtra
Tel: 0250- 2391737
Fax: 0250- 2391734
Email: [email protected], www.ppiindia.net
Website: www.pppindia.com
BELT CONVEYOR
PNL-MS series belt
conveyor with metal
detector is a device
which can detect the metal
contained in the material
during conveying and
simultaneously activate the
COMPACTOR STORAGE SYSTEM
Stomat compactor storage system can
increase storage effi ciency. Th e
existing and new shelving units can
be mounted on mobile bases, which run
on tracks set into the fl oor. Th e shelving
unit is opened or closed when required,
making it possible to make one aisle do
the work of many. Only one aisle is required to provide access to all
shelf locations. Th e system fully utilises the full height, width and
62 • SMART LOGISTICS • MARCH 2013
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Product update, continued
CARGO STORAGE SERVICES
The services in storage and
handling operations
include features like
providing customers warehouse as
per specifi cations & size in the
required area of operations,
providing with material handling
equipment, like forklifts, hydras
for loading/unloading & proper stacking of materials to be
handled, managing the incoming & outgoing cargo as per the DO
issued by principals, etc.
Shalimar Warehousing Corporation
Mumbai, Maharashtra
Tel: 022-28724981, 09924355999
Email: [email protected]
Website: www.shalimarwarehousing.in
CLIP-ON SYSTEM
In the heavy-duty clip-on
system, beams are available in
three profi les: open, stepped
and boxed section. Th ese beams are
designed for diff erent load
requirements. Th e beams are
supplied in standard grey colour.
Other non-standard house colours
are supplied as per customers’
requirements, subject to volume and colour availability.
Available from 1000 mm to 2700 mm, clear entry beams are
clipped to vertical frames and are adjustable at a pitch of 100
mm. Steel shelves with dividers are also available.
Ahlada Industries Pvt Ltd
Hyderabad, Andhra Pradesh
Tel: 040-23094301, 09866661011
Email: [email protected]
Website: www.ahlada.com
depth, allowing the user to maximise storage in the space available.
Space Magnum Equipments Pvt Ltd
Pune, Maharashtra
Tel: 020-24355895
Email: [email protected]
DERRICK CRANE
The heavy-duty Derrick crane facilitates handling of
marble blocks at the quarry. Rational structure, ie,
boom, central mast and rafters of the crane are made
MARCH 2013 • SMART LOGISTICS • 63
The information published in this section is as per the details furnished by the respective manufacturer/distributor. In any case, it does not represent the views of
Looking For A Specific Product?Searching and sourcing products were never so easy.
Just type SL (space) Product Name and send it to 51818eg. SL Forklift and send it to 51818
out of heavy-duty
structural steel
framework, duly stress-
relieved. Th e base of
central mast is fi xed to
the hoist unit, which in
turn rotates on specially
designed thrust bearing,
anchored to the central
foot by means of bolts, grouted in concrete foundation or rock.
Hoist unit comprises of special crane-duty motor, connected to
variable speed reducers and helical gearbox, duly coupled to a
grooved steel drum.
Friends Engineering Works
Udaipur, Rajasthan
Tel: 0294-2492200, 09829042424
Email: [email protected]
Website: www.friendseng.com
handling goods. Th e stacker is used
indoors for storage and distribution of
all kind of products. It is also built to
user standards, with several mast
versions and lifting heights of up to
6000 mm. Th e EZI series range off ers
versatility from material handling
operations inside a store, warehouse,
and food sectors.
Jay Equipment & Systems Pvt Ltd
Thane, Maharashtra
Tel: 0250-2481806
Email: [email protected]
Website: www.jayequipment.com
ANTISTATIC PLASTIC PALLETS
These antistatic plastic
pallets are available
in various sizes. Th ese
plastic pallets are made from
virgin foodgrade plastic
materials and are used in
pharmaceutical and food-
based industries. Also off ered
are grain storage pallets, steel reinforced plastic pallets, drum
pallets, moulded plastic pallets, rackable plastic pallets, etc.
Ergen Plastic Industries
Jodhpur, Rajasthan
Tel: 0291-2433737, 09414195707
Email: [email protected]
Website: www.indiamart.com
AUTOMATED STORAGE & RETRIEVAL SYSTEM
Stomat automated vertical storage
and retrieval system is used for
making storage neat, clean and
effi cient. Th e mechanised shelves rotate in
the vertical plane in either direction. An
electronic control with keypad to call
numbered carrier and bin/compartment
makes the retrieval extremely quick. Th e
control is equipped with a memory to
store information on the location of code
numbered components. Stomat is used
where storage is an important
consideration, in engineering, electrical
and electronic industries, and is also used directly on the
shopfl oor as intermediate storage as a standalone sophisticated
storage and retrieval system.
Space Magnum Equipments Pvt Ltd
Pune, Maharashtra
Tel: 020-24352812
Email: [email protected]
Website: htwww.spacemagnum.com
ELECTRIC STACKER
The EZI electric stacker is used for moving palletised
goods and increasing useful space storing goods on
diff erent heights, reducing time and costs of
management. Th is stacker is effi cient and cost-eff ective for
PRODUCT & ADVERTISERS’ INDEXPRODUCT & ADVERTISERS’ INDEX
64 • SMART LOGISTICS • MARCH 2013
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Our consistent advertisers
Looking For A Specific Product?Searching and sourcing products were never so easy.
Just type SL (space) Product Nameand send it to 51818
eg. SL Forklift and send it to 51818
DENDE
Auto FLC ...................................................................................................FIC
Adjustable pallet rack ...................................................................................k 59
Antistatic plastic pallet .................................................................................t 63
Automated storage and retrieval system ....................................................... 63
Automotive part tracking .............................................................................g 60
Barcode reader ..............................................................................................r 59
Belt conveyor ................................................................................................r 61
Cargo storage service .................................................................................... 62
Clip-on system ............................................................................................. 62
Compact storage system ............................................................................... 61
Connecting shippers to transporter ..............................................................r 13
Data logger ...................................................................................................r 60
Derrick crane ................................................................................................ 62
Dock leveler..................................................................................................r 60
Electric stacker .............................................................................................r 63
Foldable plastic crate ..................................................................................FIC
Folding large container (FLC) ...................................................................FIC
Hydro mech vertical lifter.............................................................................r 60
Infomedia Yellow Pages .................................................................................. 6
Logistics services ......................................................................................7,BC
Pallet ...........................................................................................................t FIC
Pallet truck ...................................................................................................k 59
Stack-a-drum pallet rack ..............................................................................k 59
Wooden pallet ..............................................................................................t 59
Products Pg No
To know more about the products & advertisements featured in this magazine, write to us at [email protected] or call us on 022-3003 4640, and we will send your inquiries to the
companies directly to help you source better.
ySchaefer Systems International Pvt Ltd 3
T: +91-22-6111 4710
W: www.ssi-schaefer.in
Chemical & Process World 4
T: +91-022 3003 4650
Network18 6
T: 1800 200 1010 (tollfree)
W: www.yellowpages.co.in
pSafexpress Private Limited , 7, BC
T: +91-1800-113-113
W: www.safexpress.com
Engineering Expo 8, BIC
T: +91-9819552270
W: www.engg-expo.com
Spider Opsnet Private Limited 13
T: +91-080-42455424
W: www.opersoft.com
pChep India Pvt Ltd FIC
T: +91 022 67839400
W: www.chep.com
Advertisers’ Name & Contact Details Pg No
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PRODUCT INQUIRY FORM
ADVERTISERS’ INQUIRY FORM
Auto FLC
Adjustable pallet rack
Antistatic plastic palletAntistatic plastic pallet
Automated storage and retrieval system
Automotive part tracking
Barcode reader
Belt conveyor
Cargo storage service
Clip-on system
Compact storage system
Connecting shippers to transporter
Data logger
Derrick crane
Dock leveler
Electric stackerElectric stacker
Foldable plastic crate
Folding large container (FLC)
Hydro mech vertical lifter
Infomedia Yellow Pages
Logistics services
Pallet
Pallet truck
Stack-a-drum pallet rack
Wooden pallet
Schaefer Systems International Pvt Ltd
Network18
Safexpress Private Limited
Engineering Expo
Spider Opsnet Private Limited
Chep India Pvt Ltd
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