log india 1 jan 2011

INDIA

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

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

Page 40

Sonic Boom

January 2011 Vol. 4 — No.5 `100INDIA

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

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

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

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

Method In Motion

October 2010 | Vol. 4 – No.2

IndIa’s LeadIng LOgIstIcs MagazIne

` 100

www.logisticsweek.com

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

LEARNINGS 2010 26Critical lessons we learned from industry leaders.

26Critical lessons we learned

eDITORIAL >

5INDIA| January 2011 | www.logisticsweek.com

T echnically, this Log.India issue signifies the end of 2010. So it’s time for an annual review, something on the lines of ‘the year that was’.

But it’s said that it’s only ghosts who look back while walking forward. And last I checked, I was a real person. So I am going to look ahead while I walk and instead of a recap, I am going to try and predict significant trends that will inf luence the logistics and supply-chain industry in the year 2011.

Disclaimer: You must to take these predictions, like you usually do – with a fat pinch of salt. As you know, most such predictions are truisms. A truism is a general statement that could be true for anybody, but when said to a particular person, it appears true for him in particular. Newspaper astrologers use truisms all the time, like ‘You will meet your soul mate today, but if you are not alert, he or she may walk past you and you wouldn’t know’. Even a lot of pop-scientific studies are truisms, like, ‘Good listeners attract more women, says study.’ Nonetheless, predicting trends, and reading them, is fun, so now I’ll hazard some foretellings for the logistics industry for 2011. Here they go.

Logistics will become fashionableIt’s been a long time coming. In the same way that Information Technology caught people’s

imagination in India somewhere around 1999. But fear not, it will become famous not because of some impending catastrophe like Y2K, but due to all the good reasons. This will help us on many fronts – attracting talent, policy, infrastructure, finance, etc.

The year of correctionsOne big surprise could be the plateauing of the telecom industry. The total subscription base

has already reach 70 crore in a country of 100 crore people. Moreover, all the 2G-scam outcry will go to curb the enthusiasm of the policy makers and the investors alike.

Then a real-estate bubble has been building up for a long time. All the signs point to a crash. However, I reckon that the real estate bubble will not burst in our faces. With booming rural-to-urban migration numbers, real estate will continue to flourish, but the prices will be corrected. Also, automotive industry has been predicted to grow at 20 percent. I think that is a tad ambitious.

The DependablesPharma, bulk commodities (like coal, cement, etc.), retail, and agriculture. In that order. Retail is on the list,

because support for retail FDI looks to be gathering steam. Even if the FDI does not become a reality this year, the local, large retail players are bound to scale up to meet the demand. Agriculture, on its part, could attract significant private investment this year, giving a boost to agri-logistics.

GST or not, we’re investingI see a sense of disenchantment in the industry that GST could be nothing but a pipe dream. Correct me if I am

wrong, but with a weak government at the center and the lure of state taxes, the case for GST looks very weak, unless the logistics industry comes together and tries to convince all stakeholders, especially the general public. Nonetheless, I believe that, with the increasing pressure on supply-chain due to the rising consumer demand, companies that were waiting for GST to invest in warehouses, will go ahead and do it anyway. The areas which will see the most investment will be automation, and technology tools that ensure data visibility across the supply-chain.

Cold chain will be hotYou know what I mean.Time for coastal shipping This area, with the draft policy on the sector expected anytime, would be a hot topic of discussion this year. India’s

freight movement, highly skewed towards roadways (that pull 57 percent of the total lot), needs saviors, and waterways – coastal shipping as well as inland – could well provide the answer. More so, since both roadways and railways are not able to keep up with the growth – both the sectors have reported high incidences of cost overruns and project delays, as data collated by ministry of program implementation has shown recently. As for aviation, it goes without saying that one can’t expect to see much action there anytime soon, due to the near-absent infrastructure in the interiors.

Have a glorious year ahead.

What’s Up

Aanand [email protected]

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

Aanand PandeyEditor

ContentsCover StoryAlways Within Reach

upShotRecent Events Two events that caught our eye were the INMARCO-INAvation 2010 and SCLC's for retail summit at which industry veterans discussed logistics challenges in shipping and food retail.

event reportCeMAT 2010Hannover Milano Fairs India Pvt Ltd’s CeMAT India 2010 was an opportunity for logistics companies to launch new products. The event also hosted a seminar jointly organized by Log.India and HMFI.

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INDIA| January 2011 | www.logisticsweek.com6

LearningS 2010Live And LearnPriceless insights from our cover stories of the year gone by.

50 Featurethe Big BreakAlthough several pharmaceutical companies refrain from using LSPs, there are a number of LSPs waiting to break into this sector by increasing the number of services.

Ericsson India's USP is managed services, which means handling supply-chain for its customers in addition to its core services.

40

50

26

CoLumnThe Bigger PictureThe knowledge of macroeconomics is necessary to optimize production outcomes and minimize costs.


January 2011

56

66

reguLarSevents 70

JANUARY 2011

panoramaWide View

gueSt CoLumnsub-Zero LogicA better cold-chain infrastructure can have a sobering effect on rising food prices and empower the farmer.

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

ADVeRtIseR InDeXArham Logiparc ...................................................... IBC

BLR Logistiks .......................................................... 35

Capricorn ................................................................13

Drive India Enterprise Solutions .............................. 45

Emirates Skycargo ......................................Back Page

Godrej Storage Solutions ..........................................17

Greenearth Translogistics ........................................ 43

Hormann ..................................................................15

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

Orange City Logistics Park ...................................... 23

Ports Finance International ...................................... 53

Radhakrishna Foodland ........................................... 57

Round The Clock ...................................................RHS

Safexpress ...............................................................11

Schaefer Systems International ................................. 9

Shree Rajlaxmi Logistics ................................... 31, 33

State Bank Of India ................................................ IFC

The Reverse Logistics and Returns Management .... 55

Uniworld Logstics .................................................... 39

Venture Intelligence ..................................................14

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

INDIA

WHAT‘S IN A NAME 22What is the right term? Is it logistics? Or is it supply chain?

PLAYING IT SAFE 44An in-depth look at security measures and cases-in-point

BEST AMONG EQUALS 24Why benchmarking must be made a norm in the industry

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20INDIA| December 2010 | www.logisticsweek.com

Order Accuracy

Assets

Valu

e A

dditio

n

Manage Accounts

Accuracy

P

rocesses

Sales and M

argins

Dam

ag

es

Billing E

rror

s

< FEATURE

Page 34

Mission Replenish

December 2010 Vol. 4 — No.4 `100

INDIA

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

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

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

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

Method In Motion

October 2010 | Vol. 4 – No.2

IndIa’s LeadIng LOgIstIcs MagazIne

` 100


GCPL supply-chain’s replenishment model holds many takeaways for peer companies. And the man in the thick of the action is Rakesh Sinha, COO (Marketing & Operations), Godrej Consumer Products Ltd. (GCPL) >>

DeCemBer 2010

news 08

56

BooK eXtraCtLet's Hear those IdeasVoice-enabled technologies can make warehouse management effective.

60

Understanding How Voice Unleashes Higher Performance in Product Distribution

THE TALKING WAREHOUSE

An eBook by Roger Byford and David Maloney

Chapter 1: The Talking Warehouse

8

< news

INDIA| January 2011 | www.logisticsweek.com

Call For Integrated Infrastructure, Logistics Policy

India needs an integrated infrastructure and logistics policy to keep up the growth

of its gross domestic product. The country’s robust growth has not only put a tremendous load on infrastructure, but has put the spotlight on the critical need for building more. These were some of the observations made at “The Surface Trans-port-2010”, CII’s Transport In-frastructure Summit, and the fi rst of its kind in the country that was organized in Mumbai on December 21, 2010.

prime challengesShyamalkumar Mukherjee, Joint Managing Director, Ma-

harashtra State Road Develop-ment Corporation (MSRDC) put the focus on infrastructure when he said that consider-ing the developing nature of the country, India needs to in-vest $300 billion in urban in-frastructure. “There is a huge stress on current infrastructure which can be mitigated by mas-sive investments.”

One of the prime challenges facing logistics sector in India is the presence of multiple in-terface points across the Centre and State, said Gopal N. Sarma, Partner with Bain & Company India. “Having an integrated transportation and logistics policy as a fi rst step towards an

CII, KPMG, GECL, AFL, TCI,

Concor, ILSPL .....................12

Siesta Logistics, Alchemy

Partners, Ashmore

Investments, Schneider

Electric, Airbus, Fujitsu,

ITC, UB Group, SBQ Steel,

Philips, Parle Agro, Lakhani,

Lilliput, Videocon, Shiv-

Vani Oil, Thermax, Everest,

Jubilant Organosys, FedEx

Express..................................15

Shreyas Shipping, Tata

Motors, Shreyas Relay Systems,

Gateway Rail, Concor. ..... ...16

OPERATIVE INDEX*

*Key entities mentioned in the news section

The message that emerged from The Surface Transport-2010 was clear. India needs an integrated transportation and logistics policy as a fi rst step towards an integrated transportation department at the central level.

The Shipping Trade Practices Bill when legislated will usher in

a more transparent and efficient regime for the shipping industry.

— gk vasan, minister for shipping,

at CII Logistics Summit 2010.

TRAIN OF THOUGHT

I was with the chief executive of LG and he said... the biggest challenge he faces is logistics... the fact that it is so fragmented, and there are all these complexities of octroi, taxes, etc.

— capt gr gopinath, cmd, deccan 360,

referring to the importance of logistics, in Times of India.

Logistics is expected to contribute 12 pc to India’s GDP

of $5 trillion in the next ten years. That means we have an

addressable market of $600 million.

— vg siddhartha, Founder, cafe coffee

day,

on acquiring Sical Logistics, in Times of India.

CEO’s Interactive Roundtable at CII Surface Transport Summit

2010 Moderated by Mini Menon, Executive Editor, Bloomberg

UTV. L-R: Arjun Dhawan, President, HCC; J P Nayak, Chair-

man – Surface Transport 2010 and Whole-time Director & Presi-

dent, Larsen & Toubro Ltd; Karunakaran Ramchand, MD, IL&FS

(Transportation); and Rajesh Sharma, VP, Escorts.

Non-compliant to new OHS regulations

Inefficient warehouse planning

Outdated storage systems

Labour intensive operation

Unable to meet KPI

Lack of local support

Poor use of available headroom

Too many error in piece picking operations

Non-compliant to FEM safety standards

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Schaefer has the formula to add up all your logistics woes and convert them into successful solutions. Our Integrated Storage Solutions is the answer. It improves your warehouse operations with high-performance order picking, greater picking accuracy, faster movement of picked orders and many other customisable possibilities. Plus all these add up to cost savings for you.

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Schaefer_Formula 5_LOG_216x270mm.indd 1 12/8/2010 12:35:09 PM

Non-compliant to new OHS regulations

Inefficient warehouse planning

Outdated storage systems

Labour intensive operation

Unable to meet KPI

Lack of local support

Poor use of available headroom

Too many error in piece picking operations

Non-compliant to FEM safety standards

Infinite Logistics Solutions

Schaefer Provides You With The Logistics Success Formula.

Schaefer Systems International Pvt. Ltd. Unit No. 504 “Powai Plaza” Hiranandani Business Park, Powai, Mumbai : 400 076Phone +91 / 22 / 6111 4700/710Fax +91 / 22 / 6111 4777eMail [email protected]

Schaefer has the formula to add up all your logistics woes and convert them into successful solutions. Our Integrated Storage Solutions is the answer. It improves your warehouse operations with high-performance order picking, greater picking accuracy, faster movement of picked orders and many other customisable possibilities. Plus all these add up to cost savings for you.

Learn how Schaefer can help you at www.ssi-schaefer.in

Schaefer_Formula 5_LOG_216x270mm.indd 1 12/8/2010 12:35:09 PM

10

< news


integrated transportation de-partment at the central level is the key.”

Highlighting the opportu-nity that the Indian logistics industry provides for develop-ment given its inadequacies, JP Nayak, Larsen & Toubro Ltd’s Whole-time Director and Presi-dent (Machinery & Industrial Products), said: “Formulating a national integrated logistics policy, targeting a greater share of freight to rail, increasing en-ergy effi ciency, building dedi-cated freight corridors, coastal corridors, last mile roads, mul-timodal logistics park, skill development etc. It is a com-plex task with the involvement of multiple stake holders and a

cross ministerial group would be required to drive it.”

As per fi gures mentioned in logistics reports, in the US, logistics cost is 70 percent less for coastal freight and 30 per-cent less for road transport compared to India.

Nayak, also the Chairman of Surface Transport-2010, said this waste is assessed at $45 bil-lion or 4.3 percent of our GDP. “Indian infrastructure is in-

suffi cient, ill-equipped and ill-designed to sustain the rapid rate of growth. Yet, this is also an opportunity where the mag-nitude is such that two third of the required infrastructure has to be newly created. If we do not improve, by 2020, it will in-crease to $140 billion or 5 per-cent of GDP.”

The CEOs of logistics com-panies raised concern over government “interference in-

stead of assistance”. In a roundtable, “Building

Integrated Sustainable Infra-structure for Tomorrow’s In-dia”, the executives said that though private sector fi rms have made inroads into Indian logistics space, opportunity re-mains untapped due to lack of clarity on Government guide-lines. Suggesting solutions for the problem, Nayak said the situation requires “formulating a national integrated logistics policy, targeting a greater share of freight to rail, increasing en-ergy effi ciency, building dedi-cated freight corridors, coastal corridors, last mile roads, mul-timodal logistics park, skill de-velopment, etc.”

indian roads handle almost 80% oF passenger traFFic and 65% oF Freight

One of the prime challenges facing logistics sector in India is the presence of multiple interface points across the Center and State.

COMPANY NEWS

Service Tax On Rail Freight Deferred to April 1, 2011 New Delhi

The Centre has for the third time this fi scal deferred the

implementation of service tax levy on transport of goods by rail. This levy will now come into effect from April 1. The earlier proposed date was January 1.

Also, the service tax exemp-tion on certain goods carried by Railways - such as pulses, foodgrains, petroleum prod-ucts for PDS, organic and chemical manure and motor vehicles - will now come into effect from April 1, along with the 70 percent abatement.

It would also come as a re-lief for the domestic cement and steel industries who would have otherwise been required to fork out higher freight rates for movement of coal, cement and steel by rail.

The Railways Ministry,

which had opposed the serv-ice tax levy, is also understood to have persuaded the Finance Ministry in going for the defer-ment. The Railways had (after the budget) indicated that it would have no choice but to pass on the tax burden to its freight customers. Again, the Finance Ministry had in June this year taken a decision to de-fer the implementation of serv-ice tax levy to January 1.

The projected annual freight earnings of the Railways for 2010-11 are `62,489 crore. The Finance Ministry was looking

to garner close to `1,000 crore from the service tax levy on railway freight.

Meanwhile, the Indian Rail-ways registered a 6.54 percent growth in freight revenue for the Apr-Nov period this fi scal against the same period last year. But the corresponding growth in freight tonnage dur-ing the period was 3.31 per cent. In November alone, the Indian Railways garnered `5,163.57 crore as freight revenue. For the eight-month period (Apr-Nov), the approximate earnings were `59,804.93 crore.

Western Railway, alone, registered a growth of about 16 percent in terms of tonnage for the fi scal year 2009-10.Of-fi cials attributed this to the de-velopment of the Mundra and Pipavav ports.

This fi scal, up to October, freight traffi c went up by 6.19 percent bringing the total freight load carried by Western Railway to 35.99 million tonnes. So far this fi scal, container traf-fi c increased by 34.5 percent, while that of imported fertilis-ers went up 18.92 percent.

The service tax exemption on certain goods carried by Railways will now come into effect, along with the 70 percent abatement.

corrigendum

In the December issue, in the Benchmarking feature (Page 30), the Warehouse Benchmarking Parameters box was printed without giving due credit to DIESL’s quality program, Project Caliper, which shared these parameters with Log.India. The error is regretted.

110 0 37

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

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CII Logistics Summit 2010 Raises Infrastructure Issues New Delhi

The Confederation of Indian Industries’ (CII) “Logistics

Summit 2010” in Delhi high-lighted the theme “Building India’s Logistics infrastruc-ture - Investment, Operation, Growth”.

At the event, KPMG col-laborated with CII to publish a research paper titled “Adding Wheels: Investing in the Indi-an transportation & logistics industry”.

While unveiling the paper together with GK Vasan, Union Minister of Shipping, Manish Saigal, Executive Director and Head of Transportation & Lo-gistics, KPMG said, “The paper aims to encapsulate opportuni-ties and complexities in the In-dian transportation and logistics sector towards the benefit of a wide group of stakeholders but especially investors.”

Key highlights of the pa-per include: *There is a shift in the government’s focus on its planned spend on infrastruc-ture. In the 11th five year plan, the infrastructure spend is tar-geted to be $500 billion out of

which 28 percent is expected to be spent on transportation in-frastructure. This spends in the 12th five year plan is expected to double to $1 trillion.

*The government expects private investors will provide most of these planned spends. *India’s transportation sector suffers from an unfavorable mo-dal mix with 61 percent of its car-go traffic using roads as opposed to only 30 percent using rail. This signifies gross underinvestment in rail and coastal shipping.

*KPMG believes there is sig-nificant investment interest for coastal shipping and has rec-ommended that the Ministry of Shipping issue private invest-ment friendly guidelines.

Speaking at the event, the Shipping Minister said the chal-lenges for the industry are the in-frastructural bottlenecks and the high logistics cost. He added that the government has taken meas-ures to support the growth of the logistics infrastructure, such as, opening up the industry to 100 percent FDI, removal of CST, in-troduction of VAT, promotion of

Fedex was the First to equip delivery vans with technology to track packages

Speakers at the Summit stressed for investment friendly guidelines across all transport infrastructure.

multi-modal transportation net-work, and PPP.

Other initiatives include the NHDP, inter-connectivity of the 12 major ports, eastern and western rail freight corridor that adds up to 2,700 km rail lines, higher rail freight handling ca-pacities, and the Dedicated Del-hi-Mumbai Corridor.

Vasan said the Shipping Trade Practices Bill when legis-lated will usher in a transparent regime for the industry.

On this occasion, CII In-stitute of Logistics and Global Coalition for Efficient Logistics (GECL) signed an MoU whereby GECL will partner the Indian lo-

gistics industry in the adoption of digital soft infrastructure.

Earlier, Cyrus Guzder, CMD of AFL Pvt Ltd, said in his ad-dress that infrastructural bot-tlenecks lags in logistics are costing the national economy around $50 billion.

With rail infrastructure not properly aligned with the new production and distribution centers, there is excess depend-ence on road infrastructure.

He said that while the govern-ment is developing 5-7 express-ways of 100-300 km, the current need is for 20 expressways. There is additional need for 750 new last mile road links.

about 90% oF india’s external trade by volume and 70%by value is moved by sea

TCI And Concor JV, ILSPL, Commences Operations New Delhi

The joint venture company of Concor (49 percent)

and Transport Corporation of India (51 percent), Inf inite Logistics Solutions Pvt. Ltd (ILSPL), has commenced op-erations.

The new company will cre-ate synergies between the two most widely used modes of transportation and offer

end-to-end multimodal logis-tics solutions and establish an integrated rail-road cargo service. The JV will offer com-prehensive solutions to cus-tomers by offering seamless services using Concor’s rail infrastructure and TCI’s road infrastructure. It will also run operations on dedicated routes and based on specif ic

needs of customers offer cus-tomized solutions.

TCI will ensure the f irst and last mile delivery of the cargo. Moreover, the contain-erized multi-modal door-to-door transport which ILSPL will offer would prove to be a cost effective solution for heavy cargo over medium and long distances.

The mission of ILSPL will be to become the Preferred Logistics partner for compa-nies seeking responsive and sustainable multi-modal lo-gistics solutions. The USP of the company will be the pan India presence, huge asset and strong infrastructure base and the ability to offer solutions to all product segments.


Three years into existence and Siesta Logistics Corporation Limited has sought to leverage growth opportunity in the

Indian logistics industry. Siesta Logistics, a part of the diversi-fied Siesta Group, has raised $10 million in private equity from Ashmore Alchemy India, a joint venture between Alchemy Part-ners LLP and Ashmore Investments (UK). The minority stake in-vestment by Ashmore Alchemy will be utilized to increase global reach and service capabilities across the global logistics hub.

Headquartered in Bengaluru, Siesta Logistics has a wide network supported by 20 global agents, besides 10 freight and customs outlets. SLCL has successfully built a strong network of clients over the years, which includes Schneider Electric, Airbus, Fujitsu, ITC, UB Group, SBQ Steel, Philips, Parle Agro, Lakhani, Lilliput, Videocon, Shiv-Vani Oil, Thermax Industries, Everest In-dustries, Jubilant Organosys, among others.

The Siesta Group is a diversified business conglomerate with interests in hospitality, fine dining, retail, agri-business and logistics.

FedEx Express, a subsidiary of FedEx Corp., has begun pro-viding Import services in India. FedEx will meet the needs

of Indian importers looking for reliable and customized import express services.

The service will provide door-to-door, customs-cleared, customized and time-definite services, which empower con-signees in India control their import shipments. With a tran-sit time of typically two to three business days, the new serv-ices are available from more than 220 countries and territories worldwide. The services also enable customers to raise invoices and make payments in Indian Rupees.

Importers in India can now have access to the complete portfolio of FedEx services for express and economy shipments including dangerous goods, perishable and valuable ship-ments. They can also consolidate multiple packages into one shipment for ease of customs clearance and then deconsolidate into individual shipments.

Simultaneously, the company has expanded premium do-mestic express delivery service to include 331 destinations, up from 58 destinations. The FedEx India domestic express serv-ice offers customers multi-point package status tracking with Proof of Delivery, competitive transit times, FedEx money-back guarantee and on-call pick-up facilities.

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Siesta Logistics Raises Funds To Increase Reach Bengaluru

FedEx Starts Import Services In India Mumbai

CII Logistics Summit 2010 Raises Infrastructure Issues New Delhi

16

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‘horn please, on kerosene’ on trucks was used during wwii to avoid explosions

Shreyas Forays In Bulk Shipping; Signs MoU with Tata Mumbai

Gateway Rail To Invest `25-cr In Cargo Handling Chandigarh

Third-Party Liability Cover For Commercial Vehicle DriversNew Delhi

Shreyas Shipping & Logistics Limited has forayed into

coastal bulk shipping opera-tions. The company has deployed M/V Unity, an Indian flag coastal bulk vessel. The vessel is a single decker, bulk ship strengthened for heavy cargo.

With coastal route costs be-ing one-third in terms of opera-tional cost when compared with railways, and one-tenth with that of road transport, the entry into bulk coastal shipping would en-sure its position as an integrated multi-modal LSP.

In a bid to de-risk its busi-ness from volatile international freight and charter rates, the company has diversified into domestic logistics. It is adding capacities and now services both the Indian coasts. It has further set up five warehouses and also has more than 4,000 contain-

ers which are used for domestic multi-modal transportation.

Shreyas Shipping is handling maximum coastal containers since inception of its coastal con-tainer service and has deployed presently three vessels of 1200 TEUs (Twenty Equivalent Units) on coast.

In another move, Shreyas Shipping, through its wholly owned subsidiary Shreyas Re-lay Systems Limited (SRS), has signed an MoU with Tata Mo-tors for acquisition of 50 trailers. The company plans to invest Rs 17 crore at regular intervals for acquiring 50 trailers. This is a part of plan to acquire 100 such trailers soon to emerge as India’s preferred integrated logistics so-lutions provider.

The trailers to be acquired by Tata Motors are new age ve-hicles with cutting-edge tech-

Container train operator Gate-way Rail Freight will infuse

Rs 25 crore to boost its container handling capacities, even as the logistic provider aims to clock total business volume of `1,500 crore in 2010-11.

The company is adding two more rail sidings at Inland Con-tainer Depot at Sahnewal in Ludhiana. The new rail sidings will reduce turnaround time (for container handling) from 12-14 hours at present to 5 to 6 hours.

Gateway Rail has also sought approval of Railway Board for connecting its upcoming rail

sidings with main rail link. At present, it has two rail sidings for loading and unloading of containers and handles 20,000 TEU per month at Ludhiana ICD. Gateway Rail set up Punjab’s first rail linked Logistics Park cum ICD in private sector at Sahne-wal with in investment of Rs 150 crore last year.

Prior to this, only CONCOR had ICD at Ludhiana, with rail linked facility.

The company claims to have captured 40 percent market share in cargo handling busi-ness in Punjab.

The drivers of commercial vehicles may soon get third

party liability cover. This will be examined by a panel headed by M Ramaprasad, Member (Non-life), set up by Insurance Regula-tory and Development Authority (IRDA) on third party liability cover to commercial vehicles.

The committee, which would submit its report in three months from now, would also study the pricing mechanism to provide the necessary adequacy and reasonableness of third party insurance cover. The mo-dalities to be adopted for creat-

ing declined pool of commercial vehicles to ensure the availability of third party liability cover to all commercial vehicles, would also be looked into besides a general review of current arrangement to third party motor liability pool.

Offering motor third party liability cover to commercial ve-hicles has been a challenge for non-life insurers in view of the tariff controls prevailing and non-availability of credible data.

Since 2006, issues relating to the premium charged for the cover were brought to the notice of the Authority.

nologies. The fleets of trailers have GPS connectivity, provid-ing real time information to the clients about cargo, container and other key aspects.

Besides this, Shreyas has also sealed an agreement for a warehouse and domestic cargo

distribution center at Tuticorin. The facility at Tuticorin will be operational within the next few weeks. Shreyas Shipping & Lo-gistics Limited has also firmed up plans for establishing similar facilities at Mundra and Cochin almost immediately.

With bulk shipping, Shreyas plans to de-risk its business from

volatile freight and charter rates.

< upshot

Out Of The Well

The Institute of Marine Engineers (India), Mumbai Branch, and In-

stitution of Naval Architects hosted the International Technology Con-ference and Exhibition “INMARCO-INAvation 2010” at the Tata Theatre, National Centre of Performing Arts (NCPA) in Mumbai from December 9 – 11, 2010. Minister of Shipping, GK Vasan, presided over the event.

It is for the first time that the two institutes have come together to jointly organize the two conferences. Since 1982, The Institute of Marine Engineers (India), Mumbai, has been organizing the “International Maritime Conference” (INMARCO) once every four years. Similarly, In-stitution of Naval Architects (India) had been planning an international technical conference cum exhibition at the same time. The technical pres-

Date: December 9 – 11, 2010Event: INMARCO – INAvation 2010 Organizers: Marine Engineers (India); The Institution of Naval ArchitectsVenue: Tata Theatre, NCPA, Mumbai

18 INDIA| January 2011 | www.logisticsweek.com

The INMARCO-INAvation 2010 saw high-profile shipping executives raise the issues that shipping and the shipbuilding industry faces. Solutions here could lie with better formulations of laws by the government of India. Frewin Francis reports.

From l-r: Abdul Serang, Gen. Secretary, National Union of Seaferers of India; Dr. R Vis, Director, Viswa Lab; Rear Admiral MK Badhwar, AVSM, VSM, IN (Retd), Pipavav Shipyard; Capt. MM Saggi, Nautical Adviser, DG Shipping; S Hajara, CMD, SCI & Pres. INSA; Mangala Yapa, MD/CEO, Colombo Dockyard; A Banerjee, Chief Surveyor, GOI; V Kumar, MD, Bharati Shipyard; and Prof. R P Gokarn (earlier Prof. at IIT Kharagpur).

entations covered topics pertaining to shipping operations and policies, environment, logistics, chartering & brokering, and tapping potential of inland water transportation.

The presentations by Rolls Royce, ClassNK, Wärtsilä, and others dem-onstrated advancements in ship-building, navigation and allied in-dustries. The panel discussions on the opening and closing day of the event saw an energetic crowd and a panel that boasted of the heavy-weights in the shipping industry.

Concurrently with the conference, the organizers also held an exhibi-tion, where companies displayed ma-rine-related offerings and services.

What they saidVijay Kumar, Chairman and Co-Man-aging Director at Bharati Shipyard Ltd, cited India’s rich history in shipbuild-ing with the building of the world’s first tidal dock around 2300BC. "One way to increase India’s presence in shipbuilding was by bringing in for-eign shipbuilders. There has also been a decline in transportation of cargo by ships. This has further declined to 5 percent or possibly even less."

In his presentation, BK Mandal, Director of Finance at SCI, stated that innovations could be pushed by way of new financial approaches. Mari-time companies face problems in get-ting loans sanctioned. He added that the Government should be proactive in promoting the industry by setting up a maritime finance fund.

Commodore Jitendran, CEO, Pipavav Shipyard, emphasized on the importance of utilizing the huge po-tential of inland waterways. Just like

there are motorways, it is possible that authorities can push for sea lanes.

Urging the need to tap the unused potential at captive ports, Rajiv Nay-yar, Head (New Shipbuilding), Essar Shipping, said this could decongest traffic at other ports in the country.

Abdul G Serang, General Secretary of National Union of Seafarers, spoke of the escalation of threats at sea by pi-rates at the Horn of Africa. This year alone has witnessed around 1,300 at-tacks. Moreover, better formulation of rules could help avoid endangering seafarers where there are accidents or unforeseen incidents.

Elaborating Serang’s point, Captain MM Saggi, Nautical Advi-sor, Government of India, said that piracy issues become complicated when it involves foreign waters. The International Ship and Port Facil-ity Security (ISPS) code created to be the best instrument to fight against piracy attacks has proved unsuccess-ful. Cleaning and sanitizing of the Somalian Coast and adoption of best management practices by the armed guards would be helpful, he added.

The CMD of SCI, S Hajara, said the maritime industry must reduce turnaround time at ports. Delays result in damages of goods and also goodwill for not only the company, but also the country.

Dr Satish B Agnihotri, DG of Ship-ping & Ex. Officio Addl. Secretary to the Govt. of India said, “Innovation would be best facilitated when the government and the private sector work together. The Indian maritime industry should change the outlook of being the frog in the well to the whale in the sea.”

Date: December 3, 2010Event: Food Retail, Logistics & Packaging Summit and Awards Organizer:Supply Chain Leadership Council Venue: Regus Business Centre, Mumbai

Testing Times For Food RetailThe Supply Chain Leadership Council organised a summit at which industry veterans discussed logistics challenges in food retail and innovations in packaging. Pamela Cheema reports

On Dec. 3, 2010 the Supply Chain Leadership Council organized the first Food Re-

tail, Logistics and Packaging Summit and Awards at Regus Business Centre, Bandra Kurla Complex, Mumbai. The summit spanned the entire gamut of food retail and its supply chain, discussing ways to manage logistics challenges in food retail in the frenet-ic business environment, while spur-ring innovation in packaging simulta-neously. The summit also focused on the role of cold chains in warehousing, expatiating on the neglect of this op-portunity in Indian logistics.

Food Retail GrowsThe keynote address was delivered by Ramesh Srinivas, Executive Director, KPMG. KPMG has predicted that the $70-bn food retail business will more than double to $150-bn by 2025.

Interesting presentations were made by industry specialists like Lt.Col. Vijay Nair, GM, Supply Chain, Hypercity Retail (India) Ltd, Ashu Khanna, Head-Supply Chain, Marico and Vivek Sarbhai, VP (Logistics & Customer Operations), Cadbury In-dia. Sarbhai emphasized that “an end-to-end cold chain is required to drive consumer satisfaction through reduced heat damage complaints. At least 69 percent of our consumer com-plaints are due to heat damage.”He advocated constant monitoring and managing of temperatures through-out the cold chain.

Varun Sharma, Manager-Supply Chain, Jubilant Foodworks, the parent company of Dominos, said his corpo-rate which has 370 stores in 71 cities in the country has opted for the mul-tiple hub and spoke model for greater

Participants of the panel discussion were (l to r)Vivek Sarbhai (Cadbury-Kraft), Pradeep Dubey (Snowman), Girish Deshpande (RK Foodland)

optimisation of transport. It has also introduced a packaging initiative like heat wave bags for better temperature retention while delivering pizzas. Dominos has installed GPS tracking system and the hydraulic tail gate lift which is under trial in north India.

Innovations In packagingMost packaging trends in India are of recent vintage. Thick, bulky packing has been replaced with silky matte packing for chocolates and can-dies. Sameer Mehendale, Associate VP, Packaging Development, Indian subcontinent, Cadbury, underscored in his presentation that “the oppor-tunity to touch and feel the product wasn’t there earlier, hence the devel-opment of silky matt finish which our new products Silk and Bourn-ville chocolates give. The product shape and size was also modified to suit the multipack option - a require-ment of modern trade.”

Adityendra Kumar, Sr. Manager, Food and Agribusiness, Research and Advisory, Rabo Bank, India, disclosed that the cold chain indus-try is growing at 20-25 percent and “is expected to touch `400 billion by 2015". However, corporates are vary of investing due to high capital costs, large payback periods, erratic power supply and the single biggest deterrent across the country, land acquisitions.

Industry Award WinnersThe summit wound up with cocktails and an awards function which was hosted by TV host, Cyrus Broacha, who set the evening alive with his in-imitable style peppered with jokes, starkly different from the dense in-

tellectual discourse earlier in the day! And the awards went to:1. Food Supply Chain Manager of the

Year (manufacturer/processor): Cadbury and Pepsico.

2. Food Supply Chain Manager of the Year (QSR): Yum Restaurants.

3. Food Supply Chain Manager of the Year (Modern Format Retailer): Future Value Retail.

4. Food Logistics Personality of the Year: Ashok Kumar of Pepsico.

5. Cold Logistics Service Provider of the Year: Snowman Frozen Foods.

6. Cold Chain Personality of the Year: Pawanexh Kohli, Chief Cold Chain Solutions Officer, Gati.

7. Cold Logistics Tech Enabling Company of the Year: Bristlecone.

8. Food Packaging Innovating Com-pany of the Year : Yum Restaurants.

9. Food Supply Chain Innovating Company of the Year: Marico.

INDIA| January 2011 | www.logisticsweek.com 19

< EVENT REPORT

Sharing Automation IdeasHannover Milano Fairs India Pvt Ltd’s CeMAT India 2010 was not only an opportunity for logistics companies to launch new products, but also a vibrant place for creating business opportunities. The event also hosted a seminar jointly organized by Log.India and HMFI. Frewin Francis reports.

CeMAT India was held con-currently with MDA India, an international trade fair

for motion, drive and automation hydraulics and pneumatics; Indus-trial Automation India, an interna-tional trade fair for process and pro-duction automation and industrial building automation; Energy India, a trade fair for energy efficiency and decentralized renewable and conventional energies; and Surface India, an international trade fair for surface technology.

Companies that were present with their range of material han-dling equipment were Godrej,

Voltas, ACE, FERRO Tiger, Kardex, VDMA, Avalon Technologies, Acer Engineer, Elite material Handling, among others. Also present was SICK India Pvt. Ltd. with its sen-sors and automation solutions for the logistics sector. Schaltbau displayed their range of charging connectors specifically designed to meet the demands of modern mate-rial handling vehicles.

Present at the exhibition venues were the Indo-German Chamber of Commerce and the Italian Trade Commission. Their presence fa-cilitated business opportunities be-tween India and Germany, and India and Italy respectively.

Drawing From KnowledgeAlongside the exhibition, Log.India along with HMFI hosted a semi-nar on “Vision Next: Emerging Key Trends in Materials Handling and


Logistics” on December 16, 2010. Prominent industry leaders who made presentations were Ajay Cho-pra, CEO of DIESL; Cavas Dumasia, Chief General Manager (Marketing & Sales), Godrej Material Handling; K. Ashok Kumar, Sr. Manager (Con-sulting and Business Development) of Godrej Storage Solutions; and Ron Farr, VNA and Warehouse Sys-tems Manager at Yale.

Chopra spoke about the increas-ing need for integrating 3PL, and if it was truly possible in India. The in-creasing levels of outsourcing have resulted in a need for integrating 3PL services down to the last mile. He discussed how, as compared to developed nations, 3PL contribution in overall logistics activity in India is still at a nascent stage. Integra-tion of 3PL would depend on several factors. The supporting ones being government initiatives to improve

Date : December 15 – 18, 2010Event: CeMAT India 2010Organizer: Hannover Milano Fairs India Pvt LtdVenue: Bombay Exhibition Center, Goregaon

logistics infrastructure, the open-ing up of rail freight operations, and a uniform tax regime. The negative factors were the huge size and geographical diversity of India, infrastructural limitations and the current tax structures. The adop-tion of an integrated 3PL model would bring about a reduction of five percent of costs in overall logis-tics operations.

Cavas Dumasia laid down some of the best practices in the material handling sector. Technologies such as WMS (warehouse management system), FMS (fleet management system), RFID (radio frequency iden-tification), AS/RS (automatic stor-age and retrieval system) and voice enabled warehouses are best prac-tices that logistics companies must employ. He added that adoption of best practices must consider some basic rules. It should improve safety, boost productivity, ensure sustain-ability and keep costs low.

Ashok Kumar of Godrej Storage Solutions spoke about the changing scene of warehousing. The much-awaited GST and infrastructure de-velopment initiatives would facilitate growth in the warehousing sector. Demand drivers would primarily be agricultural and manufacturing sec-tors. A close scrutiny could tell us that warehouses have made progress from being unorganized to being customer driven. Cubic space utilization and delivery speed are key parameters that can improve warehouse efficiency.

Ron Farr of Yale explained the emerging trends in warehouse proc-esses and design. Stressing on the significance of warehouse storage justification, he held forth on how front-end analysis and planning coupled with warehouse simulation helped in optimizing operations and adopting best practices for achiev-ing maximum efficiency.

The most anticipated event of the evening was the Panel Discus-sion. Members at the discussion

comprised Dr. Rakesh Singh, Di-rector, Durgadevi Saraf Institute of Management Studies; K. Ashok Kumar of Godrej Storage Solutions; and Ron Farr of Yale. Aanand Pan-dey, Editor of Log.India moderated the discussion.

Singh spoke at length on the vari-ous macroeconomic fundamentals with respect to managing the supply chain. He pointed out the dangers of a linear model of planning capac-ity in the supply chain. An objective model was advocated for using mac-roeconomic data for formulating supply chain decisions.

Kumar talked on a micro level about the trends in demand and bot-tlenecks in the supply chain with re-spect to India’s growth rate. He dis-cussed the spurt of investments in integrated warehouses particularly in the auto and FMCG sectors.

Farr from Yale emphasized that it’s not only training for people who operate material handling equip-ment, but also the technology adop-tion that determines performance.

New Products LaunchedAlong the sidelines of CeMAT 2010, Toyota Industries Corporation set up Toyota Material Handling India (TMHI), a fully-owned subsidiary of Toyota Industries. The initiative is a result of the demerger of Kirloskar Toyoda Textile Machinery Pvt. Ltd. (KTTM) to form TMH India. The company unveiled its Z series fork-lift prototype which will be fine tuned to the demands of the Indian market before being launched in India, when the new company be-comes operational in May 2011, explained Akihiki Nimura, General Manager (Overseas Sales & Market-ing), Toyota Industries.

The models will cater to the mid-segment of the overall lineup. With sales touching 6,000 units in the last four years, Toyota expects to reach 20,000 units by 2012.

Toyota will break into the Indian

market with the Z series. Virendra Oberoi, General Manager (Market-ing), Toyota Material Handling In-dia, stated that corporate spending varies starkly from those of SME’s. Hence, the company will decide the final price of the product after a


Ajay Chopra, CEO, DIESL stressed that there's a need for integrating 3PL services down to the last mile.

Ashok Kumar, Sr. Manager at Godrej Storage Solutions spoke of the changing scene at warehouses

Ron Farr, Warehouse Systems Manager at Yale spoke of trends in warehouse processes.

< EVENT REPORT

careful research of the Indian mar-ket. Subsequently, Toyota intends to launch an electric forklift in India.

T. Parabrahman, Managing Di-rector of Kirloskar Toyoda Textile Machinery Pvt. Ltd. stated that the company would initially set up seven offices for sales and services. Toyota also intends to change the hitherto Bengaluru centric business model to pan India model.

Currently, Toyota’s largest markets

for material handling equipment are China and the USA. In India, it intends to adopt Maruti’s friendly neighbor-hood strategy to win over customers.

Officials present at the launch stated that although the equipment would be imported now, there are plans to set up a manufacturing plant in India.

In terms of pricing, Toyota prices its products marginally higher and supports it with better reliability, longer life, high quality and safety. The material handling equipment sold in India will be Euro 3 compliant.

At the event, Maini Materials Movement Pvt Ltd also announced its tie up with the world’s third larg-est forklift and materials handling equipment manufacturer, Nacco Material Handling Group (NMHG), USA. The partnership includes the manufacture of specific Yale prod-ucts within India, besides represent-ing those made overseas.

The two launched the co-brand-ed product of Yale and Maini - ER-P15RCF. They have also launched the 8T model of Tow Tractor, the TT Series.

The ERP15RCF (1.5t) is a 3-wheel, rear wheel drive, electric forklift truck for medium duty application

Although Toyota

ME India will

import the

equipment now,

there are plans

to set up a

manufacturing

unit in India.

Maini will utilize its knowledge

of the local market to introduce

NMHG's products in India.

requirements. It is compact and highly maneuverable, ideal for use in confined areas.

Maini Materials will be responsi-ble for sales and service, and custom-er support for YALE’s range of prod-ucts in India. NMHG, on the other hand, will provide product design and engineering expertise to the Maini Group. The expertise will be pro-vided through its engineering center in Pune which focuses on product design, special purpose application design (SPED) and FEA analysis.

For 2011, Maini will look to expand its manufacturing, sales and service footprint. Existing facilities are ex-pected to be expanded to accommo-date new product introductions.

All in all, the event was a fulfill-ing experience for participants and visitors waiting to tap new business opportunities.

Cavas Dumasia, Chief GM (Marketing & Sales), Godrej Material Handling, laid down some of the best practices in the material handling sector.


Readers can view the seminar organized by Log.India and HMFI on http://www.youtube.com/user/logisticsweek.

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< OpiniOn

Awareness of macroeconomic picture and related downside risks is necessary to optimize marketing and production outcomes and minimize costs.

24

< OpiniOn

ARakesh singh Director and Professor of Economics and SCM at Durgadevi Saraf Institute of Management, and Chairman, ISCM

At the Automotive Logistics Seminar in Chennai, the senior consultants from known consulting firms while speaking on the state of the automobile industry predicted that the industry will grow at a pace of 25 - 30 percent in the initial phase, and stabilize at around 12 – 14 percent growth. they called upon the au-tomobile companies to quickly double up their capacity, as the number of vehicles that will be sold will increase from 2.8 million to 5.2 mil-lion by end of 2015.

neglecting Macroeconomic Viewthis analysis truly reflects the sentiments about india and its growth story. it seems india is an economy which will grow linearly over the next couple of decades, till it becomes

one of the top economies in terms of GDP by the year 2050. the auto industry is upbeat as it has seen growth of around 30 percent in the last quarter. Such linear thinking is common when the going is good. the problem is how-ever, they often ignore macroeconomic down-side risks.

Businesses are most often ignorant about the larger macroeconomic picture of the economy and the downside risk associated with it. even if an economy is in the growth phase, outrightly ignoring the downside risks may derail busi-nesses. A linear prophecy like above can be dan-gerous and all players in the automotive busi-nesses should be aware that this could lead to an unprecedented rise in production capacity, and if the economy tumbles, they will find themselves

The Bigger Picture

25INDIA| January 2011 | www.logisticsweek.com 25

immersed in the pool of inventory. Some awareness of the downside risk is necessary in order to optimize both mar-keting and production outcomes, as well as minimize the costs associated with this downside risk.

Why Watch Outincorporating macroeconomic fundamentals into sup-ply chain planning and business planning can help busi-ness not to smoothen demand, but to incorporate the risks in their forecasts. this downside risk has been un-derplayed primarily because of the earlier than expected recovery of the indian economy with effect of the global crisis and a prediction of the return of 9 percent growth rate witnessed in the 2003–08 period. But a glance at the recent macroeconomic data clearly warns us against such linear thought processes.

in the second quarter of the monetary policy for the year 2010-11, the RBi Governor Subbarao has clearly in-dicated the following downside risks:

1 While growth in india is supported by domestic de-mand, the prospect of a slow recovery process in advanced economies may have an impact on india’s growth perform-ance as well. While india’s exports as a percentage of GDP is relatively low, a persistent downtrend in global trade will have its effect on the manufacturing and service sector.

2 the current inflation scenario is a serious matter of con-cern. even though the wholesale price index has fallen to 7.64 percent, the food inflation clearly has remained in dou-ble digits. in a poor economy like india, where a large number of people live below the poverty line, such an un-precedented increase in inflation can be detrimental to the demands that have driven india’s growth. it is not possible in any case for this inflation to reduce to its comfort zone of 6 percent. the RBi will have to increase its policy rates and hence the interest rate in the future to tame inflation and this in turn will have a moderating impact on growth.

3 Quantitative easing by uS and other economies has led to large scale capital flow to economies like india. these have increased the money supply in the country and are making indian banks complacent and prone to risk, as these funds are being loaned out without proper scrutiny. these funds will also have an impact on the Rupee value and the exchange rate. Balance of payment (BoP) will dete-riorate as an outcome.

4 BoP is already showing a sign of imbalance. Current Account Deficit (CAD) is approaching the economic cri-sis level of 1990-91. A three percent current account defi-

cit will be hard to sustain when the recovery in other economies will start, as capital may flow to these econo-mies for better return.

5 Government profligacy is at its peak. Fiscal deficit to-day stands at around 10 percent of the total GDP with revenue deficit reaching a level of 4 percent. All this will put pressure on capital expenditure. infrastructure will be the first casualty. Not only this, to fund Fiscal deficit, the government will have to borrow from the bank. this will hurt growth as interest rates will rise.

6 in terms of good macroeconomics, the situation that existed before the crisis of 2008 no more exists and the economy may slip down. Albeit temporarily, or for a few quarters or even a slow down.

the above analysis clearly indicates that the consult-ants’ foresight of a vibrant linearly growing economy is full of prophecy and less of realism. if the auto industry takes their advice and goes ahead with an increase in capacity, the first impact of this down risk will create a

huge amount of inventory situation, killing these players in future. this is what we call in Supply Chain manage-ment as the Bull Whip effect. this Bull Whip effect is not because of business driven variables as commonly understood, but arises due to ignorance about the macr-oeconomic environment. Businesses will be smoothen-ing demand whereas the larger cake in terms of annual GDP may take a downward turn. this is macroeconomic bullwhip which may derail the business and create ex-cessive inventory all along the supply chain spectrum.

i feel an understanding of the impact of macroeco-nomic environment, variables and policy on the econ-omy, is a fundamental pre-requirement for business. macroeconomics ignorance is abounding. But, igno-rance is not bliss any more.

An unprecedented increase in inflation can be detrimental to the demands that have driven India’s growth.

The author can be reached at [email protected]


< LEARNING FROM 2010

We bring to you priceless insights from supply-chain leaders we interviewed for our cover stories in the year gone by. This one is for keeps.

On retail logistics Organized retail constitutes only 6 percent of the Indian retail market, but is set to grow to 26 percent of the market in the next fi ve or ten years. Similarly, organized Indian logistics in the retail sector which constitutes only 4 percent will grow to 26 percent in the next decade.

On infrastructure The level of maintenance of roads is very bad, while the speed breakers are vicious. That affects the fl eet movement. In most developed countries, only minor roads in residential areas have speed breakers.

On skill-gap The availability of quality skilled labor whether in the cities or rural areas of the country just does not exist. Often, compa-nies hire and train labor intensively and the next day they are just not there.

Indian warehouses, in particular, suffer from an acute scarcity of female labor due to the stigma attached to work-ing women in conservative sections of Indian society. The only city where this does not exist is in Bangalore. I have seen that women pickers do a far better job than the men.

The retail industry must cultivate a logistics-centric pool, even if it is more expensive then hiring manpower from out-

side the industry.

On expats If you come as a European and

work with the ideas which suc-ceeded in your own country, you will fail here. You need to know and work with the Indian way of thinking. Don’t get bogged down

with the conditions here, you have to move forward despite constraints.

After all, it can’t get worse, it can only get better.

< LEARNINGS FROM 2010

JANUARY

Learnings 2010Learnings 2010Learnings 2010Learnings 2010Learnings 2010Learnings 2010

Lionel Stanton Chief Operating Offi cer, Future Supply Chain Solutions

FEBRUARY

If you come as a European and

work with the ideas which succeeded in your own country, you will fail here.


On the commercial vehicle segment Commercial vehicles (CV) in the industry have a seven-year (crest and trough) cycle. This trend can be seen by referring to data of the last 40 years, which follows this pattern.

When I look at a 10-year graph I believe the industry will grow faster – maybe around 10 percent for the next 6-7 years. Therefore the kind of numbers we expect to see in 2013, 2014, and 2015 will happen in spite of the hiccups like the one we saw in the recent past.

On new launchesIf you look at the new heavy commercial vehicle launches clearly everyone is counting on them. All the new and ex-isting players have launched signif icantly upgraded trucks. The industry is counting on customers moving up in terms of trucks. We are concentrating on the extra value our trucks bring in terms of cabin comfort, cost of operations, service reliability, and the price difference from the current products.

On selling trucks We believe the most important USP is performance, which also has sub-elements. It is to do with the turnaround time which is the most important area to the fl eet operator. It is about how well the truck can go up the gradient.

The second element is fuel consumption. We hope to be offering better fuel con-

sumption than what is available.

The third element is reliability. We have put tremendous effort in mak-ing sure that our trucks are reliable and have a longer life.

Then the element that comes into play is the off-road or off-product offer-

ing. For that we are going to use the Mahi-ndra ecosystem, a powerful tool.

Another important factor is the overall operating cost. That must be kept low with better fuel effi ciency, maintenance and reliability and turnaround time. So how long will it take for a trip from Bombay to Delhi and back? This question becomes more important once we have the Golden Quadrilateral in place and the highways.

But how do I convince the buyers? The most common re-course is talking to f leet operators. We will need the early adopters who will buy our trucks and we have to prove to them the worth of our trucks. After that it will be word-of-mouth. Once we do the initial ramping up, then the product is a saleable story.

FEBRUARY

Pawan Goenka President, Automotive Sector, Mahindra & Mahindra

in the recent past. On selling trucks We believe the most important USP is performance, which also has sub-elements. It is to do with the turnaround time which is the most important area to the fl eet operator. It is about how well the truck can go up the gradient.

Another important factor is the overall operating cost. That must be kept low with better fuel effi ciency, maintenance and reliability and turnaround time. So how long will it take for a trip from Bombay to Delhi and back? This question becomes more important once we have the Golden Quadrilateral in place and the highways.

But how do I convince the buyers? The most common re-course is talking to f leet operators. We will need the early adopters who will buy our trucks and we have to prove to them the worth of our trucks. After that it will be word-of-mouth. Once we do the initial ramping up, then the product is a saleable story.

The industry is counting on

customers moving up in terms of

trucks.



On 20-km-a-day goal This has been accorded topmost priority by me from day one. The task ahead (the stated goal of building 20 km of road everyday) is not an easy one and would require concerted efforts from all sides. To achieve this, not only the processes and pro-cedures have to be geared towards it, but also it is very essential that the work culture at NHAI needs to change.

On electronic toll points We have planned three pilot studies for electronic toll collec-tion during the year 2010. They are likely to be completed in the year 2010-11.

Three locations have been identifi ed for the pilot project for technology options. These are Panipat-Jalandhar section of NH-1 in the states of Haryana and Punjab, Gurgaon-Jaipur section of NH-8 in the states of Haryana and Rajasthan and Surat-Dahisar section of NH-8 in the states of Gujarat and Maharashtra.

In the pilot studies, different technologies such as 5.8 GHz

Microwave (Passive), 5.8 GHz Microwave (Active) and Com-munication Air-interface Long and Medium Range infra red (CALM-IR) are to be studied.

Electronic tolling would reduce the delay at the toll plazas due to reduced transaction time, thereby improving the opera-tional effi ciency of the national highways. This will also make the transactions more transparent, fair and accountable by automatic classifi cation of vehicles and applying the approved rates of tolling. The costs associated with delays and congestion would also reduce.

On quality of highways Though the density of our highways is similar to what can be obtained in advanced countries like the USA, the quality of highways in India is not suffi cient to carry heavy vehicles of in-ternational standards.

One of the objectives of NHDP is to ensure that construction of highways confi rm to IRC standards. Further, the projects are currently being awarded predominantly in the BOT mode under which the concessionaire is also responsible for the O & M in ac-cordance with IRC (Indian Road Congress) standards. Hence we

are of the view that the issues related to poor quality construc-tion will not be a recurring feature.

On according industry status to transport sector The issue of according industry status to the road trans-

port sector was earlier taken up by the ministry of fi nance. The ministry of fi nance says that the fi nancing of the transport

sector – including the transport of passengers by road or by wa-ter – has been covered in the relevant provisions of the Industrial Development Bank of India Act, 1964 and Small Industries Devel-opment Bank of India Act, 1989 and thus already enjoys industry status.

On tax breaks to multi-axles The issue of encouraging the use of multi-axle vehicles was

discussed in the Transport Development Council meeting. The state governments had agreed to give 25 percent concession

on the composite fee on national permit in respect of multi-axle vehicles with a view to promote their use.

Keeping in view the benefi ts associated with the use of multi-axle vehicles such as low per unit transportation cost, lower damage to roads etc, it would be benefi cial for the country if other incentives such as reduction in excise duty and other tax components are considered by the min-

istry of fi nance at the central level and the states themselves.


MARCH

Kamal Nath Minister for Road Transport and Highways

APRIL

The work culture at

NHAI needs to change.


On growth during recession and after Our competitors focused on asset creation and thus became asset heavy, while we remained asset light because we struc-tured everything in keeping with a shaky economy. This gave us energy and nimbleness. We are also attached to the telecom, retail, chemical and plastics industries which are growing fast and that helped us to grow fast too.

On agri-parks The need is to bring together people who deal in seeds, fer-tilizers, chemicals, tractors, water pumps, in short, anything required by the rural sector. In fact, one could create an entire logistics sector which could cater to the rural areas and this would lead to economies of scale.

On ethics and competition Despite being a Tata company, DIESL does not have exclusive rights as a logistics service provider to cater to other corporates in the Tata Group like Tata Motors or Tata Chemicals. We are a very young company, just about six or seven years in the industry. Group companies like Tata Motors and Tata Steel have huge expectations. Of course, we are constantly adding to our growth with interests in areas like telecom and retail and all this contributes to our 100 percent growth.

On warehouse audit DIESL assesses the performance of its warehouses across the country through a unique quality audit module which com-prises 156 questions. The module has been devised to ensure minimum error and appears to have achieved its goal of ex-cellence in performance, for DIESL today is an ISO 9000-2001 certifi ed company. Most customers don’t even ask for certifi ca-tion, but we tried hard to get it because we wanted to assess ourselves.

On warehouse designDesign is critical. If you do not have the right design, every-thing you do will fail. To give you an example, we took up a facility which we felt would be good for a warehouse. Typically,

deliveries would begin from 2:30 pm to 6:30 pm, with the larg-est number of orders being from 4 pm to 6 pm when everyone wanted to ship out goods at that time. Our trucks would also arrive for unloading between 11 am to 12 pm. We found that truck drivers were fi ghting with each other, saying, “I want to leave fi rst, since I arrived here fi rst.” We soon found out that the problem was with the lack of docking areas at the ware-house. Whenever you buy or construct a warehouse you have to check out how work is going to fl ow there – the amount of time taken in picking, storing, and dispatching – before you can say you have a good facility.

APRIL

Ajay Chopra Chief Executive Offi cer, Drive India Enterprise Solutions Limited

(DIESL)

One could create an entire logistics sector

which could cater to the rural areas

and this would lead to economies of

scale.


On his formative years My experience (in port operations, cargo handling, etc.) gave me an exposure to multiple ports and ships that called in various ports in the country. That was the time when the ports would be very congested, there would be berthing delays. It was quite a struggle. I worked at entry-level jobs – that’s how my career started.

On starting his business What I did was, bring in the right people, set up the equip-ment and I was there to make sure that things worked. The struggle was (present) everywhere and in everything. To get the business was not easy. To have the cash fl ow in the system was very diffi cult. But we were able to stay on course since we did a good job on a sustainable basis.

The NVOCC (Non-Vessel Operating Common Carrier) busi-ness was a low-investment, high-returns busi-ness, but there was no big Indian player in the fi eld. So we began offering customers something they were unused to. Quick service, quicker response, competitive rates, a bet-ter credit period – all this helped established our business in two years time.

On surviving recession During the recession last year (2008-2009), companies drastically cut down on inventory. This worked well for us.

On acquisitions and managing talent Ours is a service industry. When you buy a company, you are buying people. If you have the right people at the right place, you can put your plans to work. We didn’t try to change too many things (in our acquisitions). You need the local ex-pertise, the local relationship, the local language, so send-ing someone from here to the various off ices around the world wouldn’t have made sense. I did send some people in the area of f inance and human resources to integrate ECU-Line cargo better.

We did a lot of things (across divi-sions), but did them carefully, gradu-ally. But when you want work done strategically, it is a question of win-

ning a war and not battles. So we lost a few battles, but won the war. We were able to integrate the company. Today it is known to be a far better managed company.

To maintain the lead in LCL, it is important to leverage brand. Obviously we need to put in a very strong develop-ment team round the globe.

To attract the right talent, we have to identify the right people with the right attitude – an attitude to learn, to have ownership over what you do and a good sense of value system.


MAY

Shashi Kiran Shetty Chairman and Managing Director, Allcargo Global Logistics

The NVOCC (Non-Vessel Operating Common Carrier) busi-ness was a low-investment, high-returns busi-

On acquisitions and managing talentOurs is a service industry. When you buy a company, you

are buying people. If you have the right people at the right place, you can put your plans to work. We didn’t try to change too many things (in our acquisitions). You need the local ex-pertise, the local relationship, the local language, so send-ing someone from here to the various off ices around the world wouldn’t have made sense. I did send some people in the area of f inance and human resources to integrate ECU-

The right attitude (is about

having) an attitude to learn, to have

ownership over what you do and a good

sense of value system.




On technology HyperCity has invested heavily in technology. The supply chain team… uses a range of solutions including the merchan-dise management system (MMS), the warehouse management system (WMS), the automatic store replenishment module (ASR) and the automatic warehouse replacement module (AWR), among others. For material handling, the DC uses battery operated pallet trucks which increase productivity considerably…We are big believers in technology.

We have put our thoughts to RFID. But it's just not viable because of the costs involved. The larger products don’t get lost and for smaller products it (RFID) is just too costly. For the moment we are not even considering it.

On fi ll rates If a category is doing well and seeing business of 99 percent or 100 percent fi ll rate, we do not audit that slot. But if a category is not doing well and is doing just 92-93 percent, we audit that slot and the fi ll rate automati-cally improves.

On suppliers From the current year, Hy-perCity has embarked on a new exercise known as the supplier-relationship programme, Where we meet the top 15 vendors and try and create a relationship, so the next time I pick up the phone, I know who they are and then auto-matically there will be a difference in the relationship.

On inventory management Finding out the reason for high inventory and learning from it is important; but equal-ly important is the strategy that you must have to liquidate the surplus. The timing of liquidation is a very, very important part of the strategy.

On productivity and effi ciency People often mention that cash incentives increase costs, but I tell them that in the long-term a happy work force reduces costs.

HyperCity Retail pays its octroi taxes online which slashes its transport costs, waiting time of trucks at checkposts and

allows the hypermarket to service its other stores simulta-neously. The online payment of octroi has improved the turnaround and utilisation rates, and reduced the trans-

portation cost. Earlier a truck driver would go to the

Malad store fi rst and by the time he had gone

through the octroi, he was not fi t enough to travel to Thane. That has changed

today. With one vehi-cle I am managing two

stores.

Make sure your workers at the DC are cost conscious and how do you make them con-scious? Anything that moves must be recorded at the DC. If a truck comes, take its weight and volume and go through the processes of opti-mization.

Retail logistics can benefi t from looking at what the army does well...good leadership, managing individuals and teams and learning how to relate information and data to ground realities.

JULY

Lt. Col. Vijay Nair (Retd) General Manager, SCM, HyperCity Retail (India) Ltd.

In the long-term a happy

work force reduces costs.




On Dell’s supply-chain model The made-to-order model gives us the benefi t of knowing what exactly the customer wants. We would be the fi rst to under-stand what the changes in the market are – we are the fastest to have our products reach our customers.

On vendor managed inventory All the components from suppliers are stored as Vendor-Managed Inventory (VMI) in the Supplier Logistics Center (SLC) facility. As the Dell manufacturing team receives the customer order, it accordingly pulls the specifi ed inventory from the SLC. The title of the material is transferred to Dell only the material is pulled from the SLC. Inside the factory we don’t have more than four hours of raw materials inventory at any point in time.

On consumer behavior and relationships Globally, we have realized that a lot of consumers want to touch and feel a product before they buy it, more so in the emerg-ing markets like India.

We talk regularly to our customers – directly, online and through our partners. This offers us tremendous insights as well as data to fi gure out the demand patterns for direct as well as indirect sales.

On selling through brick-and-mortar In India we are in the retail space for the last two years. We are available in all kinds of retail formats. We have presence in all the top markets – Tiers 1, 2 and 3 cities through the IT retail channel. We also have kiosks at a number of retail outlets where consumers can place the order online.

On demand forecasting Dell’s build-to-order route gives it a lead over others when it comes to demand forecasting. The advantage is two-fold. One is, we are able to see market changes quickly and prepare our supply-chain accordingly – for example, I can go and prepare my LCD vendors, seeing a surge in LCD demand. The other advantage is that Dell is able to shape demand based on its knowledge of its inventory. Our direct relationship with the customer helps us in responding to inventory surplus issues, where we are able to offer such inventory with better pricing or with a faster delivery time.

On track and trace At every part of the supply chain, we expect the LSPs to have track and trace. So the customer is aware at any point where his product is.

On advantages of scale Our supply-chain team utilized the scaling up of India's busi-ness to reduce the warehousing costs for all the nodes. With more scale, we could negotiate much better with the LSPs.

Dell India’s next big strategic push on the manufacturing front would be to attract big suppliers so they set up bases in India. The government (of India ) is an important partner in this endeavor of ours. Dell, along with the Manufacturers’ Associa-tion for Information Technology (MAIT), is involved in discus-sion with the government in that how do we collaboratively con-vince suppliers, say, in China, Malaysia, Taiwan to set up the supplier base here.

AUGUST

MR Sundaresan General Manager, Dell India

endeavor of ours. Dell, along with the Manufacturers’ Associa-tion for Information Technology (MAIT), is involved in discus-sion with the government in that how do we collaboratively con-vince suppliers, say, in China, Malaysia, Taiwan to set up the supplier base here.

Dell’s build-to-order route gives it a lead when it comes

to demand forecasting.



May this new year bring all ourclients & associates,

infinite joy & prosperity

New Year

Wishes & Greetings


NOVEMBER

On cost containment At times we (the supply-chain managers) do get carried away with some of the supply chain management (SCM) ob-jectives like cost containment, but the larger objectives of business also have to be kept in mind. SCM is part of the larger business. There could be situations when SCM objec-tives (like cost savings) are compromised on, but then we need to keep in focus organizational objectives. From the

strategy point of view, I would rather err on inventory than lose on sales.

I tried a pilot with RFID. It was not much of a success. “As a user industry, there is little clarity on adopting RFID at the right places and time, apart from the theory. There needs to

be a set of protocols for RFID to work well. That is yet to happen.”

On supply-chain efficiency The objective is keeping ware-

housing costs proportionate to the freighting area. Remember, we are talking of f inite resources.

We want to make the automated replenishment system more robust,

so we can maintain leaner inventory at a higher rate. We need to improve on

our forecasting model and promotion fac-tor. The best of class models typically op-erate at 12-15 percent.

Today one of the biggest prob-lems in the DC is that vendors come in and bunching happens. The turnaround

time of the vendor increases. I want

to move into a system by which I will be able to give him timely, maybe hourly

appointments. I want to be able to give him time at that hour so that I can

evacuate. And this should be automated.

OCTOBER

Amit Mukherjee Group CIO at RPG and Vice-President (Supply Chain & IT)

Spencer’s Retail Limited

tives (like cost savings) are compromised on, but then we need to keep in focus organizational objectives. From the

right places and time, apart from the theory. There needs to be a set of protocols for RFID to work well. That is

yet to happen.”

On supply-chain efficiency The objective is keeping ware-

housing costs proportionate to the freighting area. Remember, we are talking of f inite resources.

We want to make the automated replenishment system more robust,

so we can maintain leaner inventory at a higher rate. We need to improve on

our forecasting model and promotion fac-tor. The best of class models typically op-erate at 12-15 percent.

Today one of the biggest prob-lems in the DC is that vendors come in and bunching happens. The turnaround

time of the vendor increases. I want

to move into a system by which I will be able to give him timely, maybe hourly

appointments. I want to be able to give him time at that hour so that I can

evacuate. And this should be automated.

From the strategy point

of view, I would rather err on

inventory than lose on sales.



On green measures In an effort to set new paradigms for eco-friendly initia-tives, the chassis of Tata Motors’ medium and heavy com-mercial vehicles are transported by trailers to the company’s stockyards. The trailers are open bodied unlike like the ones used for cars. This has resulted in a substantial decrease in pollution, fewer traff ic snarls and a sparing use of fuel. Since the trailers can be used for chassis transportation only, our biggest concern is of having a return load. But despite the transportation costs, we are willing to pursue it in the larger interests of the country.

On demand drivers for LSPs The automotive, FMCG, electronics and phar-maceutical industries initially fuelled the demand for 3PLs, with IT hardware now being one of the largest users of such services. 3PL activity is still in a nascent stage in India and is less than 10 percent of the total lo-gistics cost in India as compared to say, Japan, where it is 80 percent of the cost.

On collaborative logistics Collaborative logistics is the future in case you want to keep your costs low and improve your service levels, and this holds true not just for the automobile industry, but any industry which has the problem of empty hauls. The step taken by some OEMs in this direction with the support of the Society of Indian Automobile Manufacturers (SIAM) might look like a pie in the sky at the moment, but it is the right step and futuristic.

The OEMs could use a common auto hub for their loading, unloading and

stocking needs – the hubs would be managed by a 3PL who would be appointed in consultation with the OEMs and SIAM and provide logistics support to all the OEMs. It is my opin-ion that as the volume game intensif ies, none of us will have much of a choice in the automobile industry as well as other industries, but to accede to such options. As cost and custom-er service are the two important Cs in any industry, we will be driven to collaborate with each other.

On SCM practices We should go one step ahead of all western countries and not blindly follow their supply chain practices, as many of them may not work in our country.

NOVEMBER

Prem K Verma Chief Executive Offi cerTML Distribution Company

Limited

biggest concern is of having a return load. But despite the transportation costs, we are willing to pursue it in the

On demand drivers for LSPs The automotive, FMCG, electronics and phar-

maceutical industries initially fuelled the demand for 3PLs, with IT hardware now being one of the largest users of such services. 3PL activity is still in a nascent stage in India and is less than 10 percent of the total lo-gistics cost in India as compared to say, Japan, where it is 80 percent of

service levels, and this holds true not just for the automobile industry, but any industry which has the problem of empty hauls. The step taken by some OEMs in this direction with the support of the Society of Indian Automobile Manufacturers (SIAM) might look like a pie in the sky at the moment, but

The OEMs could use a common auto hub for their loading, unloading and

On SCM practices

western countries and not blindly follow their supply chain practices, as many of them may not work in our country.

Collaborative logistics is the future in case

you want to keep your costs low

and improve your service levels.




On replenishment model Five years ago, we switched to a complete replenishment mod-el. That’s when we partnered with Dr Goldratt…Perhaps it was the mindset of the management that made Dr Goldratt choose us over others. Mindset is very important for companies who are required to give away forecasting and work with replenishment.

According to Goldratt, the main bottleneck for FMCG com-panies is the marketplace. And the main ways to empower the bottleneck are to increase and fulfi ll the consumer demand. As per Goldratt’s estimate, a remarkable 50 percent of the demand generated by FMCGs in India gets lost because of non-availability.

To fulfi ll the potential market, one has to be super effi cient. It also means that all the marketing inputs – advertising and other means – will give us double the inputs if our products are made available to meet the total demand generated.

One can no longer look at weekly distributor sales or weekly production schedules. Everything has to be made dynamic on a daily basis.

Hub and spoke, because we want to service each node on a daily basis. Unless we consolidate the products at the hub, there won’t be enough stock to service the downstream node on a dai-ly basis. And we don’t want to sacrifi ce the daily services. That’s part of the replenishment philosophy.

However, if a particular depot does well, we will even bypass the hub and send across the material

directly.

DECEMBER

Rakesh Kumar Sinha Chief Operating Offi cer (Marketing & Operations)

Godrej Consumer Products Ltd.

On rural growth “The rural growth has been faster than the urban growth. Now about 42 percent of our sales come from the rural areas, which used to be 32 percent when we started our replenishment model fi ve years ago.

On transport modes The good part is that the company regularly evaluates rail-ways versus road-transport rates for every route, and opts for the mode that is cheaper. It works well because road transporters know we have an alternative. When we started using railways, the road transporters also brought down their rates.

On quality and cost containment Companies ask vendors to comply with their product specifi -cations, but vendors may have their own set of specifi cations to keep supply costs down. Cost saving here is a three-way street – between the vendor, the procurement and manufacturing department, and the R&D (Research and Development). The specifi cation of a product must be tailor-made for the least cost. That’s called the total cost of ownership.

On the manufacturing side, focusing on quality is more pay-ing than is normally understood. A learning has been that every time we improve quality, the costs come down.

On effi cient storage We are also piloting some advanced stacking and racking systems for using them in areas where the rentals are high. In such areas, it makes sense to go in for vertical storage, while in areas where rentals are low, it doesn’t make sense to opt for vertical stacking. That would also require palletization, which would be an additional cost. It’s a question of looking at saving any additional cost we may incur.

On international acquisitions Where we get the fi rst-cut benefi ts (from acquisitions) is sourcing – strategic sourcing of raw materials, packaging mate-rial, that’s where we have had some savings. For example, if the same item is supplied to Indonesia (Megasari) as is to (GCPL) India, we can negotiate with suppliers to reduce the rates due to increased volumes.

So the modern trade management – dealing with a chain of stores and being able to negotiate with store chains, ensuring the effi cacy of promotions, how to do a midcourse correction if the plan is not going well, or how to step it up if it is doing very well – these are some very good learnings we have got from our acquisitions in South Africa and Argentina.

Every time we improve quality, the costs come

down.

However, if a particular depot does well, we will even bypass the hub and send across the material

directly.

Every time we improve quality, the costs come

down.


#225, ST bed Extn., 5th Main Koramangala, 4th Block, Bangalore 560034, India, www.Uniworld-logistics.com

Uniworld Marches Ahead in 2011“Uniworld Logistics Private Limited the company which specialised in freight forwarding and Total Logistics solutions , having 35 offices in 10 countries ,launched its warehousing and distribution services in February 2009 with the unique concept of Uniworld Integrated Logistics Park ( UILP) in, Sipcot Industrial Area, Irungattukottai, Sriperumbudur, Chennai, to serve its customers better. The park is spread across 22 Acers of land with an Internal Container Depot , Bonded ware house, General Warehouse and Temperature controlled ware houses to give its customers the best of both bonded and general warehousing under one roof. The facilities are designed as Green facilities keeping the current environment norms with all Safety and Security measures implemented to world standards. The customers are benefited with Bonding , De-bonding ,customs clearance and value addition services like storing, sorting, kitting, repacking and distribution under the same roof giving the advantage of time and cost. Uniworld is happy to be a part of the expansion plan of Danfoss India. Currently Uniworld operates 4 such Integrated Logistics Parks in Chennai , Delhi ( Dharuhera ) , Mumbai ( Panvel) and Bangalore ( Bommasandra Industrial Estate) offering 1 Million sqft of space to customers.”

Recently the top officials of Danfoss were in India to discuss on the growth of Danfoss India. With the market identified and investment plans being discussed, Danfoss wanted a logistics player to support them in their expansion plan. Logistics being the core support area in any market driven plan it was but imperative to choose a partner who understands the Indian market and the laws well to support them in movement of goods so as to reach the customers seamlessly. Who else could have been a better choice than a Home Grown Logistics Company who offers the end to end solution in Logistics. Uniworld Logistics P Ltd was the choice to handle their Complete domestic Logistics ( 3PL ) in India.

Imprint Feature

< Cover Story


Photo: Ramlath Kavil


The supply chain function of Ericsson India entails meeting spiraling expectations of a booming market. The man at the helm, tej Nirmal Singh, Director (Head-Supply), ericsson India, not only manages the supply chain of the telecom-equipment giant, but also that of its customers across the country. Jayashree Mendes reports.

Beneath The Wings

Supply chains of companies are tuned into continually sprucing up serv-ices so that it can meet customer needs without consuming cash. But few vendor companies would immerse themselves in the task of managing its

customers supply chain, not to mention carrying out the task of meeting exacting targets that could be demanding.

For the past six years, Ericsson India has carried it off with great panache. Consider the exponential increase in the number of mobile subscribers in In-

dia in the last few months. In June 2010 alone, telecom operators in the country added 18 million subscribers; July an additional 17 million; in August another 18.18 million; a further 14 million in October; and 17 million in November. Serv-ice providers are also on the brink of launching 3G services, and although the numbers here are uncertain, telecom equipment providers are gearing up with supplies. In such a situation, how do telecom equipment manufacturers negotiate month after month to unpredictable demand from customers?

“That is our USP,” says Tej Nirmal Singh, Director (Head-Supply), Ericsson India, a soft-spoken man with a pleasant demeanor, when we met up with him at his office in Gurgaon. “We attribute our ability to manage our customers to our experience and the team. The hands-on approach by our parent company in Sweden helps us make quick arrangements for equipment from any of our five global factories when we need it at short notice.”

Singh points out that the $30-billion telecom equipment manufacturer is not new to India. The Swedish company made its presence in India way back in 1903 when it supplied manual switchboards to the government of India. While Erics-son may go back a long way in India, but telecommunications was a new ballgame for Singh when he joined Ericsson India in 2004. “But that was not a deterrent. Whatever be the product, any supply chain has near similar complexities,” he says.

Singh’s career path in supply-chain was more fortuitous than planned. After completing his Mechanical Engineering from NIT in Raipur, he spent the first

Tej Nirmal siNghDirector (Head - Supply),Ericsson India


< Cover Story

three years of his career with Yama-ha Motor Division (of Escorts). His move to a project consultancy firm, Mantec Consultants Pvt Ltd, a firm that helped start-ups in setting up, gave him his first brush with supply chain where he helped customers to identify the technologies they would require, import them, and install the equipment.

When he moved to Titan Watches in 1992, his job profile demanded helping set up the factory for Timex Watches in Noida. As project engi-neer, Singh was later entrusted with distribution at Timex. The experience helped him imbibe yet another supply chain, so when the offer to head the materials division at Bausch & Lomb came, he was in familiar territory.

The materials division at Bausch & Lomb handles the logistics func-tion of the company. Singh says, “It was a different industry and my first meet with fashion. Our success was indigenizing the brands that Ray-Ban sought to produce at its factory in Bhiwadi in Rajasthan. I worked there for almost eight years - my longest stint at a single workplace, and was even heading the IT department of the company, not to mention the company’s supply chain in India.”

In 2004, when Singh got the offer from Ericsson, he realized the chal-lenges the job would bring due to the sheer size of the company. “I was used to working with smaller organizations, and here we had 475 people even then. The attraction was the growing tel-ecom industry. At the interview I was

told that we have roll-outs happening for one customer. It was Bharti Airtel. I joined as head of logistics, and within a year was entrusted with supply chain. Since then the industry has grown, the telecom market has grown, and the company too has grown.”

Ericsson India has 6,500 employ-ees in India, and reported a turnover of $2 billion in 2009. The supply-chain division employs 270 employees cur-rently, up from 43 in 2004.

To give an understanding of the magnitude of the tasks handled by the company, Singh recalls an ac-count soon after joining the company. There was a customs duty of `1 lakh on equipment up for payment to cus-

toms. When Singh approached his boss for the procedural sanctioning of the payment, he was asked to check on the figure again. Singh found the amount to be `1 crore. “I was used to counting in lakh of rupees, and it took me some time to understand that there are companies that pay customs duty running into crore of rupees.”

Large, Nimble-FootedDue to its virtue of being a large glo-bal MNC, and for administrative pur-poses, all Ericsson companies round the world report to the headquarters in Sweden. Decisions related to de-

mand forecasting, order processing, and production are taken in counsel with the parent company. Even the Ericsson India’s factory in Jaipur re-ports directly to Sweden while keep-ing the India office in the loop. Its supply-chain ambit covers four coun-tries – India, Bhutan, Nepal and Mal-dives, and is managed under RINA (Ericsson term for ‘Region India’). In fact, the company manages two sup-ply chains — one from its factory to the warehouses; the other for its cus-tomers (mobile service providers) by managing their networks for them.

“The supply chain from our fac-tory starts with demand planning, order processing, and order fulfill-

ment. In terms of value, the Jaipur factory produces only about 70 per-cent of our supplies; the rest we im-port from our other factories based out in Sweden, China, Brazil, or Croatia,” says Singh.

The Indian factory manufactures only those products that have volumes or critical mass. For instance, new products are imported and only after meeting a certain level of technology adoption is it manufactured locally.

Since technology products can-not be produced en masse, the par-ent company maintains a prudent eye on production and supply to all its

revenue (2009): $2 billionSupply-chain division employees: 270Number of office locations: 21No. of Manufacturing Units: 5 (Jaipur (India), Sweden, Brazil, China, and Croatiaemployees: 6,428technology at Warehouses: SAPNumber of Managed Warehouses: 52Number of LSPs: 20

At A Glance

The Experience Center within the Ericsson premises is a proof-of-concept

area where the vendor defines the scope of the technology to customers.

PAN India Warehousing (3PL/4PL)

Reverse Logistics

Primary & Secondary Transportation

In-transit Damage Reduction Solutions

Partnership in Road Safety Programs

Logistics BPO

Logistics Staffing Services

Logistics Consultancy & Training

Audits & Benchmarking

E-04, Devashree Garden, Rutu Park Service Road,Majiwada Naka, Thane (W) – 400601. Maharashtra

Contacts : (+91) 99879 22244/9820761645E-mail: [email protected]


< Cover Story

branches and subsidiaries. In order to meet the increasing demands for new technological equipment, Erics-son has been keeping a ready eye out for buying out companies. Last year it completed its acquisition of Italian company Marconi that gave it access to optical networking equipment, broadband access products, radio access products, soft-switch as well as research and development opera-tions. In 2010, it took over the wireless equipment unit of US-based Nortel. “That brings the vast locations from where we get our supplies,” he adds.

At your ServiceEricsson India’s largest supply chain undertaking is mainly that for its customers. It manages certain parts of its customers’ supply chain func-tions. For instance, Ericsson over-sees the order processing for Bharti Airtel, and constantly advises them on the equipment they need to buy. Likewise, the company also manages networks in varied ways such as in-tegrating and installing equipment, network design, operation and main-tenance of networks, among other things, for its other customers such

as Vodafone, Aircel, Idea, BSNL, Uni-nor and Etisalat.

This is also part of Ericsson’s managed services contract in which the company runs the network for its customers. “When we say we run it for them it means all the services they should be doing, are managed by us,” adds Singh.

Services could also include acquir-ing the Wireless Planning & Coordi-nation (WPC) licenses, which is issued only to operators. Acquiring a license requires meeting officials of the Wire-less and Planning Co-ordination Wing of the Department of Telecom-munications (DoT). The department is responsible for identifying and al-locating frequency spectrum to tel-ecommunications services provider, based on which the service provider can start providing wireless services.

In 2004, an increasing demand from customers to help them man-age their services gave Ericsson India the idea to start a managed services division. The service is run through an NOC (Network Op-erating Center) where a separate manpower keeps a keen eye on the frequency radiation of all the tow-ers in a particular area. “That’s a technical thing to manage. Service providers have different spectrums for different circles and we need to stay within the allotted network.”

So what areas do the service pro-viders manage at the backend? “They manage the customer service, and marketing and sales at the backend. It’s prudent on the part of our custom-ers to avoid incurring the huge man-power cost needed for running the networks and concentrate instead on acquiring and serving consumers.”

Planning AheadThe telecom service industry is growing at a breakneck speed – this month the total subscriber base in India reached a whopping 70 crore – demand forecasting becomes a chal-lenging job. “If you ask any of the

telecom service providers about the increase in the number of subscrib-ers expected next month, they can’t predict. It will take a while to gather the information and then may come up with a figure of, say, 1-1.5 million. But then they come up with three mil-lion with the current rate of growth. While it’s a good thing to plan for one million and get three, it puts pressure on the supply chain,” says Singh.

The equipment vendor, after re-ceiving this tentative figure, gets into an order-fulfillment mode for equip-ment such as towers, DGs, cables, batteries, etc. This is accomplished in the first half of the month. “If the sea-

Ericsson manages its stock inventory at warehous-es through its LSPs or DSPs

nRadio Base Station 2G (GSM)nRBS 3G Node BnMicrowave /TransmissionnSwitchesnBroadband EquipmentnAntennanBatteries n3PP as per needs

list of equipment supplied To Customers

Global LSPsnDHLnKuehne + NagelnSchenkernPanalpina

Local LSPsnUPSnTNTnOm Telecom LogisticsnCore LogisticsnSeagull LogisticsnNWCCnVision Freight nSigma Supply Chain ServicesnEast India TransportnDRS TransportnVaruna RoadlinesnPrakash Parcel ServicesnSafexpressnBlue DartnAFLnATC Logistics

lsPs That make it Work


< Cover Story

son is good and buying sentiments are strong, we will see a request for another 1.5 million. What is more, the roll-out has to happen by the end of the month,” adds Singh.

The services contract also encom-passes ‘Managed Capacity’ where based on the customer’s growth plan, the vendor would provide tech-nical solutions, supply equipment and install/integrate the same. The result is the customer gets the re-quired capacity (Erlangs: a unit of traffic density in a telecommunica-tions system) in the respective cities/ towns/ area, and helps to get their business plan rolling. For instance, a customer could see an increase by a certain amount the number of cus-tomers, say, in Agra in the next three months. Within Agra, there would be a need for a higher frequency tower ‘near Taj Mahal’. “That’s a wish list. We need to keep ready equipment to deploy within a specific time. Then we need to do the network design.” Network design involves looking at requirements within a certain area so that the expected number of sub-scribers can hook onto the network. The requirement within a particular geographical region could mean 15 base stations, towers, and such other equipment. The supply chain has to ensure that its factory in Jaipur can cater to these requirements within a specified period of time.

On a lighter note, Singh says that sometimes he wishes he could create a shopping mall for telecom equip-ment that would allow a customer to walk in with a shopping card and pick up whatever they want. But this would forever remain a fantasy since telecom equipment is customized.

With equipment usually being a

product that requires long lead time, Ericsson India adopts a three-stage forecasting method. In the long-range forecast (6 months to 2 years) endeavor called Scenario Planning Workshop, its stakeholders meet every six months to discuss projects they are working on. “Here we work on a request for proposal (RFP). For instance, a service provider could be working on a 4G LTE (long term evo-lution), and although LTE will not be available before 2012, we need to be ready. We need to understand the requirements of products and the infrastructure needed,” says Singh.

The medium-range forecast-ing involves a monthly discussion of projects in the execution stage. Called Supply Planning Tool (SPT), this type of exercise entails stock-tak-ing of components to be purchased and orders to be placed. Meanwhile, its demand planning team takes note of requirements such as the product type, numbers, the month of delivery and installation, etc. from its cus-tomers. The exercise is conducted for equipment of other technologies too. Post the SPT Freeze, the demand planning team does a mammoth fol-low up with customers. “Sometimes customers forget to give you forecasts of products they consider insignifi-cant, and come out directly with or-ders. But it’s in our vested interest to do this kind of due diligence.”

The information gathered from the SPT Freeze is then discussed with the parent company. It’s only after both the teams are satisfied

with the forecasts that the produc-tion team in Sweden swings into ac-tion. An MRP (Medium Range Pro-duction Plan) call is taken and the factories are given the go-ahead to begin manufacturing.

The micro-level forecasting, called Near Time Facts (NTF) per-tains to the order processing at its Jaipur factory. Sometimes cancelled orders placed with the factory in Swe-den could still be supplied elsewhere, but orders cancelled from the Jaipur factory can cause a problem. “If I can-cel an order from the Jaipur factory, an inventory turnover (ITO) issue crops up. So we run an NTF meeting with them every week, where issues they might have or delayed deliveries are discussed,” reasons Singh.

Inside outThe growing strength and breadth of Ericsson India has pushed it to outsource portions of its own sup-ply chain. While attending to order fulfillment, demand planning, and manufacturing in-house, it manages warehouses of customers, while cus-toms clearance and freight forward-ing are taken care of by agents.

Ericsson India uses a total ware-house area of 1.4 million sq ft across 52 locations.

Warehouses are managed by LSPs such as DHL, Kuehne + Nagel, DB Schenker, and Panalpina and the dis-tribution service providers (DSPs). The large LSPs are also those used by all the Ericsson offices worldwide. Be-sides this, the India office has roped in smaller LSPs such as TNT, UPS and several others (See Box: LSPs That Make It Work) for smaller packets in Tier II and III cities and remote locations. While the global philosophy has been to as-sign one DSP for a set of LSPs, it hasn’t been able to get down to doing this in India. Singh says, “The global of-fices are content using five large LSPs. This is not feasible in India as we have several remote locations to service. Our smaller LSPs too do not have the

nBhartinVodafonenAircelnIdea

nBSNLnUninornEtisalat

large Customers

ericsson India uses a total warehouse area of 1.4 million sq ft across 52 locations.

In terms of value, the Jaipur factory produces only about 70 percent of our supplies. the rest we source from our global factories.

Sometimes cus-tomers forget to give you fore-casts, and come out directly with orders. But it’s in our vested inter-est to do demand forecasting

While it's a good thing to plan for 1.5 million sub-scribers and ger 3 million, it puts pressure on the supply chain.

In terms of de-livery, ericsson India is fi rm that customs clear-ance to delivery to the warehouse must not take more than 2.5 days.

infrastructure to manage warehouses in remote small towns. So we then ap-pointed 18 LSPs in small states.”

Some of the warehouses are man-aged by its customers. On the other hand, some of its customers are con-tent with advice about what they need to kit and send to the site.

The contracts with customers not only cover supplies, but also installing the equipment at the sites. “There are key performance indicators (KPIs) to be met such as no call drops, no cross lines, etc. We align ourselves to cus-tomer needs. Sometimes we even do the spare parts management systems (SPMS) for them.”

Because of the size of the equip-ment, the company uses only road transport for moving goods. How-ever, as is much known, India has its unique problems of taxation, permits, excise and so on. “In In-dia, service providers are keen that the service tax paid would be avail-able for utilization as CENVAT credit. This could be up to 10 percent, which means we need to get documenta-tions in order.”

Unique to Ericsson is also high seas sale, which is basically transit sale for import of goods. Here the company sells the goods to a third-party when the shipment is still with the airline/shipping line at the point of origin, so that the title of the goods are transferred to the end user when the goods are on high seas or in mid-air in the case of air freight.

The company is keen that trips to

a site remain steady and be kept low. Two years ago, about three trucks would go to a site before the equip-ment is up and running. Today it is down to 1.5, and the company is ulti-mately looking at a milk run a couple of years down the line.

visibility Is KeyManaging the huge supply chain of the company and its service provid-ers is SAP, a platform that will soon be aligned with a warehouse man-agement system (WMS) by end-2011. “When we took the decision to imple-ment WMS, we were apprehensive that it could be used only if we own the warehouses. But this has been customized,” smiles Singh.

The SAP developed is purely for the Indian company and its custom-ers. Earlier, inventory management used LSPs tools such as access-based inventory management. The Order Monitoring Tool (OMS) developed in MS Access is an online tool that helps the company track customer’s order status. “Currently, our LSPs provide us a daily online inventory stock re-port. We have a warehouse vertical within the organization that looks at processes, does audits, stock ac-curacy, etc. There’s a pan-India ware-house manager who reports to me,” adds Singh.

Inventory turnTechnology obsolescence is a big concern for any telecom equipment provider. This could be a reason that could prolong inventory turns. “In some cases, inventory turns are so long we have to look at recycling the products. At times, our customers or-der products for a site and are unable to deploy it. So inventory starts piling up. Sometimes, by the time the prod-ucts reach the sites, other operators are offering a new technology. So our equipment is of little use.”

This is a problem mainly for new operators who have licenses for fewer circles. Old operators having a pan-


nNetwork DesignnNetwork Deployment nNetwork OptimizationnOperations & MaintenancenManaged Services: Single vendor & Multi-vendornManaged CapacitynSoftware as a servicenMultimedia, VAS Applications, TVnSPMS

services Offered


< Cover Story

a diversion, and this could create a traffic jam. They want to make a call, and the call does not mature because of lack of infrastructure in that area. Here the KPI goes for a toss. The deci-sion to build a flyover was unknown to Bharti and me. If my KPI average for that month goes for a toss, I get debit notes,” rues Singh.

A regular benchmarking exercise that the company conducts in-house could also relate to demand planning, order processing, delivery, stock ac-curacy, SPMS and quick repair and return. The company benchmarks the difference from the time of the order places to delivery. “Our orders are customized products. We have tools through which balance of quotations (BOQs) are prepared. Our customers are people in a hurry. So we need to re-duce the time from receiving the order to delivering it. Sometimes the facto-ries are not able to meet our require-ments, but yes, we do benchmark our performance,” adds Singh.

In terms of delivery, Ericsson In-dia is firm that customs clearance to delivery to the warehouse must not take more than 2.5 days. Admitting that the target is high, Singh says that sometimes at the time of order processing the client too has applied for a WPC license, so that it can be-gin offering wireless services, which could take up to three days. As the equipment could be high-radiation, it is imperative that installation hap-pens quickly enough. Under its Ac-credited Clients Program (ACP), it has been allowed a green channel facility at five ports in India. This al-lows it to quickly move goods out of the ports to the integration site.

Benchmarking does not leave out spare parts management system. A delivery of four hours is the norm. Warehouses for storing spare parts are separate and mostly run by TNT and DHL from 65 forward stocking locations.

It is also the same with quick return of repaired goods. Singh prides himself

on the low return rates of goods. “We have an average of five days to repair and return the goods to the sites. Cur-rently, we have a tie up with Bengaluru-based Elcotech, but we plan to take this to our factory in Jaipur.”

Elcotech is a provider of electron-ics manufacturing services in com-munications technology, and is the first global company to manufacture telecom equipment in India.

Going Green Some time ago, considering the na-ture of the equipment, the CEO of Ericsson committed to the New York Stock Exchange about its decision to reduce CO2 emissions. The green targets are present in all domains, including supply chain. The compa-ny ensures that almost 70 percent of the goods coming from its factories outside India are brought in by sea. This is a part of the benchmarking process for every employee.

Similarly on reverse logistics, some of the returned products require recy-cling. Although it has globally-ap-proved recyclers in Chennai and Sin-gapore, there are times it is required to recycle products belonging to other service providers outside its ambit.

Its CSR efforts include spreading technology to places most needed. The delivery of spares to rural areas had given the company an insight into the economic conditions of these areas. As a step, it decided to show the Ministry of Telecom the dire need to step up technology in these areas. Through Gramjyoti, it demonstrated how the 3G technol-ogy could help offer the poor access to healthcare.

Meanwhile, Ericsson India has been awarded deals by four opera-tors (Bharti Airtel, Aircel, Vodafone Essar, and Idea) covering 21 separate 3G licenses and is all set to ramp up the supply-chain to meet demands of the about-to-explode 3G market – yet another invaluable supply-chain ex-perience for Singh.

India license could send the spares to be used in rural areas.

Singh prides himself on being able to maintain an inventory accuracy of 99.96 percent. “Our warehouses are ac-tually a merge in transit place. We buy several pieces of equipment and all this has to be kitted and go to the site.”

With the size of equipment in-creasing, it has to contend with the problem of faulty units. The company has set up a repair center to shorten the lead time of repair, that is being expanded to its factory in Jaipur.

Standards opsAn upshot of managing the networks for subscribers is meeting KPIs. Cus-tomers have set various KPIs that the supply chain needs to meet, and one that could vary every month. The KPIs involve customers’ demand of no-call-drops, no-crossed networks, constant uptime, etc. At the month-end, Ericsson is required to prove that each KPI has been met. For in-stance, Bharti has an exclusive tie up with Ericsson and Nokia Siemens Networks (NSN), the Finnish-based telecommunications company, for managing its network. Of the 23 cir-cles awarded to Bharti, 15 are man-aged by Ericsson and the rest by NSN. The KPIs for each circle will vary de-pending on criticality.

“Sometimes performance of KPIs can fall due to lack of knowledge. For instance, meeting the no-call-drop KPI. Suppose the Delhi government starts work on a flyover. They create

nEnhanced focus on Green Supply Chain [Reduced Carbon Emission]nFocus on Sea /Surface TransportnReduction in Trips per site for domestic distributionnInitiative towards environmentnRecycle concept for reverse logistics/ scrap handlingnFocussed Cost Reduction ProgramnYear-on-Year reduction in Total cost

Near-Term Plans


< feature

Although several pharmaceutical companies refrain from using LSPs, there are a number of LSPs waiting to break into this sector by increasing the number of services. Remya Philip tells us how.

< feature

We Work Alone


With the establishment of a new dedicated pharma zone at the Rajiv Gandhi

International airport, Hyderabad, India’s pharmaceutical industry is scaling new heights. While this is def initely a step forward for India’s pharma trade, the question to be answered is, is it all good for Indian pharma?

According to a Frost and Sulli-van report, the Indian pharmaceu-tical industry accounted for around 10 percent of the global production and two percent of the world phar-maceutical market in 2010. As per

We Work Alone

the Department of Pharmaceuti-cals India, the total pharmaceuti-cal market size in the country was `89,335 crore in 2008-09, contrib-uting around 1.2 percent of India’s GDP. In 2009-10, the industry reg-istered an estimated growth of 18 percent over the previous year, tak-ing the size to `1,05,415 crore.

Due to the sensitive nature of pharmaceutical products, the sup-ply chain in this industry needs to be managed with utmost care. The products need to be handled and dealt with specific norms set out for each product and storage necessities must be met stringently in dedicated warehouses. Since it is an industry with such widespread requirements, pharmaceutical companies continue to remain apprehensive about using logistics service providers (LSPs).

the Current realityWhile LSPs speak hopefully of a promising future, the analysts have a different story to tell. Frost and Sullivan report brought to light that this year about 53 per-cent of Indian pharma compa-nies reported that they could not gain notable (5 percent or more) improvement in their logistics ef-f iciency, despite using third party logistics (3PL) providers.

Srinath Manda, Program Man-ager (Logistics & Transportation Practice), Frost & Sullivan, said, “Although a few LSPs are providing multiple services nationwide for a select few clients in the Indian phar-maceutical industry, majority of the LSPs are still not considered to be adding any notable value to the sup-ply chains of the industry.”

The reasons for this are plenty, ranging from the lack of nation-wide presence and international af-filiations of most LSPs to the lack of capabilities to add value to the sup-ply chain efficiency through proc-ess improvements, and the lack of abilities to deliver on time.

Working Without LSPsAlembic Limited, an integrated pharmaceutical company has manu-facturing facilities in Baroda and Baddi (Himachal Pradesh) in India. Raw materials to the manufactur-ing plants are brought from the out-skirts of Mumbai and from Himachal Pradesh. The finished products are then distributed by first reaching them to a central stock point which includes the areas of Viragpur in Pun-jab and Baroda in Gujarat. From this point on, clearing and forwarding agents (C&FAs) come into the picture to take care of the distribution to the various retailers. Transportation for the same is arranged for by the com-pany itself on full truck load basis. Alembic also provides courier serv-ices in case of emergencies.

Asked why the company does not use LSPs, Masud Shaikh, Head-Distribution and Logistics, Alembic said, “Involving LSPs in the supply chain makes it an expensive affair. Our internal set-up with all the in-frastructural specifications in place helps us carry out the entire process smoothly, keeping a check on the cost factor.”

At Dr. Reddy’s Laboratories Ltd, the global pharmaceutical company, raw materials are imported from China and brought in by air or sea. Rhodia Pharma and GE Healthcare are some of Dr. Reddy’s suppliers. Rajender Babu, Senior Executive (SCM), says this way they have more control on the system when they manage their own supply chain. “Sudden changes that may need to be implemented, as well as emer-gency situations can all be dealt with more easily when the logistics

n Lack of LSPs with nationwide presence n Lack of LSPs with international affiliationsn Lack of capabilities to add value to supply chain

efficiencyn Lack of abilities to deliver on time

reasons for absence of LSPs


< feature

for LSPs.” LSPs On the SceneDespite this, the presence of LSPs is not completely absent in the indus-try. Several LSPs do provide services at least partially, if not fully. Indelox Services is one such LSP providing end-to-end supply chain functions. Jeevan Raosahib, Managing Direc-tor, Indelox said, “We are not di-rectly involved with pharmaceutical companies yet, but we are talking to a few big companies and we hope to

have some of them on our list by the next financial year”.

Some of their existing custom-ers include Sun Pharma, Dr. Reddy’s Laboratories, Biocon and Jubilant. The storage and temperature regu-lations are adhered to by providing 2-8 degrees to -70 degrees of stor-age facilities. The products are also transported in specific temperature sensitive conditions using reefers. With the help of various gels, dry ice, and wet ice, the products are stored in such a manner that they can be preserved without any damage for 24 to 72 hours.

Labor used at the warehouses are trained on the classification and handling of pharmaceutical

products. “No mixing of products or using bare hands, and constant tracking and maintenance of tem-peratures are all stressed on grave-ly,” assures Raosahib.

The transportation requirements are outsourced to Blue Dart with whom they have a long term con-tract. Blue Dart provides services by both road and air all over India. For the distribution, the products first reach the main metros from where they are moved to the specific loca-tions by Blue Dart. At present, except for areas in the north east, Indelox reaches most parts of India in the north, south and west.

For the IT system, Raosahib said that Blue Dart provides a track and trace system. “We are constantly linked to the information and hence have full access to details of where a particular vehicle is and when it reaches the destination.”

Deccan 360 also known as Dec-can Cargo & Express Logistics be-gan operations in November 2009 and has been serving several prom-inent pharma brands. Some of these include GSK, Astra Zeneca, Ranbaxy, Cipla and Cadilla. Their area of work involves carrying the goods from the manufacturers to the hospitals. Deccan has not yet ventured into cold chain services but have plans of doing so in the near future.

In order to ensure that there are no cases of product damages, the products are kept safely ac-cording to temperature specif ica-tions and are not mixed with other products. For all the transport in-volved, Deccan has dedicated ve-hicles. Maruti Omni vehicles are used for speedy deliveries while Mitsubishi Canters are used for rest of the deliveries that require products to be stored in a bigger area and moved without much shaking. Dry ice is used in these vehicles whenever required to en-able proper storage.

is managed in-house”.The supply chain at Lupin Lim-

ited, producers of a wide range of affordable generic drugs, branded formulations and APIs, works in the same manner. The raw materials, apart from those available in India, are mostly imported from China, Europe and USA by air or sea. The distribution network consists of CFAs who aid in moving the prod-ucts to the stockists and then to the retailers and chemists.

Dimple Parikh, Head-Logistics, Lupin states, “The parameters that need to be met by LSPs in order to carry out services for pharma-ceutical products are laid out by the WHO and the FDA. These pa-rameters are too extensive to be provided by an LSP because of the fragmentation within the various pharmaceutical products and the industry itself.”

However, Parikh thinks there is a future for LSPs in Indian pharma. “If each area in the industry can be studied with respect to all the re-quirements right from sourcing to distribution, and an LSP can set out to provide product specif ic services, there definitely is room

Dispatch sorter

systems at

pharma DCs.

Photos: KN

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< feature

Products are moved by air or in temperature controlled en-vironments with temperatures being controlled as per require-ments within the f lights. They are packed and stored in pallets inside containers that are cylindri-cally shaped just like the f light, to ensure uncongested storage with least movement. Recently, Dec-can inducted two airbuses to serve the pharma logistics sector. The labor involved is specially trained at training programs conducted by Air India, based on guidelines laid down by the DGCA.

Deccan’s reach is not too broad since they have only come into busi-ness a year back but they nonetheless provide pick-up and delivery solu-tions in all prominent locations like Mumbai, Chennai and Himachal

Pradesh. Deccan functions as a major corridor to the Indian cargo move-ment as well, providing services to 87 percent of the cargo movement.

KNAPP AG, providers in ware-house logistics and automation solutions, caters to companies like Astra Zeneca, Phoenix Healthcare, Alliance Healthcare, Pfizer, United Drug and AAH Pharmaceuticals. Although KNAPP does provide serv-ices in India, the response so far has been disappointing, mirroring vari-ous structural issues.

Dr Emmerich Moser, Regional Sales Manager, KNAPP AG explained, “We provide end-to-end solutions

pertaining to automation and logis-tics in warehousing of bulk stock and fine picking of individual orders from pharmacists, doctors, hospitals as well as e-commerce orders”.

Depending on the turnover of individual SKUs, the stock for or-der picking is stored in static racks (slowmovers) or flowracks (fast-movers). The labor employed at the warehouses is trained on the basics of hygiene. In highly sophisticated warehouses equipped by KNAPP, pickers are instructed electronically, e.g. by R/F-Terminals, Pick by Light or Voice Terminals.

“The best practices in the phar-ma sector are met with facilities like industrial floor, closed windows / air condition and using re-usable plas-tic containers or fresh cartons for picking and shipping of customer orders, instead of re-using bulk car-tons,” stated Moser.

Time sensitive deliveries are en-sured using various measures. One of them is Zone Picking whereby the individual picker stays in his dedi-cated picking zone and focuses on picking, not walking along with his order. The transport of order totes in the warehouse is done by intelli-gent conveyors and not humans. The Warehouse Control system (WCS)

software calculates in advance the entire handling time of an order, from release until arrival in dis-patch. Based on the results, orders with longest processing time are re-leased first. WCS can also prioritize urgent orders. Finally, the dispatch sorter delivers the finished order to the delivery vehicle automatically. In the case of damaged products, the product’s barcode is scanned at final inspection to obtain a printed instruction of where to find a re-placement in the warehouse and is suitably replaced.

the Path aheadFrost and Sullivan analyses high-light the expected CAGR for the in-dustry between 2009-10 and 2015-16 to be around 12-13 percent. Due to the steady rise of exports by Indian pharmaceutical companies, the large share of revenue growth for LSPs from this industry is expected to come from the transportation and freight forwarding segments.

The growth projections prove that there is potential for the increase of logistics services revenues as well. It can thus safely be said that we are only at the threshold of expansive growth bound to take place in the In-dian pharmaceutical industry.

the CaGr for the pharma industry is expected to be around 12-13 percent from 2010 to 2016.

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< Guest feature

A big reason for the rising prices of food and vegetables is the near-absence of a solid cold-chain infrastructure in India. Even for a private player – be it a principal or an LSP – running a cold-chain entails challenges unique to India. However, the rewards far outweigh the challenges.

Piyush shahAssistant ProfessorOperation,SP Jain Institute of Management and Research

Cold Chain

56

This article is in continuation of my article in the August 2010 issue of this magazine. The encouraging feedback to that article has

tempted me to look deeper at the issue of cold chain in India.

A strong cold-chain infrastructure for fruits and vegetables (F&V) – sorely lacking in India – could be a win-win for everybody. F&V are seasonal and highly perishable. The bulk of the output arrives at a market within a span of three to four months every year. Since the market during these months is flooded with supply, farmers do not get a good price. The long chain of middlemen and the eight months of no supply ensure that the final con-sumer has to pay a high average price for the commodity.

A cold storage has a buffering function. F&V can be stored and released into the mar-ket at controlled rates. Thus, there is no im-mediate pressure on the farmer to dispose the goods, and he can get a good price. Cold stor-ages will ensure low wastages and significant-ly higher quantity of F&V reaching the con-sumer. This is bound to bring the price down and also cause consumption to go up.

Challenge involvedBut all this is in a perfect world which unfor-tunately does not exist. There are solid chal-lenges to actually ensuring a strong cold chain network in the country. Cold chain does not only mean reefer trucks or temperature-con-

trolled warehouses in isolation. It means both of them together. And, along with them it in-cludes pre-cooling, blast cooling, etc.

Apples, for example, have to be stored at around negative 18 degrees centigrade for which the storage facility has to be pre-cooled and then blast-cooled to this sub-zero temper-ature. A separate chamber then maintains the apples at this temperature. This chamber can merely maintain the apples at low temperature and not cool them to the temperature. A slight power outage can completely throw the sys-tem out of gear. Similarly, when transferring the fruits from the storage to a reefer truck, care has to be taken to ensure that the fruits stay at negative 18 degrees.

It is very difficult for a single player to be in all areas of the temperature-controlled sup-ply chain and because of this, the inefficiency on the part of any one player can have a drastic impact on the quality of food. Cold supply-chains require a significantly higher level of coordination and reliability. And reliability is definitely one of the major problems with In-dian logistics. It takes tremendous effort to get disparate players with different motives to work together and cooperate.

The chain also needs cooperation from power generating and distribution companies to ensure uninterrupted supply. The chronic power deficient situations that we manage to survive in makes getting such cooperation very difficult. We may need new research into cooling methods so that fruits can survive the

Case for Cold

58 INDIA| September 2010 | www.logisticsweek.com

< Guest feature

Despite the hundred percent FDI in cold storage infrastructure, the cold chain story is yet to take off

Piyush shahAssistant ProfessorOperations,SP Jain Institute of Management and Research

Cold Chain

58

India consumes more than 14,000 truckloads of vegetables, 9,000 truckloads of fruits, and milk enough to fill 89 Olympic-size swimming pools,

every single day. While fruits and vegetables are subject to seasonal production and have a year-long consumption, milk and meat have a small shelf life.

In terms of transportation, there are only about 5,000 reefer trucks that move non-milk commodities across the country. Then there is the fabled 30 percent wastage. Around 25-35 percent of the total produce of fruits and vegetables (F&V) worth `35,000 crore are wasted. One vegetable – the potato – accounts for almost 90 percent of the total volume of cold infrastructure.

Guided by such statistics, an integrated cold chain seems to be the obvious answer. A topic that has been subject to numerous trade conclaves, academic papers, debates, etc. However, after so many years of hard deliberations we seemed to have reached nowhere. India’s global food export stands at a mere one percent of its production in spite of being the world’s second largest producer of fruits and vegetables. A significant majority of the exports is for the less quality-conscious Gulf region.

We have only two companies, Radhakrishna Foodlands and Snowman, dictating a small segment of the cold chain in poultry. There is no comprehensive national policy that promotes farm to fork cold chain. Technically speaking, we continue to use archaic technologies and poorly designed cold storages.

the scene todayThe cold supply chain business has obviously not lived up to its promise. The grassroots level revolution that has been on eve for so long just did not happen.

Our cold storage story dates back as far back as 1938. It was set up in Meerut for storing potatoes. There has been no significant change in the last 70 years. Overall, our cold storages can store around 22 million metric ton. Of this, Uttar Pradesh and West Bengal have 65 percent of the installed capacity. While we have one case of McDonalds in India which uses smart temperature-controlled supply and distribution, we also have many companies whose food stock is met with rejection in Europe.

So except for a few examples, India has a totally un-integrated cold supply chain. In some pockets, individual entrepreneurs have ventured into the cold storage business. Most of these are of poor technical design and do not adhere to the international standards of storing and stacking. Pharmaceutical companies in Asia and the USA are constrained by laws to use the cold chain for their supply chain; in India the companies hardly use the cold chain.

With regards to the dairy industry, there are few large organized players – despite the year long demand. In ice creams, small players have as much as 35 percent of the market share. Overall, the scene in the cold chain supply chain seems like the next big thing that never happened, a sort of broken promise.

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variation in temperatures due to power outage and other reasons.

the indian ProblemGoing by my current level of research and dis-cussions, I feel that the issues for cold chains in India point to a much deeper problem. It has to do with the way agriculture is carried out in our country, the way farmers are remunerated and the way the existing supply chain is designed.

While tomato prices are shooting up because of low supply, some farmers are giving up tomato production because of low returns. This anomaly points to a middle-man-driven manipulation and control of the supply chain. The marginal farmer who is still struggling with basics can hardly be expected to use the cold infrastructure. And on the other end are the super-rich large farmers who are in certain cases also performing the role of middle men. The manipulation ensures very high margins leaving farmers disinterested in cold chain based supply chains.

Most of the farm produce in India is consumed without processing. Almost 70 percent of food out-put in Brazil is processed. For India this number is at around 5 percent. Thus the entire post-harvest activity is directed towards consumption.

Processed foods have higher margins. Such high margin foods can easily support expen-

sive cold chain technology. Absence of food processing infrastructure has a major damp-ening effect on the need for cold chain.

The cooling requirements of foods for direct consumption and those for process-ing are generally separate. This is because the foods to be processed may be stored in a semi-processed stage. There is a distinction between the quality of foods that are used for consumption and those processed.

Good quality produce is generally used for direct consumption and lower quality output is processed. The low quality does not necessarily have to do with the nutrition value of the fruits and vegetables, but could rather be related to factors like size and col-our. To be able to process food and have them use cold storage would need a scientific grad-ing mechanism close to the farmer.

The farmers’ remuneration and his mo-tivation to improve the quality of food are directly linked to this grading. Given the extremely fragmented farms in India, the quality even in one small village shows high disparity. Getting this grading mechanism at every market is a problem.

Without proper grading, the foods can-not be directed to the right storage. The price realisation of the stored produce is therefore

Almost 70 percent of food output in BrAzil is processed. for indiA this numBer is At Around 5 percent.

Cold storages will ensure low wastages and significantly higher quantity of food and vegeta-

bles reaching the consumer.

ww

w.gscoldstorage.com


less because of inconsistent quality of produce. It was mentioned in the first article that storage and use of cold chains entail additional costs. If the sale of stored foods does not lead to realisa-tion of the additional costs, farmers would not use the cold chain. The low realisation is thus a demotivator for farmers or entrepreneurs to use the services of cold chain.

The last and most important issue with cold chain pertains to the government and govern-ment-sponsored bodies. Bodies like the Agricul-ture Processed Food Products Exports Develop-ment Authority (APEDA), the state agriculture boards, agriculture research centres, etc. have significant resources. However, there are times when these bodies work in isolation. This causes the level of agriculture development staying low and hence constraining the use of cold chains.

the silver LiningMahagrapes in Maharashtra has positioned itself in the post-harvest space of the supply chain. Mahagrapes as a venture is the joint effort of some individuals and bodies like APEDA, government of Maharashtra, National Horticulture Board, etc. It sources grapes from many cooperative grape growing societies and tries to get good prices internationally for the produce. Mahagrapes started with a focus on scientific post-harvest practices and quality control. They were able to influence all the cooperative growing societies to install pre-cooling and cold storages in their respective areas. Grape export from Maharashtra has shot up to almost `13 crore in 2007-08 from `4.5 crore earned from exports in 2001-02.

McDonald’s vendors like Trikaya Agriculture and Radhakrishana Foodlands have significant investments in cold chain infrastructure. This came about because of McDonald’s focus on quality. McDonald’s supply-chain design extend-ed right up to the farm for all its food vendors.

McDonald’s is said to have invested around `450 crore over seven years in the supply-chain before starting the first restaurant. Today, all their vendors are themselves very strong and are in a position to profitably serve other cus-tomers besides McDonald’s.

Jain Irrigation has its own cold chain. It was one of the first companies to use the con-tract farming mode and is an integrated player in agriculture. They help farmers on the pre-

harvest, harvest as well as post-harvest side. Jain Irrigation also helps with issues like crop insurance. It has research laboratories and positively influences farming practices through definite interventions. It has man-aged to help farmers get a productivity of around 80 ton per hectare, which is signifi-cantly higher than other parts of the country. It has also helped improve and benefit farmers of onions, cottons and mangoes.

Lessons LearntFor cold chain business to grow and sustain, the agriculture practices have to improve. Like seen in the cases of Mahagrapes, McDonald’s and Jain Irrigation, the farmer has to benefit. He has to be incentivised to change his work methods and improve his earning. A farmer freed from the mundane troubles of finding the right price for his produce is more likely to use services of cold chain infrastructure providers.

Mahagrapes is a cooperative based model. Some set of producers helped themselves and other farmers improved. McDonald’s is a clear case of patience, persistence and investment by a user. It leveraged the high business level to in-fluence practices of its vendors. Jain Irrigation is an intervention from an integrated player. They have helped farmers improve returns from their land and in turn also improve business.

All three examples successfully use cold storages and cold transportation. However, they did not start by getting infatuated with the idea of cold chain. They achieved success because cold chain for them was a means to an end rather than an end itself. They designed business models that were scalable and suitable for India. In spite of working with marginal and new farmers, they still used world-class tech-nology. They had a clear idea that their benefit lies in the benefit of their vendors and farmers.

A weak man cannot be made fit by merely transplanting a strong heart. The root cause of the weakness will ensure that the transplant-ed heart weakens in some time. In the same, there are huge opportunities in India’s cold-chain sector but to avail of them, the entrepre-neurs will need to strengthen the roots of this business, by thinking of ways to incentivise the small marginal farmers.

mcdonAld’s is sAid to hAve invested Around `450 crore over seven yeArs in the supply-chAin Before stArting the first restAurAnt.

The author can be reached at [email protected]


< Book EXTRACT

Let's Hear Those IdeasVocollect, a developer of voice solutions for mobile workers, has launched an educational series with The Talking Warehouse. The book is meant to help supply chain professionals gather a greater understanding of voice-directed workfl ow. An extract.

The building of the great pyramids, the Parthenon, the Roman network of roads – all required that supervisors speak directions to their workforces

to coordinate tasks. Once the electronic age was ush-ered in, companies relied on spoken communications, particularly the telephone, to conduct business. It is interesting to note that the fi rst words spoken over the telephone, “Mr. Watson – come here – I want to see you,” were uttered to direct a worker.

Electronic communications have since come a long way. Today computers and the Internet allow spo-ken words to assist in performing open heart surgery thousands of miles distant, to coordinate complex engineering feats, and to direct repairs at an orbiting space station. And our technology also makes it more effi cient to get the products we use every day through the supply chain productively. Just as it was from the beginning of man’s existence to this pre-Star Trek age in which we live, there continues to be a need to com-municate clearly and concisely to accomplish work.

Voice-enabled technology used in warehouses and distribution centers represents another progression in work-directed communications. Since its introduction in the distribution sector nearly 20 years ago, voice tech-nology has dramatically enhanced the ability of thou-sands of leading companies across a wide range of in-dustry verticals to achieve greater business results from their distribution processes.

All over the world, companies using voice are at-taining 15-30 percent improvements in throughput, achieving 99.99 percent and higher accuracy rates, notably improving safety for their workers, and re-ducing new employee training times by more than 50 percent. Their customers are happier with more accurate and timely shipments. Their employees are also happier, often gaining the ability to earn great-er f inancial rewards with stronger performance. And these organizations f ind that voice benef its the bottom line by providing a low total cost of owner-ship and a very favorable return on investment that

THE TALkING WAREHoUSEAn E-BookBy Roger Byford and David Maloney

Contact: [email protected]

Understanding How Voice Unleashes Higher Performance in Product Distribution

THE TALKING WAREHOUSE

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• Need for Mechanization at Indian ports

• Draft Constraints (which hinder entry of

• The Policy Conundrum

• Regulatory Issues (The TAMP Factor)

• Labor Management at Ports

• PPP: Challenges and Opportunities

• Major and Non-Major ports: Lessons to

warehousing

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< Book EXTRACT

is normally less than a year and is often as little as six months.

Yet despite its worldwide acceptance, with thousands of companies singing its praises, voice-enabled work in the distribution/supply chain arena still is not fully un-derstood. Many supply chain professionals tell us they are familiar with voice, but few understand how it works and how it can benefit their operations.

Some may have investigated voice technology in its early years and found that its capabilities were lim-ited. And that may have been the case two decades ago. Yet as with any emerging technology, early adop-ters saw enough benefits to drive voice forward to the point where all those initial concerns have since been addressed in the eff icient, mature systems now avail-

able. Voice-directed work has come of age, ref ined through many years of research, development and practical use in distribution facilities worldwide. To-day’s voice systems are robust, productive and highly accurate, in every distribution environment, from grocery freezers to pharmaceuticals to apparel manu-facturers. And this holds true, regardless of the spo-ken language and dialect.

So, what exactly is voice in the warehouse, you may ask?

In a voice-enabled warehouse, distribution workers wearing headsets and purpose-built, wearable mobile computers are directed to the tasks they must perform. It is like having someone whispering in their ears, tell-ing them the next task to be completed.

But voice is more than just listening to directions over an earpiece – it is a system of interaction.

The worker uses a microphone attached to the head-set to speak back to the voice system.

Recognition software within the system then ana-lyzes their responses to determine if the work they are performing is appropriate. The result is a highly accurate and efficient system for enabling distribution work.

While voice offers many benefits to distribution cent-er (DC) operations, speed and accuracy are the two fac-

tors that drive the attractive return on investment avail-able with voice. Users report productivity improvements well above 20 percent, depending on the systems that voice replaces (often paper/label systems or RF scanning environments). Greater productivity means that more products can pass through a facility in a given amount of time. In some cases, the greater throughput capabilities have allowed companies to forego plans to increase the size of their buildings.

The ability of voice systems to deliver accuracy in ex-cess of 99.99 percent also means that there are fewer re-turns to process, less credits to provide for those returns and happier customers who will recognize the differ-ence voice has made in providing them with more accu-rate orders. Voice allows distributors to make the order correct the first time and to actually meet the demands of that elusive “Perfect Order.”

Global MarketToday’s voice technology continues to alter the distribu-tion landscape. Vocollect, which holds the lion’s share of the global voice market, accounts for more than 300,000 users worldwide.

These users operate in some 60 countries and receive their voice directions in more than 35 different languag-es. Aggregated, these customers process more than $3 billion worth of goods to customer locations on a daily basis. So clearly, voice has impacted distribution opera-tions in nearly every part of the world. And these are fig-

Voice allows distributors to make the order correct the first time and to actually meet the demands of that elusive “Perfect order.”

Distribution workers at large warehouses could per-

form their tasks better if they listened to instructions.


ures for Vocollect alone. Yet even with such a large user base in place, voice still is a relative unknown.

A 2008 survey by DC Velocity Magazine showed only 12 percent of respondents use voice-directed systems in any capacity. More than half – 53 percent – still are paper-based operations. More than 30 per-cent are picking with paper labels. These numbers align with industry estimates which show overall that voice still has only penetrated 10 percent of its poten-tial global market. Much of this can be attributed to a lack of understanding of voice and its potential value to distribution operations. The more managers are aware of voice and its positive implications, the more likely they are to feel it is an appropriate technology for their business.

While voice technology has a multitude of applica-tions in manufacturing, product inspection and health-care, for our purposes, we are focusing on the use of voice in warehouse and distribution applications.

The Emerging Era of The Voice-Enabled WarehouseDuring the past decade, many distribution processes moved from “paper-centric” to “RF-centric.”

Now they are moving to a “voice-centric” approach. Voice is increasingly used across many workflows, tasks and processes, and is now becoming the starting point for workflow planning.

Companies are discovering that voice is work proc-ess-driven and is the technology that can best help them optimize human/computer interactions. Full voice so-lutions are purpose-built to service the vast and varied potential areas of need throughout the distribution environment. Voice can be seamlessly integrated with warehouse management and ERP systems, along with additional tools required by mobile workers, including barcode scanners, printers, displays and RFID.

Voice-Driven BenefitsThe most widely used and best established application for voice in warehouses and distribution centers is for picking, otherwise known as order selection. This is where voice first established itself in the distribution arena, and it continues to be the point of entry for most voice customers.

It’s usually the area where the greatest numbers of employees are positioned in the warehouse and where the company can have the most direct impact, and typi-cally, the most immediate and measurable return on in-vestment.

Picking is a very labor-intensive operation. It is also the place in the DC/warehouse that is highly prone to human error, as it is usually the point with the greatest

amount of manual interaction.Picking relies on people to go to the right location,

to select, to count and to verify – all of which are tasks subject to mistakes if not administered properly.

Voice is extremely suited for efficient picking, as workers’ hands are free to perform their tasks.

They do not have their hands occupied with paper, scanners, labels, pencils or anything else.

Instead, their hands are readily available to pick prod-uct. Because workers are listening instead of reading a paper, label or screen, they can focus on the product be-ing picked, which again speeds up their work for greater productivity. It also reduces the chances for errors, as they are not glancing back and forth between the pa-per or screen and the product location. And since their eyes are not glued to a screen or paper, workers are more aware of their surroundings, which greatly improves their safety.

In addition to picking, voice also is deployed in re-ceiving, shipping, cycle-counting, inventory manage-ment, and many other distribution center and ware-house applications. Some facilities operate entirely on

voice and have completely eliminated paper, labels, most scanning, and all other task-directed methods. Instead, voice directs and manages almost every aspect of work.

Besides directing work, voice systems also capture a wealth of data used for improving facility operations. Since voice operates in real time, there is a constant flow of accurate data generated by the system. All tasks can be tracked continuously as workers move through their assignments.

The time duration of each task is measured as it is performed, allowing managers to accurately track their workforce productivity throughout the day.

In addition to determining overall productivity, voice systems give managers precise data as to which workers are more prone to errors, and who is meeting expecta-tions and who is not. This allows managers to address problems immediately before they become customer service issues.

Further, the management software’s ability to pro-vide a view on worker performance allows supervisors to

Voice is extremely suited for efficient picking, as workers' hands are free to perform their tasks.


< Book EXTRACT

identify process bottlenecks early on and other potential areas for improvement.

The software helps to provide fair and accurate data for a company’s incentive program, often driven by labor standards.

Associates also benefit from voice. No longer do they have to carry bulky RF scanners as they perform their work. Instead, their hands are free to focus on their tasks. Voice is easy to learn and easy to use. While it often takes weeks to train an operator to use a screen-based RF device, workers using voice can be productive within an hour and proficient within days. Training time and costs can be cut dramatically, in excess of 50 percent in many cases. Companies with a high degree of turnover or temporary labor can get new members working faster and at peak perform-ance sooner.

Workers also prefer voice to other methods. Time and time again, workers who may have been reluctant to adopt a new technology confess they never want to go back to the old way of doing things. They cannot imag-ine working with anything else other than voice. They consider it a “cool” system that puts them at the cut-ting edge of new technology. They recognize that their companies have given them the best tools available to do their jobs, and that their employers are willing to invest in them to enhance their individual skill sets.

Voice also brings consistency to a company’s opera-tions. Not only can the same technology be used within the four walls of a facility, but it can be easily deployed at every facility within the company’s network – anywhere in the world. This allows for consistent processes and easily allows benchmarking and comparison from one operation to the next. Language is also not an issue, as any language or dialect can be supported. So voice truly

is a worldwide technology.Lastly, voice is a green technology. Companies today

are seeking solutions that not only save costs, but help to save the environment as well. Such green technologies allow them to be good neighbors as they perform their work. Since it eliminates huge amounts of paper and the printers and ink that go with it, voice is a socially respon-sible alternative.

Favorable RoIMost companies find it relatively easy to calculate re-turn on investment with voice. It is very common for a voice system deployed in a Western nation to pay for itself within a few months. Almost every compa-ny reaches its payback within eight to 14 months. In lower-wage sectors of the world, while the ROI is not as immediate, the notable accuracy improvements, as well as the drive to attain operational excellence and consistency in their processes, provide justification for the purchase of a voice system. In this age of tightening budgets, businesses must be able to quickly see their investments produce results. Voice clearly achieves this goal. Companies also find that since voice makes their current work more productive, they can avoid the need to hire additional labor at today’s ever-increasing costs of salary and benefits.

In future chapters we will discuss in detail the many benefits of voice and how many leading companies are deploying the technology to take their distribution to the highest possible levels of productivity. But first, it would be good to learn a little of where voice came from.

The history of the voice systems used in distribution today can be traced to research and development con-ducted at Westinghouse Electric Corporation in Pitts-burgh back in the early 1980s.

Westinghouse had established a number of research teams which worked on “intrapreneurial” pursuits. These groups were charged with developing new solutions for problems that Westinghouse faced internally. It was also hoped that some of the solutions these teams discovered would have the potential to be marketed elsewhere.

Since voice eliminates huge amounts of paper and the printers and ink that go with it, voice is a socially responsible alternative.

Voice is a green technology. It can help companies save on costs too.

India’s Warehouse Landscape: A reality check

GST: Are we ready?

Changing Customer Expectations

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

Changing technology paradigms: To Adopt Or Not

Handling Risk

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THE WAREHOUSE HANDBOOK- II : Managing Change


< PanoRama

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enterprise, without the need to get into the al-gorithms behind the supply chain solutions.

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In the railway technology market, mi-croelectromechanical systems (MEMS) capacitive accelerometers are well recog-nized for their high reliability in harsh environment and are qualified for safety critical railway applications.

One of the applications of MEMS capaci-tive accelerometers has been measurement of bogie tilt. Other applications include rolling vibration measurements, position monitoring of magnetic levitation train, control systems, health and usage moni-toring system (HUMS), shock monitoring during transportation, and seismic railway track monitoring system for safety and maintenance.

The sensors operate from a single pow-er supply voltage (between 2.5V and 5.5V) with low current consumption (< 0.5mA at 5V). The output is a ratiometric analog voltage that varies between 0.5V and 4.5V for the full-scale acceleration range at a voltage supply of 5V.

Operation ranges for these sensors go from -55°C to +125°C and can withstand shocks up to 6000g without performance degradation.

Security threats and challenges to maritime supply chainsBy Vijay Sakhuja, Director (Research) at the Indian Council of World Affairs, New Delhi

The United Nations Conference on Trade and Development’s Review of Maritime Transport 2009 notes that in 2008 world sea-borne trade increased by 3.6 percent to reach an estimated 8.17 billion tons, glo-bal fleet tonnage witnessed year-on-year

growth of 1.19 billion deadweight tons (dwt), and world container port through-put grew by an estimated 4 percent to reach 506 million TEUs.

While globalization may have acted as a catalyst for the growth of commerce, it has also unleashed and aggravated disparity. An examination of the impact of globalization reveals that the sea-based trading system is vulnerable to piracy, drug trafficking, fraud, illegal fishing and pollution, which can all disrupt maritime supply chains.

This paper examines the threat of piracy and terrorism to maritime supply chains. It begins by identifying the geography of operation of pirates and terrorists, i.e. lit-torals, and highlights the threats and chal-lenges posed by non-state actors. It then elaborates on the regional and interna-tional cooperative initiatives targeting the problem of piracy. Finally, the paper argues for a UN-mandated force for anti-piracy and counter-terrorism.

Joining Forces in an emergency - Logistics emergency teamsBlogger: World Food ProgramIn their blog, the World Food Program (WFP) writes on the efforts of three players in the logistics and distribution sectors and their efforts at providing aid during natural disasters.

UPS, TNT and Agility created Logistics Emergency Teams (LETs) to support humanitarian relief efforts during natural disasters. Their deployment in Haiti in January 2010 has subsequently led to the formation of LET training units.

The LETs are groups of experienced logistics personnel (such as warehousing, fleet, air and reports officers) ready to be deployed to an emergency area within a timeframe of 48 hours after WFP’s request made on behalf of the Logistics Cluster, for which WFP is the lead agency. The Cluster coordinates the logistical response of the humanitarian community at times of disaster.

The LET training takes place yearly. It aims at preparing a pool of these companies’ logistics personnel on a standby roster for potential deployment to an emergency environment.

LET recruitment is done internally and staff voluntarily sign up for a two-year commitment. Chosen personnel read through LET booklets and guidelines and build an understanding of what is operationally expected from them. What novices do not expect is the sudden upturn their lives will face once on the ground. search tags: WFP, logistics cluster, logistics emergency

the complexities of carbon reportingBlogger: steve BankerBanker, in his blog, emphasizes on how companies are trying their best to maintain ethical levels of corporate social responsibility (CSR), through maintaining carbon reporting. Although carbon reporting is gaining ground, it comes with its share of complexities.

Currently there’s no single, agreed upon standard on how to calculate carbon emissions. According to a report by Cefic, The European Chemical Industry Council, “The simplest and most accurate way of calculating these emissions is to record energy use and employ standard emission factors to convert energy values into C02.”

From an emissions standpoint, ocean and rail are better modes of transport than road and air. But since most companies don’t have a private fleet, they need to take an “activity-based approach”—i.e., take the tons transported and the average distance traveled and apply various emissions factors to come up with a number.

Shippers often do not know the route of their intermodal shipments, nor the split between the different modes, and not all carriers are capable of providing this data.

The steeper the gradients encountered, the higher the carbon emissions. There are also boundary questions: Who owns the carbon emissions, the shipper, carrier, or consignee? And which emissions should each party own for a multi-leg shipment? search tags: terrorists and logistics, Adrian Gonzalez

— Compiled by Frewin Francis

BLogosPheRe


< PanoRama

Ramco on-Demand eRP shuttle XP

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

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

The modular design of some of the charg-ing connectors offers a flexible, scalable so-lution for the vehicle - battery - charger con-stellation. Multifunctional adapters allow automatic water topping up of the battery cells

through the coupled connector during the charge. For this purpose module holders can be attached to the connector shell in various positions to accommodate the adapters.

The connectors also permit electrolyte cir-culation. This reduces the rate of airflow sent to the battery cells thereby preventing electro-lyte stratification and airflow shut off when connector is disengaged. A data link is also provided between the battery and charger via auxiliary and pilot contacts.

The socket contacts have an increased con-tact area which allows for higher amperage, reduced temperature rise of contacts, and low contact resistance during continued opera-tion. This results in high contact forces that do not deteriorate over time as well as less wear and tear when mating and unmating.

Connectors are also intermateable with all commercially available charging connectors of comparable design - even with option for electrolyte circulation systems.

Manufacturer: SchaltbauSolution: Multifunctional adapters for charging connectors

The Shuttle XP is a high density storage from Kardex for in-

creased order picking productiv-ity. It is fully automated and simul-taneously measures, weighs and allocates products to be stored in the most space efficient location.

The system is a dynamic verti-cal lift system with flexibility in terms of height with units avail-able up to 30 meters high. One unit can carry a gross load of ap-proximately 60 tons or more.

Another interesting feature is its several access openings and operations on several floors. While using Shuttle XP over sev-eral floors access openings can

be integrated at any point on the front or the rear of the system. These can also be changed at a lat-er time. The integrated lift doors in each access opening prevent air draft from entering and reduce traveling noises.

Shuttle XP increases the pro-ductivity in the storage with transfer rate of trays at 2.3 m per second. The high travelling speed of trays in the Shuttle XP reduces waiting periods and increases the order picking service.

Manufacturer: KardexSolution: Shuttle XP

RODE is Ramco’s first full-fledged ERP to be delivered as a service.

The solution streamlines and integrates multiple functions and systems into one solution, giving total visibility and control of operations. It can be accessed from anywhere by a web-browser.

Ramco On-Demand ERP is config-ured to specific business requirements and takes less than a week’s time to de-ploy. The solution is built on the power-ful Ramco VirtualWorks platform and offers a comprehensive user interface and customization capabilities. RODE can handle many business transactions and complex functionalities such as Material Requirements Planning (MRP), across different industries.

The solution’s modular nature allows it to be seamlessly scaled-up as business require-ments grow to accommodate multiple loca-

tions, currencies and business units. The sys-tem also supports regulatory compliance.

Manufacturer: RamcoSolution: RODE (Ramco On-Demand ERP)

New Products, Technologies, Solutions LaunchPaD

LV series connectors

LV series connectors provide electrolyte cir-culation while charging batteries.

How RODE integrates multiple functions to Web.

The high density storage solu-tion Shuttle XP.

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

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

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< EVENTS

Januar y 2011

January 6 - 8, 2011SME Expo - LogiSticS & MatEriaL HandLing 2011chennai trade centreSME Expo - Logistics & Material Handling 2011 is India’s leading international logistics and material handling exhibition. The expo is aimed at providing a common platform for small & medium enterprises (SMEs) in logistics to explore fresh business oppor-tunities and to exchange their ideas and expertise. This expo will offer an opportunity to exhibit the most up-to-date trends in the logistics & material handling sectors. organized by: INIS Enterprises Private LimitedTel: +91 22 28763111

January 7 and 8, 2011rEtaiL tEcHnoLogy SHow - tHE FuturE SHopthe grand oberoi, KolkataRetail Technology Show - The Future Shop presents concepts of global technology providers with futuris-tic retail prototypes. At The Future Shop, some of the world’s leading service and solution providers flaunt the technological advancements that are changing the face and back-end of retail molding technology in line with consumer expectations.organized by: Images Multimedia Private LimitedTel: +91 11 26015683/26015686

January 8, 2011SuppLy cHain india MEEt 2011Hotel Stars parade, chembur, MumbaiThe Supply Chain Management Development Council (SCMDC) is organizing a one-day forum, Supply Chain India Meet, where practitioners, professionals and academicians of supply chain management will share their value added experiences in the area of consumer durables, engineering, petroleum, FMCG, courier, pharmaceutical, retail and logistics indus-tries.

SCMDC is one of the non-aided and not-for-profit higher educational forum in the field of logistics and supply chain management in India. organized by: SCMDCEmail: [email protected]

January 7 - 9, 2011coLd cHain & LogiSticS Expopragati Maidan, new delhiCold Chain & Logistics Expo will showcase and help to understand the most vital aspects of supply chain management. Postharvest management of fresh fruits & vegetables using emerging technology will be one of the biggest business opportunities in India.

The exhibits will include cold chain equipment, cold room & refrigeration appliances, cold storage

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machinery, environment & combustion control sys-tem, cooling pads & heat extractors, cooling towers & equipment.organized by: Media Today Pvt LtdTel: +91 11 26682045 / 26681671

January 16 - 18, 2011gLobaL StEELHotel taj palace, new delhiGlobal Steel 2011 is being organized to address the challenges before the Indian steel industry. The con-ference would analyze the Indian steel mills’ proposed expansion plans and discover how supporting logistics and infrastructure networks are preparing themselves. One of the prime focus this year would be raw mate-rial security. Increasing price of raw materials like coking coal and iron ore and scarce supply worldwide has become one of the key concerns of steel makers around the world. Global Steel 2011 would analyze the global trend, also the effect of China which is a dominant force in the steel spectrum, to chart a clear strategy for India’s steel vision. organized by: Critical Mass Multilink Private LimitedTel: +91 33 22891471

January 19 and 20, 2011port FinancE intErnationaL indianovotel, Juhu beach, Mumbai

The Port Finance International India conference is designed to offer an in-depth understanding of innovative financing solutions and practical advice. Additionally, the conference will place a spotlight on Indian ports and their plans for expansion and devel-opment, whilst also investigating opportunities for growth and investment.organized by: Port Finance InternationalTel: +91 22 6772 5768

FEbruary 16 – 19, 2011LognEt gLobaL annuaL conFErEncEna Jomtien, thailandLognet Global is holding its annual group meeting in Thailand, a forum to connect with fellow members and build relationships that help grow and develop one’s business with trust. The meeting will focus on “One on One” sessions to ensure that members of the group have the opportunity to meet face to face and explore areas of new business for mutual benefit.

Lognet Global offers member to member confi-dence by providing financial protection and a vast suite of professional services to help enhance the member’s business. It is a forum that can help members to man-age the risks seen in the freight forwarding industry by building trusting relationships and to discover new opportunities to expand business. organized by: Lognet Global LtdTel: +66 2 714 4551

RNI No. MAHENG/2007/23777 l Registration No.MH/MR/South-279/2008-10Allowed to post at Patrika Channel Sorting Offi ce G.P.O. Mumbai - 400001 Date of mailing: 5th of every month issue

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