LOGISTICS IN INDIA

04/11/2304/11/23 Shantanu Bhadkamkar: Planning Commission IT & HRShantanu Bhadkamkar: Planning Commission IT & HR

NEXTGEN APPROACH TO LOGISTICS

SUB-GROUP – IVTECHNOLOGY & HR

Planning CommissionPlanning CommissionWORKING GROUP ON LOGISTICSWORKING GROUP ON LOGISTICS


Functional DescriptionFunctional DescriptionStructure of the IndustryStructure of the IndustryTrendsTrendsBusiness StrategiesBusiness Strategies

We Cannot Direct The Wind But We Can Adjust The Sails

Comprehensive Comprehensive OverviewOverview


The Value ChainThe Value Chain

MA

RG

IN

MA

RG

INSupport

Activities

Primary Activities

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Inbound Logistics

Operations Outbound Logistics

Marketing and Sales

Service


MANUFACTURE

RM

PA

RT

SA

SS

EM

BL

IES

PROCESS/ASSEMBLE

SPARES

FINISHEDGOODS

CUSTOMER/USER

DISTRIBUTOR

Generic Model of Supply ChainGeneric Model of Supply Chain

LOGISTICS

SERVICES


Many Business – Not Many Business – Not OneOne

Domestic - Import – Export - Transit

Performing Carriers - Freight Forwarder - CHA - 3PLDoccumentation & Information

Modes:AirSea

RoadRail

MultimodalCourier

Post

PortsWarehousesDistribution


ConvergenceConvergence

3PL

•CHA

•IATA

•MTO

•GROUPAGE

•NVOCC

•Courier

Carriers

Air

Road

Ocean

Rail

Post

Port – CFS - Warehouse – TerminalINFRASTRUCTURE

Technology


Market PlaceMarket Place

CARRIERS: ORGANISED - CARRIERS: ORGANISED - UNORGANISEDUNORGANISED

INTERMEDIARIES: ORGANISED -INTERMEDIARIES: ORGANISED -UNORGANISEDUNORGANISED

DOMESTIC - INTERNATIONALDOMESTIC - INTERNATIONAL MULTINATIONAL - NATIONALMULTINATIONAL - NATIONAL INFRASTRUCTUREINFRASTRUCTURE

– STATUTOTY BODIESSTATUTOTY BODIES– CUSTOMERS: DOMESTIC - INTERNATIONALCUSTOMERS: DOMESTIC - INTERNATIONAL


CHANGING RELATIONSHIP CHANGING RELATIONSHIP MATRIXMATRIX

3PL3PL4PL4PL

BUYERBUYERSELLERSELLER

CustodiansCustodians

CarriersCarriers

CustomsCustomsStatutory AuthoritiesStatutory Authorities

PrincipalPrincipal

ChangingRelationsChanging

TERMS

DOOR TO DOORDOOR TO DOOROne Stop ShopOne Stop Shop

Quicker delivery Lower cost Quality of service Range Flexibility Visibility


Logistics IndustryLogistics Industry

GOAL 2010GOAL 2010

Comedian Hero Su

per

Sta

r

Ext

ra

“The Future arrived when we weren’t looking,

so we’re still dealing with issues,

ideas and programs that don’t fit the world’s new realities.”

- Peter Drucker


Right Place

Right Documentation

Good Condition

Right Price

Right Time

Right Tariff

Logistics Objectives

Smooth

Movement

Online

Information


Taking Logistics Industry To The Next Taking Logistics Industry To The Next LevelLevel

Problem Is Always MultifacetedProblem Is Always Multifaceted Global Best PracticesGlobal Best Practices Resource OptimisationResource Optimisation Reliable StatisticsReliable Statistics Technology including ITTechnology including IT Enabling LegislationsEnabling Legislations Friendly Tax RegimeFriendly Tax Regime Human ResoursesHuman Resourses InfrasctuureInfrasctuure Competitive MindsetCompetitive Mindset


Government – Trade Government – Trade PartnershipPartnership

Trust the Compliant - Maintain IntegrityTrust the Compliant - Maintain Integrity– Increased Linkages and Inter-dependencyIncreased Linkages and Inter-dependency– Interest in Facilitation Is BilateralInterest in Facilitation Is Bilateral– Facilitation - Minimal Control - Minimum Facilitation - Minimal Control - Minimum

LegislationLegislation Think Exponential – Not IncrementalThink Exponential – Not Incremental Think Revolutionary Rather Than ReviewThink Revolutionary Rather Than Review Reduce by 50%Reduce by 50%

– Transaction CostsTransaction Costs– Reduce Transit TimeReduce Transit Time

Build VisibilityBuild Visibility Infrastructure Ahead of Requirement by 10 Infrastructure Ahead of Requirement by 10

YearsYears


Developing Global MindsetDeveloping Global Mindset

Value Chain - Supply Chain - LOGISTICSValue Chain - Supply Chain - LOGISTICS

PricebergPriceberg Strategic Global VisionStrategic Global Vision New ParadigmNew Paradigm Boiling Frog SyndromeBoiling Frog Syndrome VISION 2016VISION 2016

– Redefine– Re-Engineer– Training - Education– Specialisation - High End Skill - Standards– Inclusive Participation of ALL


Service ApproachInformation ManagementKnowledge Worker

Focal Point Of Information Network

INFORMATION MANAGEMENTINFORMATION MANAGEMENT

Intermediaries must evolve to add value or perish

Only A Few Businesses Can Succeed By Having The Lowest Price.Growth & Survival Strategy Should Include Customer Service & Quality.


Community SystemCommunity System

OVERSEAS

STAKEHOLDER

FINANCIAL

INSTITUTIONS

TRANSPORT

INTERMEDIARIES REGULATORY

BODIES

PORTSWAREHOUSES

FREIGHT STATIONS

CARRIERS

INTERNATIONAL

DOMESTIC

CONSIGNER

CONSIGNEE

CENTRAL HUB

& GATEWAYS


CASE FORCASE FORCommunity SystemCommunity System

TRADITIONAL PAPER TRADE

•27 PARTICIPANTS/TRANSACTION

•40 DOCUMENTS/TRANSACTION

•30 DATA ITEMS REPEATED 20 TIMES

•70 % DATA RE-KEYED

• Logistics & Transaction Cost Amount to 7% - 15% OF VALUE OF GOODS

- UN/ECE-FIATA

Everyone has Proprietary Networks

Even Digital Signatures are Different

Little or No Interfacing


EXPERTISE IN SOFT TECHINAL EXPERTISE IN SOFT TECHINAL SKILLSSKILLS

RATESRATES ROUTESROUTES TARRIFSTARRIFS RULESRULES PROCEDURESPROCEDURES REGULATIONSREGULATIONS INSURANCEINSURANCE TRACKINGTRACKING STORAGESTORAGE SAFETYSAFETY SECURITYSECURITY ENVIRONMENTENVIRONMENT


Information Management

Risk Management

Finance and Payment

Physical Logistics

Statutory Compliance

Cross Functional Cross Functional IntegrationIntegration

Demanding Global CustomerDemanding Global Customer - - Emerging Service PerspectiveEmerging Service Perspective

SAFETY - SECURITY - ENVIRONMENT


Forces Driving The Industry Forces Driving The Industry

CompetitionCompetition

Disintermediation

Convergence

CustomerBargaining

Power

SupplierBargaining

Power

New EntrantsMultinational

AmongstExisting

3PL3PL

Competition Competition IntensityIntensity


Customer ExpectationsCustomer Expectations

Competition with Arms Breaking Competition with Arms Breaking Barrier Barrier

Change from ‘Need Based’ to Change from ‘Need Based’ to ‘Expectation Based’ Service ‘Expectation Based’ Service ProvidersProviders

Customers now wants contracts Customers now wants contracts signed with bloodsigned with blood


Liberalisation

Simplification

Globalisation

Growth

Disintermediation

Attrition

Undifferentiated

Competition

Redefine ReengineerConvergence

Growth CurvesGrowth Curves


Formal EducationFormal Education Specialised Industry TrainingSpecialised Industry Training Flexibility, Versatility & Cross Functional Flexibility, Versatility & Cross Functional

AbilitiesAbilities Ability To Respond To ChangeAbility To Respond To Change Responsible For Results & ActionsResponsible For Results & Actions Customer RelationsCustomer Relations Efficiency & EffectivityEfficiency & Effectivity Communication SkillsCommunication Skills Computer LiteracyComputer Literacy

STAFF & TRAININGSTAFF & TRAINING


RIGHT AT THE FIRST TIMERIGHT AT THE FIRST TIME

HIGH PRODUCTIVITYHIGH PRODUCTIVITY

UNDERSTANDINGUNDERSTANDING

INNOVATIONINNOVATION

OPEN MINDOPEN MIND

TIME BOUNDTIME BOUND

CONTINUOUS UPGRADATIONCONTINUOUS UPGRADATION

Staff Training IssuesStaff Training Issues


KEY RESULTSKEY RESULTS SpeedSpeed CorrectnessCorrectness SolutionsSolutions ReliabilityReliability ConsistencyConsistency Single PriceSingle Price ProactiveProactive Post ClearancePost Clearance

Shantanu Bhadkamkar: Planning Commission IT & HRShantanu Bhadkamkar: Planning Commission IT & HR04/11/2304/11/23

Demanding customersDemanding customers

Customers have global access Customers have global access The choice is increasingThe choice is increasing Product life cycles are shorteningProduct life cycles are shortening Relationships are profit motivated Relationships are profit motivated Quality and service are at their historic highQuality and service are at their historic high Costs are gravitating to their global lowCosts are gravitating to their global low Business is riskier with low toleranceBusiness is riskier with low toleranceSo everyone in supply chain is more So everyone in supply chain is more

demandingdemanding


Primary servicesPrimary services

Transport and handling – 3PLTransport and handling – 3PL– Long haulLong haul– Local deliveryLocal delivery– Storage Storage – Handling Handling

Customs – 3PCustoms – 3P Risk-cover – 3PRisk-cover – 3P Inspection – 3PInspection – 3P Coordination – 4PLCoordination – 4PL


Costs to customer Costs to customer

Price of servicePrice of service Cost of co-ordinationCost of co-ordination Consequential cost of time Consequential cost of time Risk of delay and bad serviceRisk of delay and bad service Loss of businessLoss of business


PRICE

OVERHEADS orCONSEQUENCES

Priceberg?Priceberg?


AgendaAgenda Business EnvironmentBusiness Environment What to Change ?What to Change ?

– Symptoms or Root Cause…Symptoms or Root Cause…– Key ConflictsKey Conflicts– Goal of the organizationGoal of the organization

What to Change to? What to Change to? – Top CEO Issues & HR AlignmentTop CEO Issues & HR Alignment

How to cause the change?How to cause the change?– RoadmapRoadmap– Strategic GapStrategic Gap– Vision & ValuesVision & Values– TrainingTraining– Performance MeasurementPerformance Measurement

SummarySummary


Organisation RealityOrganisation RealityPeople Vs Processes Attracting and Retaining Talent

Monotonous Jobs

Demotivated staff

No fair reward or reprisal systemObsolescence of skill and knowledge

Lack of Decision Making structures

No formal organisation structure

Specific roles and responsibilities not defined

Second line does not exist Our costs are increasing every year

Sense of ownership does not exist


Top CEO IssuesTop CEO Issues Customer Loyalty/RetentionCustomer Loyalty/Retention Engaging Employees in Company Engaging Employees in Company

Vision/ValuesVision/Values Competing for talentCompeting for talent Shortage of Key SkillsShortage of Key Skills Reducing CostsReducing Costs Increasing Flexibility/SpeedIncreasing Flexibility/Speed Industry ConsolidationIndustry Consolidation

What to Change To?What to Change To?


GAPGAPSSGAPGAPSS

DesiredState

CurrentState

Strategic GapStrategic Gap


Vision and Values Vision and Values

Employees MUST feel a part of the CauseEmployees MUST feel a part of the Cause Vision may be to be a 500 crore Vision may be to be a 500 crore

company in 5 yearscompany in 5 years Employee Thoughts: But what role do I Employee Thoughts: But what role do I

play in all of this? play in all of this? Vision Once identified must be Vision Once identified must be

communicated to employees in the communicated to employees in the language they understandlanguage they understand

How do they fit into the entire picture? How do they fit into the entire picture?


TrainingTraining

Technical and Skills OrientedTechnical and Skills Oriented Attitude and Behaviour OrientedAttitude and Behaviour Oriented


TrainingTraining Technical & SkillsTechnical & Skills

– Freight Forwarding Freight Forwarding – Air & Sea Import/ExportAir & Sea Import/Export– Warehousing and DistributionWarehousing and Distribution– Customs ClearanceCustoms Clearance– BillingBilling

SoftSoft– Communication Communication – NegotiationsNegotiations– Employee MotivationEmployee Motivation– AssertivenessAssertiveness– Time ManagementTime Management– Personal EffectivenessPersonal Effectiveness– Managing DiversityManaging Diversity– ……

– Supply Chain & Supply Chain & LogisticsLogistics

– Customer ServiceCustomer Service– Key Account Key Account

ManagementManagement– ……


Performance Performance MeasurementMeasurement

““Tell me how you will measure me and Tell me how you will measure me and I will tell you how I will behave”I will tell you how I will behave”

People behave the way they are People behave the way they are measured !!!measured !!!

People behave the way they are People behave the way they are measured !!!measured !!!


ImplicationsImplications Those will be best equipped to face Those will be best equipped to face

future challenges, who are flexible to future challenges, who are flexible to changechange

Human Resources and Training: Human Resources and Training: Focus on your most important Focus on your most important resource – “People”resource – “People”

Attract and retain the right peopleAttract and retain the right people Empower them to perform for the Empower them to perform for the

futurefuture


SummarySummary Changing industry dynamicsChanging industry dynamics

– Moving towards single window model handing the Moving towards single window model handing the entire supply chain logistics of the cliententire supply chain logistics of the client

– Shape Up or Ship OutShape Up or Ship Out What is the goal of my organisation?What is the goal of my organisation? Evaporation of Key ConflictsEvaporation of Key Conflicts Blueprint for futureBlueprint for future

– Shared Vision & Operational StrategyShared Vision & Operational Strategy– Organisation Structure, Roles & Responsibilities Organisation Structure, Roles & Responsibilities – Adequate Skill Set – Hiring & Training, Succession & Adequate Skill Set – Hiring & Training, Succession &

Career PlanningCareer Planning– Performance Measurement – “ People Behave The Way Performance Measurement – “ People Behave The Way

They Are Measured”They Are Measured”


Industry AnalysisIndustry Analysis Shantanu BhadkamkarShantanu Bhadkamkar

– Structural Analysis of the Industry & StrategiesStructural Analysis of the Industry & Strategies– Convergence, Disintermediation & Other Competitive Convergence, Disintermediation & Other Competitive

ForcesForces– Reengineer, don’t repairReengineer, don’t repair

J. KrishnanJ. Krishnan– Evolution of CHAEvolution of CHA– Correlated Regulatory Regimes to EvolutionCorrelated Regulatory Regimes to Evolution– Evolution to YieldEvolution to Yield

X. BrittoX. Britto– Innovative – Fountain PenInnovative – Fountain Pen– If you have one hour to cut a tree, use half an hour to If you have one hour to cut a tree, use half an hour to

grind the axegrind the axe– Polished Rice Costs MoneyPolished Rice Costs Money

11/11/06 3:35 AM11/11/06 3:35 AM Shantanu Bhadkamkar: Planning Commission IT & HRShantanu Bhadkamkar: Planning Commission IT & HR

NextGen Logistics TrendsNextGen Logistics Trends

o DTD - DDP/DDU – Delivered Termso Increased Interplant Movement & Vendor Managed

Inventoryo Visibilityo Change from ‘Need Based’ to ‘Expectation Based’

Service Providerso Full Supply Chain Integration - Value Chain includedo Higher Customer Interfaceo Simultaneous Online Processing & Information Flowo Servicing at Both the Ends, including intermediateo Proactiveo Post Delivery Services

Proliferation of Successful StrategiesProliferation of Successful Strategies


Influencing FactorsInfluencing Factorso TechnologiesTechnologies

Information ManagementInformation Management Full Integration with Customer’s ERPFull Integration with Customer’s ERP Middle WareMiddle Ware RFID, Bar Coding …RFID, Bar Coding …

o SecuritySecurity DomesticDomestic InternationalInternational Storage, Carriage, PersonnelStorage, Carriage, Personnel

Environmental IssuesEnvironmental Issues Implications of Fuel Costs Rise, particularly Fossil Implications of Fuel Costs Rise, particularly Fossil

Fuels - Peak OilFuels - Peak Oil

Proliferation of Successful StrategiesProliferation of Successful Strategies


Value Added ServicesValue Added Services

o Integration - Systems including ITIntegration - Systems including ITo Purchase Order ManagementPurchase Order Managemento Intermediate Storage & DistributionIntermediate Storage & Distributiono Vendor Managed Inventories : More Vendor Managed Inventories : More

Movement Inter-Plant, More Overseas Movement Inter-Plant, More Overseas Manufacturing Manufacturing

o Reverse LogisticsReverse Logisticso InspectionInspection


Fragmented

Matured-Declining-Emerging

Undifferentiated

Low Entry &Exit Barriers

Industry CharacteristicsIndustry Characteristics


Pricing, Costing, Forecasting, Feed Back- MIS, Response Management

Concept Selling & Enhanced Role Of Marketing Ability To Handle New Unexpected Situations &

Dealing With Uncertainty Global Alliances & Strategic Networking Better Management Of Finances Cannibalisation Of Own Products Strategic Global Vision

EMERGING INDUSTRY ISSUESEMERGING INDUSTRY ISSUES


KEY RESULTSKEY RESULTS SpeedSpeed CorrectnessCorrectness SolutionsSolutions ReliabilityReliability FlexibilityFlexibility ConsistencyConsistency Single PriceSingle Price ProactiveProactive Post Delivery ServicesPost Delivery ServicesRestructuring of MindRestructuring of Mind

Get Related to Customer more Get Related to Customer more professionallyprofessionally


ReengineeringReengineeringFor Nextgen LogisticsFor Nextgen Logistics

RedefineRedefine ReengineerReengineer RelookRelook

ModifyModify RepairRepair TamperTamper