“FOCUS ON INTER-MODAL LOGISTICS SOLUTIONS TO ENHANCE PENETRATION OF RURAL MARKETS”

Chennai, November 6, 2008: “The inter-modal logistic solution is going to be extremely important for Indian automotive industry, which is aiming to penetrate suburban and rural markets to tap the after market potential and augment the dealership network in the coming years,” said Mr K Venkatraman, Partner, ATKearney.

Addressing the CEO’s Conclave of Auto SCM India 2008, a two-day conference on “Outbound SCM Perspective for Aftermarket and OEM-Competitiveness Through Cost Effective SCM”, organised by CII Institute of Logistics, Confederation of Indian Industry, here today, Mr Venkatraman said that the three important factors that are impacting the supply chain players catering to the Indian automotive industry are: 1) the coming down of the automobile production of traditional OEMs in US and Europe from 91% to 60% in the next eight years 2) the growth projections of ultra low cost cars segment, which is expected to register about 24% growth in the immediate future, and 3) the emergence of China, middle east and India region that is a major economic hub in the next 20-30 yrs by 2020 would account for about 50% of population and 40% of GDP of the world.

He said that the government should improve the single-window clearance system and better its administration to cut down the processes. He suggested that the logistics solution companies can use a basket of non computing products to save on asset cost – for instance, they can cater to FMCG and agriculture industry, when they transport automobile products.

Addressing the Conference, Mr R Dinesh, Chairman, Auto SCM India 2008 and Joint Managing Director, TVS Sons, said that pre planning for ten years down the line is crucial for the development of basic infrastructure. The government agencies should simplify processes and documentations, apart from being proactive and open, to create an efficient supply chain infrastructure.

He said that in European countries, the logistics solution providers deal with a simplified process related to import and export, but in India, there are a large number of documents and multiple agencies to deal with. This adds to a lot of paper work, processes and cost, and inhibits the logistics service providers from becoming the part of the supply chain.

He observed that the manufacturing companies tend to look at logistics service providers largely as physical service providers. “That is the reason why the integration and alignment of common goals between manufacturers and logistics companies have not taken place yet,” he said. Though OEMs proudly proclaim the logistics players as 3PL or 4PL suppliers the partnerships are only in agreement papers but not in mind. “The manufacturing sectors should consider logistics services as in-sourcing, rather than outsourcing. Both the service providers and companies should have a common objective and aim at bringing down the total cost instead of trying to cut down the profits of one other,” he added. He said that there is a great business scope for logistic solution providers who position themselves as knowledge leaders in supply chain to integrate the supply chain elements through alliances, and joint ventures.

Referring to the current slow down in the economy, Mr Dinesh said that irrespective of the market situation, the companies should continue to invest when the markets are down – otherwise the industry would not be ready when the markets are up. “Though investments towards creating new capacity can be pulled back for a short term, industry should continue to invest in bettering the existing infrastructure. He also stressed the importance of the supply chain sector getting industry recognition. The government should give priority in land allotment for logistics companies the way they do for the manufacturing companies.

In his address, Mr Srivats Ram, Managing Director, Wheels India, said that since the automotive industry is highly fragmented, the information move through a number of points and layers result in distortion and inaccuracy. OEMs order for components based on the information they get from market. In many instances, the information is exaggerated and the auto component manufacturers end up with having over stock or zero inventory.  

He said that the turn around time at ports is still a major handicap and it becomes very embarrassing to explain to “our American customers that since there are union negotiations at ports, the goods are lying at terminals for two days”. He said that the reason why Indian infrastructure is always ten years behind time is because “we are not planning for the future when it comes to infrastructure development, while industry pre-plans for production capacity and marketing ten years in advance.”

In his address, Mr Juan Madrid, Commercial Director, Port of Barcelona, said since the Spanish economy is growing fast in Europe, the logistics industry too is growing rapidly.  He said that Spain alone handles over 4 million cars including 3 million cars that are produced in the country and one million cars that are imported. The Port of Barcelona is internationally well recognized by large shipping carriers because of the increase size of its operations. He said that the port is doubling its capacity to handle about 900,000 cars a year and it is focused on creating inter modal connectivity for roads and rails, establishing new rail connections from factory to port and vice versa.

In his address, Mr Vincent DeSaedeleer, Vice President, Port Authority of Zeebrugge, which is one of the largest automotive ports in the world, said that a long term strategy is important for the ports to emerge competitive. There are 23 major ports in Europe, and unless we reinvent and reconsider our strategies it would be impossible to remain competitive,” he said. He said that the country is willing to look at creating “green lanes” with India to minimise the documentation process related to imports and exports.

About CII Institute of Logistics
CII Institute of Logistics has been established by the Confederation of Indian Industry as a Center of Excellence in Logistics and Supply Chain and to improve the competitiveness of Indian Industry in this domain. CII's Institute of Logistics (CIL) creates a platform to gain more insight into the emerging trends, industry specific problems of national importance and global best practices in logistics & supply chain management. It enables the industry to cut down the transaction cost, increase efficiency, and enhance profitability and enable to sensitize and bring solutions to macro level issues.

With a relentless aspiration to enhance logistics competitiveness in the industry, CIL provides a complete range of services such as education, training, consultancy, research, events and information services & publication.

“BUSINESS IS NO MORE A STANDALONE ENTITY BUT A TOTAL SUPPLY CHAIN”

Chennai, November 7, 2008: “A business is no more recognised as a stand-alone entity but rather a total supply chain. Hence, each business entity needs to co-ordinate and manage the relationships with their partners in a network, committing themselves to a better, closer and more agile relationship with their end customers,” said Mr S Ravichandran, President, TVS Logistics Services Private Limited.

Addressing a session on Outbound Supply Chain Management for OEM Exports at Auto SCM India 2008, a two-day conference organised by the CII Institute of Logistics, Confederation of Indian Industry (CII) here today, Mr Ravichandran said that the need of the hour is joint ownership of inventory and replenishment and a shared process of creation between two or more parties with diverse skills and knowledge. Delivering a unified approach that provides the optimal framework for customer satisfaction is important to meet the supply chain delivery challenges. The industry also needs to produce single demand forecast jointly and a single, shared source of data and simple control processes.

Mr Ravichandran said that the key supply chain delivery challenges include: ensuring reliability, least cost/continuous improvements, inventory reductions, flexibility and problem solving ability, transparency, value-added knowledge, and ‘any-location-coverage’. He said that the stake holders of supply chain include: supplier, consumer, origin logistics service provider, destination logistics service provider representing inland transportation, warehousing and last mile service. And the roles played by the logistics service provider are physical fulfillment, knowledge management and integrator. He added that the physical fulfillment includes asset utilization, infrastructure, warehouse, material handling equipments, storage structure and vehicles etc, apart from manpower. The knowledge management for the logistics service provider would encompass designing and optimizing warehouse, layout, infrastructure, evolving decision tools for logistics plan, plan for every part, for every supplier and inventing unique processes. As an integrator, the logistics solution provider has to provide single window solution and continuously add value to the customers by knowledge management and optimization of assets.

In his Opening Remarks, Mr Sudhir S Rangnekar, Managing Director & Group CEO, Sical Logistics, stressed the need to give more importance to cost control. He said that the time taken for getting a shipment approval at Indian ports, which at present is 3 to 5 days, should be reduced. Similarly, there is a scope to cut down the number of documents to be filled pertaining to imports and exports. He pointed out that on average the cost of shipment processes in India is around US$1200, whereas it is less than US$ 300-350 in China and Singapore. 

He said that the logistics service providers should try to increase their usage of railways and port infrastructure. In India, the domestic logistics via sea, which is called as ‘short sea shipment’ in European countries, is just 8–9% and the domestic cargo movement through railways is just 22%. However, about 80% of the domestic logistics use only roadways. 

In infrastructure developments at Indian ports are behind ten year time. Unlike India, China preplans infrastructure development for 20 to 30 years. There is also a need to review the Acts related to shipping – some of our current acts were passed in 1907. For instance, the Multi Modal Transport of Goods Act was last amended in 1993. Though, we had a lot of industrial developments happening in the last fifteen years, the Acts need to be reviewed. 

In his address Mr BG Menon, Marg Karaikal Port said that out of total export volume of cargo handled by Tamil Nadu ports, over 50% come from the automotive sector. South India is emergeing as a global connecting point. In the last three years, there have been significant developments in the port infrastructure of Tamil Nadu. However to attract automotive players, ports should have facilitate ‘Roll-On Roll-Off’ vessels and exclusive value added services to provide end-end solution.

Marg is creating ports at strategic locations that enjoy proximity to production centres and to sea routes that provide access to global markets. Our focus is to effect time and cost savings, faster transport activities from and to production centres. Karaikal Port is strategically located to help manufacturers from hinterlands and industrial clusters of Tamil Nadu such as Trichy, Salem and Coimbatore to export products to global markets. Karaikal Port will have three berths by March 2009. The unique selling proportions of Karaikal Port are congestion free traffic, hinterland connectivity and good pathways.

Addressing the conference, Mr Jasjit Sethi, CEO, TCI Supply Chain Solutions said that the major bottleneck was lack of industry status. “We do not have a separate ministry for logistics to look into the specific requirements of the ports and to help SCM companies administer processes related to logistics movements across state borders effectively. We also need to create enough road networks,” he said.

He emphasised the need for companies to customise their vehicles and equip them specially taking into the specific needs of products they handle. “Without a customized vehicle, it is not possible to meet Just-in-Time supply chain management,” he said and added that route mapping is essential to meet correct time lines. Apart from that companies should have good internet backbone across various points of access, ERP software and digital back-up facilities with right storage medium as the flow of information is more critical than the flow of materials.

About CII Institute of Logistics
CII Institute of Logistics has been established by the Confederation of Indian Industry as a Center of Excellence in Logistics and Supply Chain and to improve the competitiveness of Indian Industry in this domain. CII's Institute of Logistics (CIL) creates a platform to gain more insight into the emerging trends, industry specific problems of national importance and global best practices in logistics & supply chain management. It enables the industry to cut down the transaction cost, increase efficiency, and enhance profitability and enable to sensitize and bring solutions to macro level issues.

With a relentless aspiration to enhance logistics competitiveness in the industry, CIL provides a complete range of services such as education, training, consultancy, research, events and information services & publication.

“SUPPLIERS RELATIONSHIP MANAGEMENT IS CRITICAL FOR SUSTAINABLE SUPPLY CHAIN MANAGEMENT”

Chennai: November 7, 2008: “With the considerations of new parameters like CO2 emissions reduction, reduced energy consumption, better traceability and reduced traffic congestion, the critical areas of Supply Chain Management are: supplier relationship management (SRM), ergonomics in logistics and supply chain, ecological and environmental concerns in Supply Chain and technology exploitation,” Dr Narendran, Dean, Industrial Consultancy and Sponsored Research, Indian Institute of Technology, Chennai.

Addressing Auto SCM India 2008, a two-day conference organised by the CII Institute of Logistics, Confederation of Indian Industry (CII) here today, pointing out the unsustainable aspects of supplier relationship management, he said that in many areas the customer-supplier relationship turns into a "bully-victim" relationship. “While customer practice zero inventory, they insist suppliers to keep a warehouse close to that site and maintain inventory to feed the customer ‘just in time’,” he observed and added that this type of “passing-the-buck” approach down the value chain is not a sustainable business model.

Supplier relationship management (SRM) can be viewed as the systematic management of supplier relationships to optimise the value delivered through those relationships over the course of their life cycles. The goal of SRM is therefore to streamline and make more effective the processes between an enterprise and its suppliers. He insisted that ergonomics in logistics and supply chain is important – “All of us know the extent to which automation has invaded our shop-floor but handling still remains mixed. While there is mechanized handling at the shop-floor to some extent, most of the loading and unloading to the trucks is done manually. There are times when inhuman weights are lifted, high risks are taken and even acrobatics performed,” he remarked.

Dr Narendran lamented that though there is risk of accident at shop floor, practically nothing is being done to the activities that cause slow injuries and render a person unfit for work in a matter of 5 to 6 years. Companies should address such human issues as the price of poor utilization and costs may be the result of workers' compensation claims, employee dissatisfaction and lost work time.

In his address Mr Sumeet Nadkar, Head – Logistics SBU, Kale Consultants said that the logistics industry is on the “run-way” and about to take-off and the time is right for us to realise the importance of IT that can remove internal process efficiencies and help collaboration in the supply chain. He said that the industry needs a working group for IT adoption and standard definition. There is a necessity to get technology adoption through innovative models – software as service model.

He said that the size of the Indian auto logistics industry was Rs 34 billion in 2006-07. In The logistics cost for the automobile industry is around 2-3% of sales, whereas in the case of auto components industry, it is about 3-4% of sales. The reverse logistics is estimated at 0.5 to 1% for both auto and auto components industry.

Mr Nadkar said that developing efficient supply chain is mandatory for sustaining growth of organisations. Efficient supply chain means providing goods and information wherever needed and whenever need in most efficient manner. The supply chain, which has various elements such as shipper, forwarder, carrier, airports, hubs, ports and customs, is as efficient as the weakest link in it. He said that the IT spend of the Indian SCM industry is very less. Though India is worlds IT shop, the IT adoption by the SCM industry is less than 1%, while it should be 3-5%.
 
He said that the external factors that contribute to the inefficiencies in the industry include: industry fragmentation, constrained transport infrastructure, regulatory issues and lack of trained resources. Internal factors that pose challenge for the industry are customer expectations, lack of scalability and accessibility, reduced profit margins and market slow down.

In his address Mr Richard Pawinski, MD, Morley Management Services Limited, England, said that the UK Accident Repair Market registers about 6m insurance funded repairs per annum and £9 billion premium income from motor insurance. There are about 29m vehicles on UK roads, out of which 75% are cars, 4 % two wheelers and 20% commercial vehicles. About £6 billion insurance is spent on accident repairs. He said that the motor insurance market of UK is highly competitive with low margins.

About CII Institute of Logistics
CII Institute of Logistics has been established by the Confederation of Indian Industry as a Center of Excellence in Logistics and Supply Chain and to improve the competitiveness of Indian Industry in this domain. CII's Institute of Logistics (CIL) creates a platform to gain more insight into the emerging trends, industry specific problems of national importance and global best practices in logistics & supply chain management. It enables the industry to cut down the transaction cost, increase efficiency, and enhance profitability and enable to sensitize and bring solutions to macro level issues.

With a relentless aspiration to enhance logistics competitiveness in the industry, CIL provides a complete range of services such as education, training, consultancy, research, events and information services & publication.

Source: Shipping Post Dated: 3 August 2008

CII’s session on Indian Coastal Shipping
Low investment hampers the development of coastal shipping
Exim News Service

The CII Institute of Logistics’ symposium on the “The Indian Coastal Shipping: Opportunities towards Economical Logistics”, held here recently paved the way for opening up new vistas on coastal shipping by discussing the openings prevailing in coastal shipping industry, best practices, issues and challenges and provided an opportunity to share the expertise and knowledge of the players. The session also threw light on the congenial and favourable conditions for the development of coastal shipping as an alternate mode of transport besides highlighting the fact that coastal shipping is an energy efficient, environmental friendly and economical mode of transport in the Indian transport net work.

Delivering the inaugural address, Capt PVK Mohan, Member National Shipping Board revealed that the sector has not progressed well due to the inadequate funding by the Government in coastal shipping. “Investment in the Indian shipping itself is low when compared to rail and road sectors,” Mr Mohan said and added that this is despite the fact that this sector is being discussed in every forum. “Unlike textile, cement and steels sectors, we do not have a strong lobby to take up the issues related to coastal shipping. We are too busy with our own things and concerned about the day-to-day issues. Unless there is a strong representation we will not be able to move further,” he underlined.

In his theme address, Mr Sudhir S Rangnekar, Event Chairman and Managing Director and Group CEO, Sical Logistics stressed on the necessity of developing coastal shipping as an alternative mode on account of its cost benefits. He urged the Centre to take serious steps to augment coastal shipping as it can be considered as a safer mode of transport as well as economical means of logistics.

Mr Rajeev K. Gupta, Joint Secretary, Ministry of Shipping, said despite having a number of reports on coastal shipping the sector has not progressed well. “Come out with innovative ideas to develop the sector. Coastal shipping should not be considered in isolation but be part of the overall infrastructure,” he said.

Poul V Jensen, MD Transcare Logistics (I) Pvt Ltd suggested a separate government representation for logistics as a whole which includes shipping road rail & finance.

Mr. Suresh Joseph, DP World Cochin explained about the Vallarpadam project and said that the International container transshipment terminal will be ready by November 2009.

Apart from this the session also focused on some of the developmental initiatives like infrastructure, berthing facilities at ports, rail network and road connectivity to the hinterland where majority of production and consumption centres are located and multiple handling of cargo where some stretches needed to be covered by road and rail.

Some of the key advantages of coastal shipping over rail and road transport based on certain factors are: It is energy efficient. Fuel consumption for every tonne-kilometre by coastal shipping is approximately 15 per cent of the consumption by road and 54 per cent of that by rail. When compared to other mode of transportation it is very safe for hazardous materials like liquid and inflammable chemicals, which would otherwise unsafe for other people in case they are transported by road. Apart from this coastal shipping has the ability to handle large parcel sizes easily and the cost of carriage of goods from coast to coast works out to be much lower than that by road and rail. Taking in account the external costs arising out of accidents, air pollution, climate change etc., the cost of coastal shipping as a percentage of road and rail transport is much lower.

The prominent coastal shipping routes include movement of south bound cargo from either Pipavav or Mundra in Gujarat to Kochi in Kerala and other ports and back; movement of cargo from Chennai to Chittagong/ Yangon through Haldia /Kolkata; inland and coastal movement of iron ore in and around Goa. Some of the commodities shipped through the coastal mode include bulk cargo like petroleum products, minerals, coal, food grains, cement and containerized cargo including cotton yarn, automobiles, automotive spare parts, steel etc.

The immediate hinterland for the coastal trade comprises of 40 districts of five States on the west and four on the east coast and Pondicherry, Lakshadweep and Andaman and Nicobar group of islands in the Arabian sea and the Bay of Bengal respectively also forms part of the coastal hinterland.

Hence there is an increased focus on development of coastal shipping so that it can provide facilities at comparative costs. In addition, efficient and economical coastal shipping will boost transshipment at Indian ports, thereby enhancing the competitive edge of Indian exports and increasing the port potential to develop as hub ports, leading to increased revenues and opportunities for generating both direct and indirect employment.

Source:
Exim News Service
Dated: 20 August 2008

Source:
Hindu Business Line
Dated: 14 August 2008

Source:
Deccan Chronicle
Dated: 15 August 2008