SCMPr n KNOWLEDGEn STRATEGYnBEST PRACTICEnTRENDSnhumAN RESOuRCE

July 2013 Vol. 1—No. 5 `150Supply Chain Management Professional

AcAdemic AdvocAcyModelling Supply Chain Dynamics

Page...8

FeAtureFrontiers in Supply Chain Educatione

Page...46

In ThIs I s s u e

An Agenda for Change

Ports as an Economic Unit on its own, provides lifeline for trade in the country.

Pg.14

columnCompetitive Strategy for Future

Page...36

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editorial

3SCMPr July 2013

We are bringing out this issue in the back drop of a colossal trag-edy. And as expected, the government was caught flat footed. The simple task of collecting material for relief from across

the country and channelizing them to the affected people showed us how poor the state of our logistics sector is! Truck loads of goods were stuck at Dehradun and other collection points because the roads were washed away! Would it have been possible for helicopters which were returning empty to ferry these goods! We think so. Our hearts are with the people who suffered loss of life and property. As a part of the SCM industry, it is our collective responsibility to come up with a plan for ensuring regular supplies in the face of gravest of disaster.

As Supply Chain professionals, we are taught to think of the risks in our supply chain and develop mitigation plans. Can we as an industry, come up with a plan for ensuring supply chain functioning in the face of national disasters? We believe so. Google map shows us every lane and by-lane in towns. Each one of us has some bit of information of the road connectivity across the country. Can we pool it and enhance the reach of Google Maps. This one step will help us plan alternate networks.

The 12th Five year plan has an ambitious target of USD 1 Trillion investment in infrastructure. This should be seen in the backdrop of our achievement so far. Every major initiative – be it the road ways, the railways, ports, all of them are moving at a snail’s pace. More than the quantum, we need more effective implementation. That and transpar-ency in the process. Unfortunately for us, this will degenerate into a get rich quick process by the politicians and the bureaucrats. Once again, we will have to rely on the judiciary to pull this chestnut out of the fire.

In the meanwhile, let us all do our bit to take the Indian Supply Chain sector to global standards.

Happy Reading

Executive Editor

StalledInfrastructure

Girish V s

Executive Editor

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06InsIght >>Parsing Holds Key to Better Sales & operations.

36As/Rs FeAtuRe >>Intelligent Warehousing System: Latest Developments in the area of ASRS.

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43Column >>Brian Miles: Getting the best value from your cold store.

36ACAdemIC AdvoCACy >>Modeling Supply Chain Dynamics: A Multiagent Approach.

SCMPr July 2013

Single Worldwide

Source

S&OP

Multiple Regional Source

Multiple Shared Sourcing

Dedicated Regional Source

46eduCAtIon speCIAl >>Frontiers in Supply Chain Education.

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Executive Publisher Jayaram Nairjayaram.nair@scmp.in

EDITORIALExecutive EditorGirish V Sgirish.vs@scmp.in

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Lead story on challenges and prospects for Indian ports and how crisis in shipping Industry effects the growth plan.

Academic Partner

SCMPr

5SCMPr July 2013

14lead story

57event RepoRt >>SCMPro - Pharma Supply Chain Summit: Unlocking the potential for Higher Growth.

55humAn ResouRCe >>Darryl Judd discusses the next generation of talent management practices for SCM Industry.

insight

6 SCMPr July 2013

Growth in globalization and con-sumerism has led to complex supply chains that support the sales of broader and shorter

lifecycle products into more and more countries. At the same time, supply lines are longer as companies manufacture and source on an anywhere-in-the-world basis. These developments have rendered the use of a single Sales and Operations Planning (S&OP) process unwieldy and cumber-some. Thus, as with any complex task, the S&OP process often needs to be parsed in order to “divide-and-conquer.” But in doing so, there’s an important caveat: you need to carefully consolidate the individual plans to get an accurate global enterprise view.

Research supports this view of S&OP. In 2006, a medical devices manufacturer asked MIT to research how S&OP processes could be effectively applied across its global busi-ness units (BUs). At the time the company was running two S&OP processes—one for each of its two BUs, which were focused on different products. It wanted to know whether two was best, whether one might be better, or should the S&OP processes be parsed even further. The research ques-tions became the topic of a Master’s thesis by Christopher M. Honstain, titled Sales and Operations Planning in a Global Business.

A number of practitioners and industry experts from consulting and software firms were interviewed. In addition, the research-

ers examined the S&OP practices of three specific companies: a consumer-product goods (CPG) company, a pharmaceutical company, and a petro-chemical company.

The CPG Company had some best prac-tices in global S&OP. It conducted over 90 monthly S&OP processes around the world and divided the process along BU, product group, and geographical dimensions. The company clustered business entities to best represent “pure” profit-and-loss (P&L) cent-ers in which demand-supply planning deci-sions could be made assuming a unique set of supplying plants for each demand cluster.

For each business unit there was a BU-based process owner. In addition, there was a corporate-wide process owner responsible for coordinating efforts, as well as provid-ing rough process guidelines, self-assessment tools, and assistance in assessing the per-formance of each process. The finance or-ganization consolidated and harmonized the S&OP plans to provide corporate executives with a consolidated enterprise-wide plan.

Other research we conducted confirmed the need to parse S&OP processes, focusing on supply-demand characteristics. Demand characteristics include geography, channels, and product demand patterns; supply char-acteristics include sourcing, production, and distribution resources.

The research also underscored the need to consolidate parsed plans in order to “harmo-nize” them whenever there is limited world-

Dr. Lapide is a lecturer at the University of Massachusetts’ Boston Campus and is an MIT Research Affiliate.He welcomes comments on his columns at llapide@ mit.edu.

For many global companies, a single Sales & Operations Planning process across the enterprise is no longer optimum. What’s needed instead are multiple processes tailored to individual business units and regions.

Parsing Holds Key to Better S&OP

Single Worldwide

Source

S&OP

Multiple Regional Source

Multiple Shared Sourcing

Dedicated Regional Source

insight

7SCMPr July 2013 7

wide supply, and to ensure they are aligned to meet corporate goals and objectives. (Har-monizing in this context involves making sure that plans are consistent, non-conflict-ing, and supportive.) The processes should follow a common set of rough guidelines and have a consistent set of process performance objectives. Otherwise, plans would not be “apples-to- apples”, making consolidation difficult or impossible.

A problem uncovered during the research was the disconnect that often existed be-tween marketing and finance organizations. This was manifested in the frequent mis-alignment of financial versus S&OP plans. To correct this, finance organizations need to get more involved in the processes, so that S&OP plans can be more precisely trans-lated into financial terms.

Recommended Parsing CriteriaA global S&OP process ought to be parsed into multiple processes so that each repre-sents a pure P&L center (at least to the extent possible). Honstain in his thesis offers this observation: “Within the supply chain, the characteristics of the manufacturing sites are the deciding factors for the number of S&OP processes. The specific characteristics that are important are the number of plants within each region, whether the plant is dedicated to the region or it is shared between the regions, and whether or not the plant is centrally con-trolled or decentralized.”

“Regions” are business units or market-ing/sales territories, typically defined as North America, South America, EMEA (Europe, Middle East, and Africa), and Asia. Criteria on how to parse a global S&OP process vary depending on four supply-based scenarios:

Single Worldwide Source: This is the sim-plest scenario in which one—and only one—plant supplies product on a global basis to all re-gions. Under this scenario, one S&OP process suffices and there is little reason to break it up.

Multiple Regional Source: Under this scenario, multiple plants around the world supply product. However, only one plant is dedicated to supply product to each region. A plant may supply multiple regions, but no other plant serves them. Parsing the S&OP is recommended under this scenario. Each S&OP process would be defined to include

all regions that have common product sup-ply. The demand forecasts for these regions would be consolidated, thereby establishing a pure P&L center for each S&OP process.

Dedicated Regional Source: Under this scenario, multiple plants throughout the world supply product. However, each plant is dedicated to supply product to one and only one region; that is, plants do not supply multiple regions. Under this scenario, each region would conduct its own independent S&OP process as a pure P&L center.

Multiple Shared Sourcing: This scenario is complex, yet it is the most prevalent. There are multiple plants throughout the world that supply product and each region can be served by one or more plants. This is the most com-plex scenario because supply is shared among regions. Centralized management is required to ensure that global enterprise goals and objectives are met when there is contention among regions for constrained product sup-ply. Each region with a supply source should run its own S&OP process under this sce-nario. Regions that don’t have a supply source in them should be grouped into regions that do. The outputs from the individual processes would become the inputs to an executive-level S&OP process that consolidates them to de-velop the enterprise-wide global plan.

Consolidated View Needed Since most global companies are comprised of some combination of the four supply scenarios described above, consolidating and harmonizing multiple S&OP plans at an executive level is critical for obtaining a global picture of the future. As part of this, companies need to accurately translate their unit-based (i.e., non-monetized) plans into financial plans so as to align S&OP plans with enterprise-wide goals and objectives.

Whenever I’ve discussed parsing a global S&OP process, I’ve talked about the cau-tionary Humpty Dumpty nursery rhyme. When he fell off the wall, “all the King’s horses, and all the King’s men, couldn’t put Humpty together again.” In S&OP, you can use the criteria discussed above to parse your global S&OP process. But if you don’t parse correctly, like Humpty Dumpty, it is not an easy task to put the S&OP plans back to-gether again. So be careful!

Within the supply chain, the characteristics of the manufacturing sites are the deciding factors for the number of S&OP processes.

8 SCMPr July 2013

Modeling Supply Chain Dynamics:

A global economy and increase in customer expectations in terms of cost and services have put a premium on effective supply chain reengineering. It is essential to perform risk-benefit analysis of reengineering alternatives before making a final decision. Simulation provides an effective pragmatic approach to detailed analysis and evaluation of supply chain design and management alternatives. However, the utility of this methodology is hampered by the time and effort required to develop models with sufficient fidelity to the actual supply chain of interest. In this paper, we describe a supply chain modeling framework designed to overcome this difficulty.

Jayashankar M. SwaminathanWalter A. Haas School of Business, University of California, Berkeley, CA 94720, email: msj@haas.berkeley.eduStephen F. Smith and Norman M. SadehThe Robotics Institute, Carnegie Mellon University, Pittsburgh, PA 15213, email: sfs@ri.cmu.edu and sadeh@ri.cmu.edu

A Multiagent Approach

n KNOWLEDGE n STRATEGY n BEST PRACTICE n TRENDS n human resource

AcAdemic AdvocAcy

9SCMPr July 2013 9

sis for alternative solutions. How-ever, there are two major problems associated with building custom-ized simulation models: (1) they take a long time to develop and, (2) they are very specific and have limited reuse. The author’s aim in this paper is to provide a flexible and reusable modeling and simu-lation framework that enables rapid development of customized decision support tools for supply chain management.

It is essential to understand im-portant issues and common proc-esses in different types of supply chains to develop a generic, modu-lar, and reusable framework. The framework suggested n this paper is based on supply chain studies con-ducted in three distinct domains: a

port tools that can analyze various alternatives can be very useful in impartially quantifying gains and helping the organization make the right decision (Feigin, An, Con-nors, & Crawford, 1996). In most organizations, reengineering deci-sions are generally based on either qualitative analysis (such as bench-marking) or customized simula-tion analysis.

This is because complex inter-actions between different entities and the multitiered structure of supply chains make it difficult to utilize closed form analytical solutions. Benchmarking solu-tions provide insights into current trends but are not prescriptive. This leaves simulation as the only viable platform for detailed analy-

A supply chain can be de-fined as a network of autonomous or semi-autonomous business

entities collectively responsible for procurement, manufacturing and distribution activities associ-ated with one or more families of related products. Different entities in a supply chain operate subject to different sets of constraints and objectives. However, these entities are highly interdependent when it comes to improving performance of the supply chain in terms of ob-jectives such as on-time delivery, quality assurance, and cost mini-mization. As a result, performance of any entity in a supply chain de-pends on the performance of oth-ers, and their willingness and abil-ity to coordinate activities within the supply chain. A global econo-my and increase in customer expec-tations regarding cost and service have influenced manufacturers to strive to improve processes within their supply chains, often referred to as supply chain reengineering (Swaminathan, 1996). For exam-ple, Hewlett Packard’s Vancouver division reduced inventory costs by approximately 18% for HP Deskjet printers through delayed product differentiation (Billington, 1994). Similarly, National Semi-conductor has managed to reduce delivery time, increase sales, and reduce distribution cost through effective supply chain reengineer-ing (Henkoff, 1994).

Supply chain reengineering ef-forts have the potential to impact performance in a big way. Often they are undertaken with only a probabilistic view of the future, and it is essential to perform a de-tailed risk analysis before adopt-ing a new process. In addition, many times these reengineering efforts are made under politically and emotionally charged circum-stances. As a result, decision sup-

Direction of Flow of Demand

Supply Chain NetworkDirection of Flow of Product

Raw Material Vendor

Tier-IISuppliers

Tier-ISuppliers

DistributionCenters

Retailers

CustomerZones

Manufacturers

AcAdemic AdvocAcy

10 SCMPr July 2013

vertically integrated supply chain of a global computer manufactur-er; a Japanese automotive supply chain that is less tightly coupled; and an inter-organizational supply chain in the U.S. grocery industry. These supply chains differ in terms of centers of decision making, heterogeneity in the supply chain, and relationship with suppliers. In the supply chain for the com-puter manufacturer the decision-making process was centralized to a great extent, few suppliers were extremely important whereas oth-ers were mainly controlled by the manufacturer, and a major part of the supply chain was owned by the manufacturer. In the Japa-nese automotive supply chain, the manufacturer had a greater con-trol over external suppliers and in some cases partially owned them. However, suppliers made inde-pendent decisions many times and the supply chain involved different companies, though all worked according to the guide-lines set by the manufacturer. In the grocery supply chain, manu-facturers and retailers were equally

ronments) were part of the same supply chain. Despite these differ-ences, a number of processes were common to these supply chains. The authors identified these proc-esses and have developed a library of software components for mod-eling them. The library consists of two main categories—structural elements and control elements. Structural elements (like retailer, distribution center, manufacturer, supplier, and transportation vehi-cles) are used to model production and transportation of products. Control elements are used to spec-ify various control policies (related to information, demand, supply, and material flow) that govern product flow within the supply chain.

Given this base of primitives, an executable simulation model of a given supply chain is constructed by instantiating and relating ap-propriate structural and control elements. The framework allows

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MessageIncoming

Outgoing

Event Selection

Priorities (Q) State (S)

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Domain Knowledge (D)

Commitments

Objectives

Agent Architecture

Inventory Product Flow

Distribution Centre

Retailer - 1

Retailer - 2

Retailer - 3

Orders Orders

Manufacturer-C

Manufacturer-B

Manufacturer-A

Standard distribution Centre

powerful and sometimes had conflicting interests. The decision making was decentralized and different organizations (operating under different industrial envi-

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acquired deep insights

to help the Supply Chain

professionals bootstrap

their knowledge, the

Institute of Supply Chain

& Management invites you

to join us as Associate

Faculty in the areas of:

Specializations

Supply Chain

Management

Risk Management

Agri Business

Demand Planning &

Forecasting

Warehousing

Transportation

Supply Chain Audit

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Supply Chain Network

Design

Retail Logistics

Sustainability

About ISCM: The Institute of Supply Chain & Management (ISCM) is the leading forum for supply chain professionals to share best practices, strategic insights and business challenges and explore the innovations in Supply Chain Management in India. ISCM is one of the leading institutes in the area of Supply Chain Management in India. It offers full time and part-time post graduate programs and specialized management development programs in the area of supply chain and business forecasting. The programs offered by ISCM are highly respected and recognized in corporate sector for employment.

C/o. Durgadevi Saraf Institute of Management Studies, R. S. Campus, S. V. Road, Malad (W), Mumbai – 400 064Email:info@iscmindia.net Website:www.iscmindia.net

What will you help us doHelping professionals learn Guide students in live projects

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AcAdemic AdvocAcy

12 SCMPr July 2013

Structure of Supply Chain Library

supply chain elements

Structural Elements

TransportationProduction

Retailer Manufacturer Vehicles Loading Centralised Forecast Contracts Periodic

Real-timeMarketingDecentralisedRoutingSupplierDistributor

Flow Inventory Demand Supply Information

Controll Elements

development of models to ad-dress issues related to configura-tion, coordination, and contracts. Configuration deals with issues related to the network structure of a supply chain based on factors such as lead time, transportation cost, and currency fluctuations. Coordination deals with routine activities in a supply chain such as materials flow, distribution, in-ventory control, and information exchange. Contracts control ma-terial flow over a longer horizon based on factors such as supplier reliability, number of suppliers, quantity discounts, demand fore-cast mechanisms, and flexibility to change commitments.

Multi-agent computational en-vironments are suitable for study-ing classes of coordination issues involving multiple autonomous or semiautonomous optimizing agents where knowledge is dis-

tributed and agents communicate through messages. Because sup-ply chain management is funda-mentally concerned with coher-ence among multiple decision makers, a multi-agent modeling framework based on explicit com-munication between constituent agents (such as manufacturers, suppliers, distributors) is a natural choice. The model uses structural elements as heterogeneous agents that utilize control elements in or-der to communicate and control the flow of products within the supply chain. This approach em-phasizes models that capture the locality that typically exists with respect to the purview, operating constraints, and objectives of in-dividual supply chain entities, and thus promotes simultaneous anal-ysis of supply chain performance from a variety of organizational perspectives. The modular archi-

tecture of the framework enables one to develop executable models for different situations with lim-ited additional effort.

A typical supply chain faces uncertainty in terms of supply, demand, and process. This frame-work reduces the effort involved in modeling various alternatives and measuring their performance through simulation under dif-ferent assumptions about uncer-tainties. This eases the ability of decision makers to quantitatively assess the risk and benefits asso-ciated with various supply chain reengineering alternatives. In this paper, the authors describe their framework in its current state and provide examples to demonstrate how issues relevant to supply chain management can be ana-lyzed using it.

In the paper, the authors review the existing research and approach-

AcAdemic AdvocAcy

13SCMPr July 2013

Inventory Product Flow

Cross Docking

Retailer - 1

Retailer - 2

Retailer - 3

Orders

Manufacturer-C

Manufacturer-B

Manufacturer-A

Cross Docking

Sorting

BOM, Demand, Lead Time, Transportation Tim, Supply Chain Network, Cost, Supplier Reliability

Fill Rates, Inventory Costs, Work-In-Progress, Order Turnaround Time

Customer

Simulation Optimisation

Sypply Chain

Inventory

Data

Levels

Service

Inventory Servicability Application

es and describe multi-agent frame-work in greater detail. In addition, the paper identifies key elements required to model supply chain dynamics. The authors present a cross-docking prototype from the grocery chain industry too.

CONCLUSIONSAs manufacturers attempt to in-crease supply chain performance, there is a critical need to gain a deeper understanding of the im-pact of decisions on their opera-tions as well as those of their part-ners. Simulation has been found to be one of the popular and suitable mechanisms for understanding supply chain dynamics. Many times supply chain reengineering decisions are made with a proba-bilistic view of the future. As a result, there is a necessity for de-cision support tools that can help managers to understand the costs, benefits, and risks associated with various alternatives. In this paper, the authors have described a sim-ulation-based framework for de-veloping customized supply chain models from a library of software components.

These components capture generic supply chain processes and concepts, thereby promoting modular construction and reuse of models for a wide range of ap-plications.

Using these components, it is possible to incorporate supply, process, and demand uncertainty as well as to integrate analytic and heuristic decision procedures. The approach underscores the impor-tance of models in which different entities in the supply chain oper-ate subject to their own local con-straints and objectives, and have different local views of the world. This multi-agent approach ena-bles performance to be analyzed from a variety of organizational perspectives.

lead story

An Agenda for ChangePorts as an Economic Unit on its own, provides lifeline for trade in the country. Girish V.S., Executive Editor looks at port infrastructure in India and some challenges faced by Indian ports.

lead story

Ports

14 SCMPr July 2013

lead story

the port’s actual throughput with its economic techni-cally efficient, cost efficient and effectiveness optimum throughput, respectively.

In “Shipping in Crisis” we take a look at the ship-ping industry and its impact on ports. The overcapac-ity situation and slow recovery of demand had, not only depressed charter rates to historical lows after 2008, but also players’ margin, leaving many with in-sufficient fund to service their loans. And when the shipping industry sneezes, ports catch a cold.

In “Hinterland Strategies”, we take a look at the need for better hinterland co-ordination in Ports. Port au-thorities generally focus on the development of the local port area, ignoring the development of port hinterland. In “Sustainability in Ports” we examine challenges of sustainability to Port operations. The proximity to sensitive resources inherently challenges ports to oper-ate in a sustainable manner. The negative environmen-tal impacts of ports are increasing with their ever-in-creasing cargo volumes. Populated port communities, in particular, are placing greater pressure on ports to negate or lessen their environmental impacts.

We analyze the issues in “Intermodal Transport for Ports in India”. Ports depend on their hinterland for business – both for incoming and outgoing. To do

their job effectively, ports require an excellent supporting network of rail and road infrastructure to be able to offer cost competitive solutions to its clients. We take a look at the existing connectivity of Indian Ports and the necessity to develop an intermodal transportation net-work as a first step to decongest Indian Ports.

15SCMPr July 2013

A port is an economic unit. It provides a trans-fer service as opposed to producing a prod-uct by a manufacturing firm. As the lifeline of trade of the country, ports are central to

the economy. Ports provide an interface between the ocean transport and land-based transport. They repre-sent a promising sector for India, given the country’s 7,516 KM long coastline, robust economic growth, abundant raw material, cost-competitive workforce and a strategic location on the trade map. The port infrastructure in India constitutes of 13 major ports and 187 non-major ports. Out of the total non-major ports, only about 48 are operational; while the rest are only fishing harbors. SCMPro takes a look at the Port infrastructure in India and some of the challenges that ports face.

We start the series with “The Economics of Ports.” This article examines methodologies for evaluating the economic performance of a port. The performance of a port can be evaluated from the point of technical ef-ficiency, cost efficiency and effectiveness by comparing

16 SCMPr July 2013

This article examines methodologies for evaluating the economic performance of a port. The performance of a port can be evaluated from the point of technical efficiency, cost efficiency and effectiveness by comparing the port’s actual throughput with its economic technically efficient, cost efficient and effectiveness optimum throughput, respectively. The port’s economic performance may also be evaluated by comparing the actual values of its performance indicators to their standard benchmarks for similar ports across the world. If the actual values converge or diverge from the benchmarks over a period, the port’s performance with respect to that economic objective has improved or deteriorated.

The Economics of Ports lead story

A port is an “engine” for economic develop-ment by providing employment, worker incomes, business earnings, and taxes. Like we do for any other firm, it is necessary to

evaluate a port as an economic entity. A port provides an economic service - facilitating the transfer of goods from one place to another. The amount of this transfer service is referred to as the port’s throughput, i.e., the number of containers (or tons of cargo) and passengers moved through the port. Ports utilize resources such as labor, capital goods (like cranes) and infrastructure (like wharfs) in transferring cargo and passengers to and from vessels. If the port seeks to be technically efficient, it will seek to maximize its throughput in the employment of a given level of resources. The crucial question that arises in evaluating a port’s perform-

ance is how to measure performance. Should a port’s performance be evaluated relative to its performance over time (a single-port approach) or relative to the performance of other ports (a multi-port approach)? Should the performance be evaluated from engineer-ing or an economics perspective?

Ports have traditionally been evaluated by comparing their actual and rated throughputs (measured in tonnage or number of containers handled or number of passen-gers handled) under specified conditions. If a port’s actual throughput approaches (departs from) its rated through-put over time, we conclude that its performance has improved (deteriorated) over the periods. Engineering optimum throughputs have typically been used in such evaluations, defined as the maximum throughput that a port can physically handle under certain conditions.

lead story

17SCMPr July 2013 17

In an environment in which ports have their own captive hinterlands and are not competing with one another, an engineering performance evaluation methodology of comparing actual and engineering optimum throughputs may be adequate. But when ports compete with one another - either in the same country or not(India and Sri Lankan ports) - and where shippers and carriers are part of the port-selec-tion process, a port has to worry about whether it can physically handle the cargo volumes and also whether it can compete for the cargo. In such a competitive en-vironment, port time-related costs in addition to port charges incurred by shippers and carriers are impor-tant determinants in port selection. For example, the average cost of shipping a blackberry mobile handset through Malaysia is around 60 Cents against a cost of USD 7 if it were to be shipped through ports in India! Any wonder why the landed costs in India are higher.

Since port cargo remains in the shipper’s inventory (assuming the shipper retains ownership), the shipper incurs time-related inventory (or logistics) costs in port; water and inland carriers also incur port time-related costs, e.g. depreciation and insurance costs on their ships and vehicles while in port. A port can reduce these time-related costs by reducing the time that the cargo of shippers and the ships and vehicles of carriers are in port, i.e. by improving the quality of its service. During a recent visit to Westport in Port Klang, Malaysia, it was observed that the port currently has a turnaround time of 12 hours for a ship. In India, the ship will not be able to find a berth in that time. These costs build up and distort the economics of the port.

If a port’s performance in a competitive environ-ment is evaluated by comparing actual and optimum throughputs, an economic (rather than the engineer-ing) optimum throughput should be utilized. A port’s economic optimum throughput is that throughput for which the port achieves an economic objective, e.g. maximizing port profits.

An alternative methodology to that of comparing actu-al and optimum throughputs for evaluating the perform-ance of a port is one that makes use of port performance indicators. From an economics perspective, port perform-ance indicators are choice variables (i.e. variables whose values are under the control of port management) for op-timizing the port’s economic objective. If the economic objective is to maximize profits, port management would select values for the port indicators that would result in maximum profits for the port. These values of the per-formance indicators have been referred to in the literature as performance indicator standards (or benchmarks). If the actual values of the port’s performance indicators ap-proach (depart from) their respective standards over time,

the port’s performance – with respect to its economic ob-jective – have improved (deteriorated) over time.

Both these port performance evaluation method-ologies, comparing actual and optimum throughputs and comparing actual values and standards of perform-ance indicators, are consistent with one another. For example, if the port’s economic objective is to maxi-mize profits, the port’s economic optimum through-put can be determined by substituting the standards for the performance indicators.

The determination of a port’s economic optimum throughput and its performance indicators, as men-tioned above, requires an estimate the port’s economic objective. For example, to obtain a port’s profit, the port’s throughput demand must be known or estimat-ed. However, economic objectives are not likely to be known with certainty. Further, available data may not be sufficient to obtain reliable estimates of these, nor to obtain reliable estimates of the port’s economic opti-mum throughput and performance indicator standards.

Port managements will use performance indicators to evaluate their performance. A privately owned port’s eco-nomic objective may be to maximize profits, and the port management would select values for the port indicators that would result in the maximization of the port’s profits. On the other hand, government owned ports may have a different objective - the economic operating objective might be to maximize throughput subject to a zero operat-ing deficit (where port revenue equals cost) or subject to a maximum operating deficit (where port revenue is less than cost) that is to be subsidized by government. These indica-tor values are the port’s performance indicator benchmarks.

A port in a competitive environment is not only concerned with whether it is technically efficient and also cost efficient but also whether it is effective in pro-viding throughput. Effectiveness is measured as how well the port utilizes its available resources to provide throughput service to its users – carriers and shippers. Economic operating objectives of a port may be clas-sified as either efficiency or effectiveness objectives. For example, port efficiency operating objectives in-clude the technical efficiency objective of maximizing throughput in the employment of a given level of re-sources and the cost efficiency objective of minimizing cost in the provision of a given level of throughput.

In order for a port to be effective, it must be efficient – i.e., it must be cost efficient which in turn requires that it must be technically efficient. For example, if a port has the effectiveness operating objective of maximizing prof-its and is cost inefficient, it can obtain greater profits for the same level of throughput service by lowering its costs to become cost efficient. It should be recognized that a port can be cost efficient without being effective.

The shipping industry is still facing headwinds. Global trade is yet to recover from event the 2011 levels. The shipping industry is the worst hit since the global crisis that started in 2008. It also has the dubious honor of being the slowest to recover from the crisis. In the heady days of growth from 2003 to 2008, global shipping saw a surge in volumes. This boosted charter rates. And when the going is good, no one wants to look too closely at the markets. The period saw a rush among the cash rich players to place huge orders for new ships – both in numbers and size. A few years later, from around 2009, these new ships started to enter the market. The same time saw, arguably, the worst crisis to hit the world. This skewed the demand supply patterns and sent charter rates plummeting. The overcapacity situation and slow recovery of demand had, not only depressed charter rates to historical lows after 2008, but also players’ margin, leaving many with insufficient fund to service their loans. And when the shipping industry sneezes, ports catch a cold. We take a look at the shipping industry and its impact on ports.

Shipping in Crisis

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Maritime transport was impacted by the economic crisis and the declining vol-ume of sea transport reflects the down-turn of international trade. According

to report by Moody’s Investor Services, the global shipping slump is expected to last well into 2013 as a glut of vessels and a growing credit squeeze challenge even the toughest companies in the seaborne sector. Shipping companies, especially in the oil tanker and dry bulk sectors, already hit by worsening economic

turmoil, weak earnings and oversupply ordered in the good times now face tighter financing as banks cut their exposure to risky and dollar denominated as-sets such as ship finance to meet tougher capital rules. Enormous global overcapacity is proving a formida-ble headwind to growth expectations. World trade has been falling since 2010 and the world is awash in overcapacity and oversupply: this is the same “huge misjudgment of the market” embedded in overly opti-mistic stock prices today.

18 SCMPr July 2013

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20 SCMPr July 2013 20

According to Thomas Wybierek, a shipping analyst at Norddeutsche Landesbank Girozentrale, “The ship-ping industry suffers from overcapacity and there are more mega-ships coming into the market this year. Furthermore, Chinese growth is below expectations, the euro zone is stuck in crisis and there are no stimuli from the US.”

A classic example of the shipping crisis spilling over into the port sector is Germany’s newest and deep-est shipping port – JadeWeserPort - which sits nearly empty due to the global slowdown in the container shipping trade. The port was completed in September 2012 and has handled around 33000 containers since – a far cry from the annual 2.7 million forecast when government embarked on the 1 billion-euro ($1.3 bil-lion) project a decade ago.

Another new port put on ice is Cai Mep Port in Vietnam. Capacity at Cai Mep, the modern, deepwa-ter port in Vietnam is hopelessly under used due – at present Cai Mep - which has an annual capacity of 7 million teu - handles just 1M teu

The Global Port Development Report 2012 pub-lished by SISI recently points out that 2012 has been a year of intensive readjustment for port industry. The Report shows that against the backdrop of the Euro-pean debt crisis, the growth in global port throughput declined on a quarterly basis in 2012 despite a rapid rally in Q1, with an annual increase of only 4.8 per cent, lower than those of 2010 (14 per cent) and 2011 (7.3 per cent), indicating an obviously sluggish per-formance. In particular, emerging economies which used to shore up global port throughput lost steam and saw a plummeting growth.

The austerity plans, shrinking consumption and insufficient market confidence put European ports on the brink of stagnation literally, with major ports like Antwerp Port, Hamburg Port and Marseilles Port registering a 1 per cent decline in throughput growth.

The world’s Top 20 ports showed vastly diverg-ing performances: Eight of them recorded slow (less than 3 per cent) or negative growth (three of the top 20!), which were mostly first-tier hub ports with high throughput records or export-oriented ports along major shipping routes. These ports lost their momentum under the influence of global economic downturn and higher trade barrier. Tianjin Port, Bu-san Port, Ningbo-Zhoushan Port and Qingdao Port stayed in the middle with a growth rate of 3-10 per cent. These ports maintained stable growth over the past year thanks to the abundant cargo flow from hinterland, sound cargo canvassing capacity and enabling services. Another eight ports, mostly dry bulk terminals in Asia and Australia, registered a

double-digit growth on account of the robust demand of China and Korea for coal and iron ore despite the overall bleak environment.

However, major container ports in the world were mired in depression in 2012. The Y-o-Y growth in glo-bal container throughput shrank by nearly 50% from the level of 2010 to 3.96% lower than the ten-year av-erage and the lowest except those of the crisis-hit years. The trends for the year show major container ports in the world are facing a unprecedented harsh time and are nowhere near recovery.

Ports in Europe are the worst hit, with a negative growth in containers handled. The Port of Rotterdam, for example, with a stagnant throughput of 11.87 million TEU, got kicked out of the top ten slot by Tianjin Port in China. And despite the bleak industrial environment, major North American ports registered a marginal growth of 2.3%, driven by the modest ex-pansion of manufacturing industry in the US.

Another major trend that emerges is with ships becoming larger and larger, global ports may fall into two groups: hub ports and feeder ports. India with its shallow ports will get increasingly pushed into a feeder port status.

In 2013, in an effective manner, various countries will successively step up their economic reform, imple-ment a new round of easing monetary policies and in-dustry support programs, further strengthen the infra-structure construction in terms of transport facilities and real estates, and promote regional cooperation by accession to the ASEAN and the Trans-Pacific Partner-ship Agreement. Such policy packages may effectively shore up the port industry. It is predicted that global port throughput and container throughput will main-tain a modest growth of over 5%. To be specific, stim-ulated by the economic recovery, European ports are likely to see a return to stability, with a limited growth of less than 3%.

With global economic, trade and shipping cent-ers moving eastward, China and Southeast Asia have witnessed rapid economic and trade development and made heavy investments in port construction, leaving some regions perplexed in capacity surplus. Therefore, sought-after destinations of terminal construction and investment may be gradually shifted from Asia to Lat-in America and Africa.

The world’s largest cargo ship - the brand new “Al-exander von Humboldt” has been a tourist attraction in Hamburg harbor for days: The almost 400-meter-long (1,312-foot-long) giant belongs to the French shipping company CMA CGM and can hold close to 16,000 containers. Hope the ship can be put its right-ful use -to transport containers!

Managing logistics for temperature sensitive products is a complex process in India. A major challenge is in storage and transportation due to varying climatic conditions and inadequate infrastructure. Products such as Dairy & Ice Cream, Frozen Foods, Agricultural, Pharma/Healthcare, Poultry & Sea-foods, etc need specialized temperature control treatment throughout the period of transit. While the manufacturers may have state-of-the-art cold chain facility, they need to work closely with their Logistics Service Providers (LSPs) to upgrade their supply chain/logistics infrastructure ensuring a seamless logistics process as the product moves through the supply chain.

SCMPro’s August 2013 edition will publish a special report on the State Of Cold Chain Logistics In India. The feature will provide a unique platform for industry experts actively involved in temperature sensitive logistics to share their experience on topics such as existing infrastructure, temperature control solutions & technologies, etc. The idea is to educate the readers about the transforming Cold Chain landscape issues and how to leverage their core competencies for achieving full growth potential.

COLD CHAIN INDIA

SCMPrFor editorial inputs contact: +91 22 60020121 or drop a mail to info@scmp.inTo advertise in the feature, ask for the media pack on +91 22 60020122 or info@scmp.in

Hinterland

Port authorities generally focus on the development of the local port area, ignoring the development of port hinterland. A set of players - shippers, forwarders, barge and rail operators – are the bridge between the port and the hinterland. It is becoming increasingly apparent that a ports competitive position depends on its hinterland networks. This has forced port managements to take an active part in the hinterland. This new role has already been suggested by different academics. However, limited empirical evidence exists of port authorities taking stakes in inland terminals or developing transport services. The development of inland ports and logistical zones appear to be an emerging situation. Still, port managements tend to be reluctant to undertake partnerships with inland ports, mostly out of concern of losing value added activities. There is a fear that inland ports may promote port competition by offering access to new freight corridors and can thus challenge the fundamental hinterland of a port and its related cargo. SCMPro takes a look at the need for better hinterland co-ordination in Ports.

Strategies

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22 SCMPr July 2013

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23SCMPr July 2013 23

Hinterland connectivity is clearly a factor of fundamental importance in the eco-nomic development and competitiveness of ports and is one of the most signifi-

cant variables affecting the viability of any port. Ports are an integral part of a chain of transport links that move cargo from the manufacturer to the consumer. The development of the hinterland of a port depends on the connectivity of the port with its hinterland. Hinterland connectivity across the globe acts as a vital link to the supply chain. But in India it is a weak link.

Interestingly, a report by the Committee of Sec-retaries on “Road, Rail connectivity of Major ports” goes on to say “With infusion of new technology and capacity building, the cumulative/ total capacity available at ports matches the current requirement. However, ports are unable to handle additional traffic because of slow evacuation of cargoes from the ports.

Thus, despite having adequate capacity and mod-ern handling facilities, the ports are not able to en-sure a quicker turnaround of ships (present average turnaround time at major ports is 3.42 days). This undermines the competitiveness of Indian ports vis-à-vis other ports in the neighborhood. Therefore, it is important that connectivity of Major Ports with the hinterland is augmented not only to ensure smooth

flow of traffic at the present level but also to meet the requirements of projected increase in traffic.”

The problem is not new. But the willingness to im-plement the same is lacking. As a result of the growth spurt in cargo volume registered by the ports , enhanced port connectivity has become essential to facilitate im-proved port performance. Congestions near the ports are a common phenomenon. This problem is further aggravated by poor rail and road connectivity / capacity.

National Highways Authority of India (NHAI) has the mandate for providing road connectivity to the major ports. The port connectivity project was includ-ed under Phase I of the National Highways Develop-ment Program (NHDP). It is a sad reflection that the 37 KM long road along the Surathkal - Nantur section that was begun in June 2005 is yet to be completed.

The main challenges to Port Hinterland con-nectivity in India are:Congested & Poor Quality of Indian Roads - In-dia routinely sees recurrent congestion on al-most quarter of roads, leading to high fuel con-sumption and increasing environment pollution. Another major challenge is the different rates of tax-es between the states. As goods transit from state to state, navigating the tax maze can be a daunting task.

Output of Port

Land Based Infrastructure

Not Bad Bad

Poor

Excellent

Haldia Port

Paradip Port

Gopalpur

Not Bad

Very Bad Good

Good & Can be Improved

Good & Can be Improved

Port Infrastructure

ConnectivityHinterland to

Port

Backup Area

Equipments/ Berth/Handling

RateDraft+ ++ =

Marine Infrastrucure

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24 SCMPr July 2013

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Strategies Used by Port Authorities to Coordinate their Hinterland Globalization and the growing complexity of supply chains are incit-ing port authorities to undertake strategies aiming at a better level of coordination of their hinterland:n Usage of incentives. Coordinate operations of freight actors so that the usage of transport chains and the underlying assets is more optimal. It can involve using a preferential rate structure for custom-ers that provide a minimum volume or that meet a level of reliability. Others will be incited to follow since the reward is a lower cost access to the infrastructures.n Inter-firm alliances. Concerns two types of alliances. The first is vertical integration (along transport chains) where, for instance, a maritime shipping company and a terminal operator can agree to better coordinate their services. The second is horizontal integration (between competitors) where, for instance an equipment or container pool can be established to improve the level of asset utilization.n Organizational scope. Vertical integration process where an actor decides to penetrate a new market to expand or add value to its activi-ties. For instance, a maritime shipping company can be involved in port terminal operations. Also, a port authority could be involved in the development an inland port as a strategy to alleviate congestion and expand to market potential of its hinterland.n Collective actions. A series of strategies under the leadership of the port authority such as the setting of public / private partnerships to create a logistic zone. Each actor contributes within its realm of exper-tise. The development of port community systems is also a collective action that is receiving attention.

Another major challenge is the poor access to rural areas - India has an extensive road network (at least on paper), but 40 per cent of our villages are cut off dur-ing monsoons. Even in urban settings, monsoons spell doom for roads.

When the roads are down, railways can step in to ensure connectivity. But Indian Railways is facing a se-vere capacity constraint - there are not enough rakes to move goods and often goods are stuck at rail yards for want of empty carriages to move them. To add to the woes, freight tariffs have been kept high to subsidize passenger traffic.

A fourth challenge s the urban congestion - urban centers are severely congested, leading to a slow evacu-ation of goods from the ports.

And to cap it all, ports are congested - with increas-ing port traffic, Indian ports need to ramp up capacity and productivity.

While researching for this article, we came across a comparison between Port Headland in Australia and Haldia, Paradip, Gopalpur Ports in India by Mantrana Maritime Advisory Pvt. Ltd.. The comparison tells a lot out our hinterland connectivity.

Port Hedland Australia is the largest bulk mineral ex-port port in the world. It has a certified capacity of 495 Mtpa & trade worth 40Bn$p.a. With excellent plan-ning, development and wide network of Hinterland connection directly to mines and a huge rail network owned by mines, huge conveyor and excellent load/dis-charge rate. Compare this with the three Indian ports!

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26 SCMPr July 2013

PortsThe overall port capacity in India is expected to grow at a CAGR of 16.4% from 930 million tons in FY11 to 3,126 million tons in FY20. The capacity at non-major ports is projected to expand at a faster CAGR of 20.7% and is expected to increase from 370 million tons in the FY 2011-12 to 1,666 million tons by 2020. This means an increase in port activity and as a consequence, pollution. Ports worldwide are facing environmental challenges while facilitating maritime trade. Ports are intermodal facilities located in urban locales. They exist at the land-water interface and hence face a few unique sustainability issues. Ports often operate in close proximity to sensitive aquatic resources including wetlands. The proximity to sensitive resources inherently challenges ports to operate in a sustainable manner. The negative environmental impacts of ports are increasing with their ever-increasing cargo volumes. Populated port communities, in particular, are placing greater pressure on ports to negate or lessen their environmental impacts. SCM Pro takes a look at sustainability issues in Ports.

Sustainability in

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27SCMPr July 2013 27

Sustainability has been defined as “Develop-ment that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Ports

operate in urban settings and are an integral part of the urban communities they are located in. Because of their location amidst populated areas, they need to maintain environment quality and ensure their opera-tions and expansions take place with minimal impact on surrounding communities.

The operations of a port cover a range of activities. Goods and commodities travel to and from ports. Most products are shipped in large metal boxes called containers. Some are trucked in as bulk cargo. These

are transported to ports via trucks or rail. Once they reach the port, they are loaded onto large ships by cranes and other bulk loading systems. Goods arriv-ing on ships are off-loaded by cranes and then trans-ported via truck or rail to their destination. Therefore, ports share many of the same environmental concerns as the road and rail sectors. Air quality, noise, storm water management, and solid waste management is-sues plague ports as well. Ports also contain buildings so LEED principles apply to ports as well.

A major difference between the ports and other trans-portation sectors is the need to dredge the sea bed to main-tain channel depths and to deepen channels to provide sufficient depths for ships to navigate. Dredging needs

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28 SCMPr July 2013

The Managing the Environmental Sustainability of Ports (MESP) Project in Europe The MESP project proposes, on the short term, to:n Reduce pollution sources in ports and nearby urban areas;n Define methodologies, technologies and procedures adaptable to different port contexts and transferable in Mediterranean context;n Reinforce competences of public-decision makers and local admin-istrators, particularly regarding the communication between people in charge of management and planning of port and nearby urban areas;n Guarantee environmental, economical and social sustainability in every expected actions, outputs and results. That permits to reach the port sustainability target;n To retrain degraded and unhealthy port areas and to give back to citizens, tourists and workers an healthier and usable environmentand, on the long term, to:n Create a long lasting cooperation network, that in a first time involves partners and then other Mediterranean ports interesting in sustainable development of their areas, infrastructures and proce-dures;n Formulate legislative tools giving the starting point for the creation of a common law for Mediterranean ports. In this way best-practice exchange and collaboration between research institutions around the development of sustainable approach and technologies in port ambit will be favourite.n Create certification processes for procedures and tools that allow objectively to value the sustainability of ports and the authority of persons in charge of their installation, management and maintenance.

to be conducted using best environment management practices such as environmental buckets, water quality monitoring, avoidance of dredging during sensitive time periods for aquatic resources, etc. to minimize impacts on sensitive resources. These apart, dredged sediments can be reused for landfill cover. These sedi-ments may be contaminated and therefore volatiliza-tion of contaminants and leaching of contaminants from the sediments into the landfill site ecosystem or waterways should be evaluated. Storm water manage-ment practices to prevent contaminated runoff from the dredged sediment entering the waterway become ecologically important. Water pollution at ports may be associated with the disposal of vessel ballast water and waste, the use of vessel antifouling paints and ves-sel oil spillage. Port air pollution may arise from emis-sions from vessels, trucks, cargo-handling equipment, and railroad locomotives while in port.

Maintenance and repair of waterfront structures must be appropriately permitted and done in compliance with applicable environmental regulations. Fueling opera-tions for ships and trucks may result in spills which can

enter the waterway. The use of spill prevention methods and compliance with spill prevention regulations and storage tank regulations are important to prevent spills from coming in contact with the waterway.

Sustainability in IndiaSustainability as a concept is not come into the cor-porate India mainstream practice. The reasons for this seeming lack of interest are not hard to find. There are quite a few reasons - lack of awareness of sustainabil-ity issues, lack of concern, and most important, the lack of regulatory mandates for sustainability.

As per the current maritime regulations and laws, there is no specific mandate that a port should employ only sustainable development methods in port opera-tions and development. However, we hope that as we continue our development, and mature as an industry, we will adopt some of the best practices from the top ports across the globe.

There are a few bright spots emerging in India. The CVR group which is developing the Krishnapatanam Port has a slew of sustainable initiatives like develop-ing a green belt around the port, protection and de-velopment of mangroves, rainwater harvesting, reuse of treated water, sewage treatment, dust suppression using water sprinklers in cargo storage yards. mecha-nized cargo handling, using covered conveyors for dust generating cargo, etc.

IL&FS Maritime Infrastructure Company Lim-ited, which develops port infrastructure looks at en-vironmental issues while developing ports. IMICL addresses the environmental and social issues in their projects. In one of their projects, the earmarked wa-terfront included a river mouth and adjoining lands, some of which were used by the local fishermen for fishing. During the layout plan, the river mouth and other such areas were excluded as an environmental and social issue mitigation measure. What gives us some hope is that during the sixth Vibrant Gujarat Summit 2013, of the 63 MoUs for the development of Gujarat ports, eight were signed towards develop-ment of Green ports. Let us hope that such positive initiatives are the norm rather than an exception.

According to Mr. Saibal De, the CEO Ports at IM-ICL, “Implementation of green concepts could posi-tively affect project parameters during development. Best practices followed during design, engineering, and procurement stages can bring about accrued ben-efits over the long term. They can also reduce life cy-cle cost for equipment, contingency costs on account of implementation. And when there is a demand for “Green Port” label, the port would get positioned bet-ter over other competing ports”. Amen to that.

Source: mesp.org

SCMP is a monthly magazine for Supply Chain Professionals for Enterprise Users as well as Service Providers. The magazine contains specialist artcles, news and information designed to update the readers on the developments in supply chain industry. Specialised articles are contributed by the Industry Leaders and Academicians. Besides, there are other updates published to keep the readers keep pace with the Industry. Published in the 1st week of the month, the magazine is distributed to the readers through courier. Currentxly the print copy of the issue is available only for readers based in India. cover Price 150/-

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“Intermodal” in transportation means that a container can be moved from one mode of transport to another - from ship, to rail, to truck - without unloading and reload-

ing the contents of the container. This method reduces cargo handling, improves security, reduces damage and loss, and allows freight to be transported faster. However, effective evacuation of the cargo to and from the port is critical for an inter-modal network to func-tion smoothly. Delay in any one node will cause a pile

up of goods. Depending on the type of cargo, different players are involved– for certain bulk cargoes, railways are the preferred mode of transportation. For manu-factured goods and products, firms prefer movement by road because of the inherent advantages road pro-vides in terms of flexibility in dispatches and possibil-ity of door delivery.

In recent years, containerization of non-bulk and non-liquid cargo has increased globally as well as in In-dia. Most manufactured cargo and even bulk cargo for

Intermodal Transport for Ports in IndiaPorts depend on their hinterland for business – both for incoming and outgoing. To do their job effectively, ports require an excellent supporting network of rail and road infrastructure to be able to offer cost competitive solutions to its clients. While most of the ports in India are connected through rail and road, there are issues related to the quality of the inland network. This acts as a stumbling block in attracting more cargo and prevents seamless evacuation of cargo. It is imperative that with the development of growth centers like ports and industries, the supporting infrastructure of roads and railways must also be upgraded to reap the benefits of development driven by the ports. SCM Pro takes a look at the existing connectivity of Indian Ports and the necessity to develop an intermodal transportation network as a first step to decongest Indian Ports.

30 SCMPr July 2013

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international as well as domestic trade move in con-tainers. According to figures released by Indian Ports Association, the number of TEUs handled has been fairly static from 2007-08 to 2009-10 (when figures are last available!) The total TEUs handled in 2007-08 was 6.71 million, while in 2009-10 it was 6.87 mil-lion TEUs. As the trend of containerization increases, hopefully, multi-modal transport of cargo will assume increasing significance.

The Need for Inter-Modal Transport A transportation system in the new business en-vironment has to transform itself from a static network that links origins and destinations, into a flexible system able to quickly adapt to constant fluctuations of origins and destinations. Intermo-dal logistics is designed to cut transit times, decon-gest transport modes and reduce logistics cost. A report by Deloitte estimates that intermodal logis-tics can potentially reduce transit times by 40-50 per cent. Realizing the role of intermodal trans-port in export competitiveness of firms in India, the Government came out with the Multimodal Transport Act, 1993 specifically aimed at increas-ing exports from India. However, for intermodal logistics to deliver, three major challenges have to be surmounted – the challenge of Regulation, In-frastructure and Technology.

Regulatory reforms: The world has recognized the potential for inter-modal transport. India too wants to get on to the bandwagon. However, the pathetic road connectivity and the lack of high speed dedicated freight corridors across the country are a sad reflection of the

potential gone waste. The regulatory oversight is cum-bersome – four different ministries and their attendant bureaucrats with overlapping powers render decision making a slow process. The Multimodal Transporta-tion of Goods Act 1993 was enacted with the purpose

Types of Intermodal Logistics systems Apart from the ubiquitous containers Intermodal transport has a few interesting variants:

Lighter Aboard Ship: LASH transport is the combination of deep sea and inland waterway transportation. Barges operating on inland waterways can be loaded onto a LASH and carried across sea to the destination port. Subsequently, the unloaded barge can carry cargo further to the hinterland.

Piggyback / Trailer train: This is a system of unitised multimodal land transportation, a combination of transport by road and rail. It combines the speed and reliability of rail on long hauls with the door-to-door flexibility of road transport for collection and delivery. The goods are packed in trailers and hauled by tractors to the railway station. At the station, the trailers are moved onto railway flat cars and the transport tractors, which stay behind, are then disconnected. At destination, tractors again haul the trailers to the warehouses of the consignee.

Sea train: This is another innovation in the multimodal transport system. It comprises a seagoing ship equipped for carrying a train of railroad cars so that geographically separated rail systems can be con-nected by the use of an ocean carrier.

Roll-on/Roll-off: This mode combines different means of transpor-tation (sea and road), and is used most often with new automobiles, which are shipped by sea and them simply driven off the vessel to the importer’s warehouse.

31SCMPr July 2013 31

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32 SCMPr July 2013

of developing this segment of logistics and regulating the MTOs.

Intermodal/Multimodal transport operations need to be regulated by a single regulator, or else with a nodal regulator, with an objective of controlled devel-opment of the sector, driving growth while mitigating possible risks. Generally, controls may be placed on licensing, pricing, contracting and service standards. For the growth of international intermodal transport, necessary changes are required in the customs proce-dures and export-import procedures among others. An exporter needs to fill in 15 forms for a permit for export! Probably, this is to increase employment! For domestic transport, changes in Cabotage laws, octroi levies (The LBT is an interesting development), roll

out of GST, privatization of railways, including routes, are the need of the hour.

According to Mr. Anand Sheth, Immediate past president of AMTOI, “The procedural differences in different customs stations in India are also a chal-lenge. So is the issue of laws and public notices being issued without consultation with the trade, adding up to the woes of the operators. The Indian operators also do not have a level-playing field vis-à-vis their counterparts in Europe and the US, in many areas like taxation, etc. and this makes Indian companies more expensive.” Many operators believe that this Act favors the shippers more than the transporters and places more liabilities on the transporters. Fur-ther the MTO license needs to be renewed every year instead of a single lifetime license as in the case of private rail operators.

Infrastructure development: The growth in infra-structure lags behind the growth in container trade. Container traffic in India is growing at an average

rate of 10 per cent, while big infrastructure projects like the dedicated freight corridors, conceptualized in the mid of last decade, are still under development! Intermodal/Multimodal transport builds on the op-erational efficiencies of the country’s transport sys-tem. Without adequate infrastructure, the incremen-tal benefits of intermodal transport will be negligible. According to a study done by IIM Kolkata, a truck going from Delhi to Bangalore averaged only 21 kil-ometers per hour and had to stop up to 38 times in the entire journey either to pay toll tax or Octroi or for document verification. Necessary infrastructure development to provide for compatibility between modes, less friction costs, low dwell times, less pilfer-age and increase in containerization is basic to growth

of intermodal transport. Investment in technology:

taking up from the IIM study, a simple toll collection using near field communication can save the trucker time and speed up the journey. Similarly, it is possible to extend the e-freight initiative of the air cargo indus-try, to the inland trade too. It should be possible to pay oc-tori and other taxes online by the consignor or consignee. An Intermodal/Multimodal opera-tor enters into a single contract with the shipper, but multiple contracts with transporters, customs agents, ports / airports,

railways, warehouse operators and other related enti-ties. The voluminous documentation requirements and need to coordinate with a number of parties cre-ates a need for appropriate information technology support. Additionally, the transport and warehousing technology must itself be up-to-date to facilitate ac-curate tracking of shipments and reduce logistics cost and time.

The unfinished agendaThe potential for inter-modal transport is enormous. The need of the hour is to create a nodal agency that will oversee the development of the sector. The 12th five year plan by the government promises UD on Trillion investments in infrastructure – an amount equal to more than half our GDP! We need the politi-cal will and the ability to attract FDI in these projects. But the cumbersome land acquisition process will de-ter even the most diehard India fan. Time to look at our processes if we are to attract investments.

Container traffic in India is growing at an average rate of 1o%, while big infrastructure projects like the dedicated freight corridors, conceptualized in the mid of last decade, are still under development! Intermodal/ Multimodal transport builds on the operational efficiencies of the country’s transport system.

For More Details, Contact:Mohit Budhija+91-9999689225mohit.budhija@reedmanch.com

12-13-14 SEPTEMBER 2013BOMBAY EXHIBITION CENTREMUMBAI, MAHARASHTRA

Bringing cold chain buyers & sellers togetherCold Logistics

Refrigeration

Storage & Distribution

Cold Storages

Temperature Controlling

www.IndiaColdChainShow.com

Organised ByLanyard PartnerPlatinum Partner Supported ByFoundation Partner

08 09 10 July 2014Pragati Maidan, New Delhi

Media Partner

For More Details, Contact:Mohit Budhija+91-9999689225mohit.budhija@reedmanch.com

12-13-14 SEPTEMBER 2013BOMBAY EXHIBITION CENTREMUMBAI, MAHARASHTRA

Bringing cold chain buyers & sellers togetherCold Logistics

Refrigeration

Storage & Distribution

Cold Storages

Temperature Controlling

www.IndiaColdChainShow.com

Organised ByLanyard PartnerPlatinum Partner Supported ByFoundation Partner

08 09 10 July 2014Pragati Maidan, New Delhi

Media Partner

Dighi Port is being developed by Balaji Infra Projects Ltd (BIPL) under a 50 year “Build, Own, Operate, Share, Transfer (BOOST)” Concession Agreement

signed with the Maharashtra Maritime Board, the Govern-ment of Maharashtra, to develop, operate, finance and maintain the Port.

Dighi Port, the first and the largest Greenfield port of Ma-harashtra, is being developed as a multipurpose, multi-car-go, all-weather port with deep draught, direct berthing facili-ties and modern cargo handling equipments with adequate stack yards and warehousing facilities, back up areas with an ample land bank of approximately 1500 acres.

Strategic LocationThe port is located on the banks of the Rajpuri Creek, in the Raigad District of Maharashtra. The unique feature of the port is its ideal location within a natural harbour and exclu-sive channel offering a depth of 12.5m, making it one of the deepest ports in Maharashtra.

Meticulous planning from the onset with cargo handling terminals on either banks of the creek, gives the port the unique advantage of handling all types of cargo in all weather conditions.

The port is located at a distance of 42 nautical miles (NM) from Mumbai Port and 170kms south of Mumbai by road. The port is connected by the State Highways to the National Highway 17, which is 45kms from the port. The nearest Kon-kan Railway Rail Head Indapur - Mangaon is 47kms from the port. The PortDighi Port is being developed on the two banks of the Rajpuri Creek l The South Bank (Dighi Side)l The North Bank (Agardanda Side)

Under Phase 1 development, the South Bank offers 2 multi-purpose berths measuring 650m in length and a depth of 12.5m.

Both berths on the South Bank berths are operational and are equipped with multi-purpose Gottwald Mobile

Harbour Cranes for the efficient handling of cargo. The port plans to handle bulk, break-bulk cargo such as agri products, bauxite, cement, clinker, coal, fertilizer, steel etc. and liquid cargo at the South Bank. The port has han-dled over approximately 1.25 million MTs of cargo in the last year.

Under Phase 1 development, the North Bank will offer 3 multi-purpose berths having a total quay length of 1100m and an alongside depth of 12.5m. Piling work for the berths is already in progress and the first berth is likely to be ready by last quarter of 2012. The remaining 2 berths will be ready by the third quarter of calendar year 2013. The North Bank will primarily be used for handling containers and other clean cargo.

Total installed capacity in Phase 1 will be 30 million tonnes. In Phase 2, the port will offer a depth of 16m and will have a capacity to handle 60 million MTs of cargo. On completion of Phase 3, Dighi Port will offer a depth of 20m and will have a capacity to handle 90 million MTs of cargo.

ConneCTiviTyRoadBoth banks of the port are connected to the National High-way NH 17 via 5 State Highways. The North Bank is connect-ed to National Highway via State Highways (SH) 92, 96 and 90 and the South Bank is connected to National Highway via SH 97 and 98.

Joint inspection and survey of the State Highways (SH) has been completed by PWD and Dighi Port Ltd. Land for 2 laning of roads with paved shoulder is available across all State Highways effectively giving a 4 lane facility service to the port.

NHAI commissioned study through Feedback Ventures to upgrade SH 97 & SH 92 to 4 lane and 6 lane. Further, work on the 4 laning of NH 17 is currently in progress.

All development works as per previous schedule has been completed and permission has been received from PWD to develop the State Highway on BOT basis.

Dighi: The Port of ChoiCe

Rail Dighi Port Limited has received an approval from Ministry of Railways (MoR) to develop the railway siding at the port under the ‘Private Rail Siding (PRS)’ model. The port will be connected to the nearest Konkan Railway Head Indapur – Mangaon, which is at a distance of 47kms.

Special economic Zone (SeZ) and Free Trade Warehousing Zone (FTWZ) - DighiDighi Port is designed to provide multiple facilities unlike other traditional ports. These facilities will be the value add-ed components such as the Special Economic Zone (SEZ) inclusive of a Free Trade Warehousing Zone (FTWZ) which shall further enhance the potentiality of the development for the industrial community along with a rail and road network.

Delhi Mumbai industrial Corridor (DMiC) & Dedicated Freight Corridor (DFC)Dighi port is the final node of the DMIC and is being devel-oped as a multi-modal logistic hub. Setting up of an indus-trial city namely ‘Dighi Industrial City’ near the port under the DMIC is in the anvil.

In the state of Maharashtra, the DMIC will have indus-trial parks, i.e. manufacturing zones for food processing, light manufacturing and heavy manufacturing. It will also have multimodal and logistics supports as well as distribu-tion networks. Investment proposed in Dighi port as part of DMIC is expected to be around US$ 2 billion and it will fa-cilitate investment of US $ 6 billion in creation of industrial and multimodal logistics hubs in the state of Maharashtra.

Dighi Port will cater to a large number of Industrial Clus-ters such as, Dighi Industrial area, Vile Bhagad, Pune Nashik, Igatpuri, Sinar, Roha and Chiplun industrial region. Industrial clusters developed under the DMIC in close proximity to Dighi Port are Vile Bhagad (Steel, Power & Project Equip-ment), Pune–Chakan (Automobiles, Agriculture, Chemicals and Ancillaries) and Nashik–Sinnar (Power, Agriculture and Ancillaries).

It has also been proposed to include Dighi Port as a part of the DFC, a Special Purpose Vehicle set up under the admin-istrative control of the Ministry of Railways.

Dighi Port Area – national investment and Manufacturing Zone (niMZ)The Dighi Port Area has been identified as a one of the 7 Mega National Investment and Manufacturing Zones un-der Government of India’s new Manufacturing Policy. A to-tal area of 230sq.km allocated for the development of the Manufacturing Zone in Dighi Port Area.

The NIMZ’s will entail an investment of US Dollars 5 billion and will include support infrastructure and services like Mul-ti-modal Logistic Hubs, Container Freight Stations (CFS), In-land Container Depots (ICDs), Warehousing, Cold Storages, Cargo Distribution etc.

Dighi on CompletionThe Port on completion will be an integrated infrastruc-ture initiative with few parallels. It has the potential to become the centre of marine business initiative, thanks to its world-class infrastructure and end-to-end logistics solutions.

Dighi Port has a total waterfront of 5kms with a capac-ity to build up to 18 berths to handle up to 90 million tonnes of cargo. The port has plans to increase the existing depth phase wise up to 20m.

Dighi – The Port of ChoiceWith the gateway ports in Mumbai currently working at full capacity and even at stretched capacity, Dighi Port with its strategic location and well planned infrastructure is geared and ready to handle the cargo generating from North, West and Central India in a hassle free and economically viable manner. Dighi Port offers entire value chain under one umbrella.

36 SCMPr July 2013

How many matches that we need to organize for a 7 round knock-out tournament like Wimbledon? Sometime back I

asked this question in our training program and the participants started working by add-ing matches in each round till final. Actually, answer can found in seconds. In knock out tournament, a player can win many times but lose only once and in the end there is only one undefeated. So answer is, number of players minus one.

Friends, today most of us face the same challenge, i.e. provide customer what he wants and do everything to deliver in time. Despite each one of us giving more than 100%, why do we observe that only few succeed.

Over the years, companies adopting in-novative approach to enter market, and then supporting it with innovative supply chain, have gained competitive advantage

Innovation in supply chain may strike at the design level, e.g. in deciding framework of supply chain, or at the process level e.g. in deciding implementation of parts of the designed supply chain. Technology evolu-tion often combined with innovation offers opportunities for supply chain innovation at both design and implementation levels. We also observe that supply chains are changing radically as a result of technology adoption, perhaps not fast enough in some countries, where over-regulation and an unsupportive infrastructure act as deterrent.

Anil S. SAtheSenior General Manager, Supply Chain (ProductsBusiness), Blue Star.

Innovations in Supply Chain Competitive Strategy for Future

The surest path to competitive advantage is through innovation and faster we move on this more certain better for our business says Anil Sathe.

n KnOWleDGe n StRAteGY n BeSt PRACtiCe n tRenDS n HR

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37SCMPr July 201337

Today, innovation is all around us. More companies are outsourcing parts of their supply chains, which being an innovative in itself prompts further innovation by 1) spreading best practices more quickly through centers of excellence, and; 2) ena-bling manufacturers to focus on core activ-ities-creating and marketing products that delight customers.

What do we anticipate in future? Well, it has always been rather difficult to predict; but we can foresee some developments that will drive innovation.n The sustained movement of people into

urban areas, with simultaneous markets expansion in rural areas can radically al-ter the depth /width of the supply chain and its complexities, warranting changes in the way we collate information and ex-ecute orders.

n The rising role of the cloud and digitiza-tion of products that till recently required physical supply chains.

n The sustained growth and influence of mobile phones on all facets of our lives.

n Social media’s influence.n Huge information base / data available

with customers. n Increasing need to provide end-of-life so-

lutions to products that we put in market .

Thus, I see a lot of potential in in terms of innovative new products / services and the supply chain optimizations that will be needed to get them to market ahead of the competition.

Successful innovations require hard work and creative thinking. To move busi-ness along the road to supply chain im-provement, the change initiator / agent

can start a journey with some simple ideas illustrated below:

Variation: Apply “Self-serve Op-erations” concept to your business and think of ‘What are you doing for your customers which otherwise

they would have done for themselves.. Also, consider whether there are things that cus-tomers could be inclined to do, so that cus-tomers opts for your service / product which is on offering for them. All the web-check in processes as well as electronic fund transfers are examples of this.

Reversal: Outline a current process, then reverse it. Vendor-managed in-ventory is a classic example. It was

once a retailer’s responsibility to manage in-ventory; now vendors do it.

“What if?” Ask questions like what if you need to serve my cus-tomer differently? Or what if you

did not have your current infrastructure? The answers to these questions might sur-prise you and lead to some of your best innovations. Sharing of infrastructure within competitors has already begun in few sectors

Starting over: If you were rede-signing you product or service, what changes would you make?

Would those changes affect your person-ally. Would they alter your competition? Would they change your customer base, locations, or resources?

Halve your resources: Allocation decisions define priorities. Budget-ing is not an exact science, however,

and this exercise defines needs versus “nice-to-haves.” This process will identify pre-conceived notions, erroneous assumptions, blind spots, and protectionism.

As a summary, supply chains have dynamic natures, multiple moving parts, and situational variables; they are ripe for innovation.

Innovation may take place at the design level, in the kind of supply chain to be adopted, or at the process level deciding how parts of the designed supply chain shall be implemented.

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Feedback /suggestions /comments are most welcome

on mail ID feedback_scmexcellence@yahoo.com

38 SCMPr July 2013

AS /RS - Intelligent Warehousing System

Automated storage and retrieval systems (AS/RS) are inventory management systems widely used in manufacturing facilities, distribution centers, and warehouses throughout the world. AS/RS allow intensive storage of materials and improves the supply chain performance, assuring more available volume for storage, lower labor costs and higher handling throughput of warehousing. Team SCM Pro takes a look behind the scenes to bring you the latest developments in Automated storage and retrieval systems.

38 SCMPr April 2013

Automated Storage and Re-trieval Systems are becom-ing increasingly important in

modern warehousing environment. Especially land costs are driving up warehousing costs. Warehousing needs two major inputs–land (for storage space) and labor. Both are scarce resources. If we move the ware-house to a remote location to reduce land cost, we run up against scarce

feature as/rs

labor. One way of optimizing both labor and land is to go in for an au-tomated storage and retrieval system.

Automated Storage and Retrieval Systems have many advantages. They provide warehouses with in-creased inventory control and track-ing, including greater flexibility to accommodate changing storage re-quirements. These Automated Stor-age and Retrieval Systems comprise

of modular subsystems that can be easily replaced to minimize down-time and extend the service life of the overall system. They also reduce labor costs, lowering necessary work-force requirements, increasing work-place safety, and removing personnel from difficult working conditions (such as cold food storage environ-ments). Perhaps most significantly, however, Automated Storage and

feature as/rs

39SCMPr July 2013 39

for maintenance and updating of various subsystems.

These capital expenses can tempt some business owners to cut finan-cial corners, buying “bargain” sys-tems that are ill-equipped for exten-sive, long-term use. In many cases, such decisions can end up costing far more in the long run. When dis-ruptions occur, the impact can be devastating to small and mid-sized businesses. The toll of interrupted

AS/RS service extends from the measurable (lost production and shipping revenue, increased labor costs for repair) to the intangible (diminished workforce confidence in the company’s operations, down-graded client confidence). As a re-sult, businesses are urged to exam-ine the long-term implications of their choices when they incorporate an automated storage and retrieval system into their operations.

Flaws in Present System n Less accuracy n Time consuming n Labor cost n Large paperwork n Wasted of storage space n Dependent on warehouse

personal

Retrieval Systems can produce major savings in inventory storage costs, as vastly improved warehouse space uti-lization–both vertically and horizon-tally–creating greater storage density.

Conditions That Are Favorable To AS/RSThe environments in which AS/RS can offer the greatest benefit are cold storage, frozen foods, Retail, Auto-motive, Electrical & Electronics, and Clothing, and those in which very strict item tracking is necessary.

Installation ConcernsAs they involve significant invest-ment, AS/RS requires a rigoros design phase where the system capacity and throughput are de-termined. Design parameters like rack configuration - single or doubl depth and the number of aisles and cranes and the lo-cation of the input/output point need to be determined. Once im-plemented, control decisions like storage policies, batching, dwell point and sequencing need to be determined. The cost of purchas-ing and implementing an effec-tive automated storage/retrieval system is significant, encompass-ing everything from pre-purchase analysis of supply chain and in-ventory management needs to the actual purchase price of AS/RS equipment and software. In addition, experts in the use and maintenance of AS/RS systems note that companies often expe-rience significant ongoing costs

Path of Crane

PiCk/DroP station

Crane

aisles

Canadian Journal on Artificial Intelligence, Machine Learning and Pattern Recognition Vol. 3 No. 2, March 2012.

Top View of AS/RS with Aisle Capitive Crane

feature as/rs

40 SCMPr July 2013

AS/RS Design IssuesThe AS/RS design needs to consider a range of issues such as system configuration, travel time estima-tion, storage assignment, dwell-point location, and request sequenc-ing. We look at some of these issues more closely.

Dwell point positioningThe dwell point in an AS/RS is the position where the S/R ma-chine stays when the system is idle. The dwell point should be carefully selected so that the ex-pected travel time to the position of the first transaction after the idle period is minimized. An ef-fective dwell point strategy may reduce the response times of the AS/RS, since the S/R machine typically performs a sequence of operations following an idle period. Hence, if the first op-eration is advanced, then all operations within the sequence are completed earlier. There are three common dwell point poli-cies for AS/RS.

Return to middle (dwell point) policy: under this policy, the Hori-zontal Platform machine returns to middle of tier upon finishing a job

and the Vertical Platform returns to middle of handover station upon finishing a job.

Return to start (dwell point) policy: the Vertical Platform returns to the input/output station and the Horizontal Platform returns to the handover station upon fin-ishing a job.

Stay dwell point policy: the platforms remain where they are after completing a storage and re-trieval operation, (The platforms will stay where they are at the end of each operation until they are required for another operation later).

Expected Travel TimeDevelopment of expected travel-time (i.e., average travel time) models for S/R machines is an-other area of research. After each operation, the crane comes to rest at a specified point in the AS/RS. The throughput of the system depends on two factors–the handling time and the travel time. The handling time is the time taken by the crane to pick up or deposit an item into a stor-age slot. This is a constant for an AS/RS. Travel time, on the other hand is the time taken by the crane to move from it dwell point to the pick up or drop location. Minimizing travel time improves throughput. The travel time de-

pends on two factors: the assign-ment of the storage locations and the sequencing decision.

Request sequencingRequest sequencing -planning the order in which storage and retriev-al requests are performed is critical in AS/RS performance. It is gener-ally assumed that storage decisions are made on a first come, first served rule while the retrieval deci-sions can be done randomly. Some of the popular sequencing poli-cies are block sequencing–where the storage and retrieval requests are separated into blocks. Then a single block of storage and a block of retrieval are sequenced with-out taking into account the loca-tions that become available dur-ing execution of the S/R for that block. The other policy is dynamic sequencing–where the list is up-dated every time a new request is added. The third policy is general-ized sequencing where a complete block of requests is sequenced but only the first command cycle is ex-ecuted. Executing any of these se-quencing requires two parameters. The first parameter is the “sequenc-ing horizon” or the length of the next block to sequence. The second parameter is the “frozen horizon” or the number of command cycles that the crane will execute before re-sequencing.

Howard Zollinger, the founder and president of Zollinger Associates lists ten conditions where an AS/RS installation may be most successfully installed:n Two or three shiftsn Critical inventory levelsn Production flexibility is essentialn Joint storage of parts and toolsn High land cost areasn No limit on building heightn Skilled technicians are on-staff or availablen High value parts or assemblies are usedn The number of stock keeping units (SKUs) in

not largen Tight existing site space in which an AS/RS

installation may eliminate the need to move

Elements of AS/RS Racks are typically metal structures with locations that can accommo-date loads (e.g., pallets) that need to be stored.Cranes are the fully automated storage and retrieval machines that can autonomously move, pick up and drop off loads.Aisles are formed by the empty spaces between the racks, where the cranes can move.An input/output point (I/O-point) is a location where retrieved loads are dropped off, and where incoming loads are picked up for storage.Pick positions are places where people are working to remove indi-vidual items from a retrieved load before the load is sent back into the system.

feature as/rs

41SCMPr July 2013

Lesson for Indian CompaniesThe lesson to Indian companies should be that automation has, and will, continue to be a signifi-cant part of warehousing. Com-panies, worldwide, have achieved significant operational efficiencies by adopting the right technolo-gies. The economic liberalization In India has heralded a phase of unprecedented growth and pos-sibilities in manufacturing. The one area that can no longer be ignored by Indian companies is warehousing, when moderniza-tion plans are drawn up.

The proper way to approach automation in warehousing is not by asking, “Is automation right for me”? Rather the questions should be “What is the correct level of automation”? “How is it justi-fied”?, and “How will automation be phased in”? The introduction of automation in warehousing should be a foregone conclusion. The approach and technology best suited for an individual company will depend on their requirements. This will require an appropriate level of planning for warehouse automation.

The correct approach to plan for warehouse automation is to devel-op a Warehouse Strategic Master Plan (WSMP). The WSMP pro-

vides the future direction for the warehouse over a five or ten-year period. It addresses the facilities, staffing, equipment, inventory, and throughout required to meet the corporate business plan. The role of warehouse automation is a signifi-cant portion of a WSMP. The auto-mation plan should be regarded as one component of a broader view and not a separate end unto itself.

Developing a WSMP is a me-thodical, five-step process1 Conduct Operational Assess-ment: The first step is to under-stand the present status of ware-house operations. Data should be collected on the following:

Customer Service Layout Con-trol Systems Equipment Methods Inventory Accuracy Equipment Utilization Space Utilization Build-ing Facilities Labour Productivity Housekeeping and Safety Ware-house strengths and weaknesses should be identified.

2. Define Future Requirements: Once the present operation has been analyzed, future warehouse requirements should be deter-mined. This can be accomplished by examining a business forecast. A five-year projection is needed to answer the following questions:

n How will order volumes change?n Will inventory levels change?n Will inventory turn rates change?n What new types of material

will be present?

3. Develop Alternatives: Once present warehouse weaknesses and future requirements are known, various approaches to warehouse automation can now be considered and budget investment and opera-tion costs can be developed. Po-tential savings in space and labour should be determined.

4. Evaluate Alternatives: For each alternative, an economic analysis should be performed. In addition, a qualitative analysis should be performed to consider issues, such as safety and ergo-nomics, that cannot be expressed in economic terms. The method of warehouse automation that is best suited to the particular op-eration and that is most justifiable can then be selected.

5. Document the WSMP: A written description of the WSMP. including alternative analysis, should be developed. The docu-ment should cover facility layouts, specify staffing levels, and detail equipment and system descrip-tions. Once written, it can be pre-sented to senior management to obtain funding and support.

Using the WSMP approach provides a systematic method of properly confronting warehouse automation. The process provides clear direction as to the degree and type of automation to implement for any specific application. As the pace of warehousing quickens and customers demand better service, those who take a systems approach to warehousing and warehousing automation will be the ones best prepared to meet the challenges of the future.

Advantagesn High density of storage by utilizing the cubic space available and

with the help of narrow aisles.n Tighter inventory control through computerization resulting in

higher inventory accuracy.nReduced access in the aisles, improving the security of the material.nIncreased space utilization via random storage versus dedicated

space allocated to different parts.nAbility to tie the storage system to the manufacturing and the dis-

tribution systems via computer control, permitting a higher level of system performance.

nBetter utilization of storage and retrieval equipment.nReduction in manpower.nImproved labor productivity

Technology that Delivers: AS/RS at INTAS Pharmaceuticals Ltd.The ClientINTAS Pharmaceutical Ltd. is a leading vertically integrated Indian Pharmaceuti-cal company committed on delivering af-fordable and innovative pharmaceutical solutions. The company headquartered at Ahmedabad has an extensive presence in more than 60 countries worldwide with turnover of USD 650mn.

The RequirementTo cater to the ever increasing demand for its products, INTAS Pharma decided to set up one of the largest pharmaceuticals plant at Special Economic Zone (SEZ) in Ahmedabad. Since the plan was to set up state of art facility along with a warehouse that provides dense storage, high through-put and seamless material flow, M/s Intas decided to call the AS/RS technology ex-perts M/s Godrej Efacec.

While working meticulously with the client, to meet the storage requirements comfortably, two separate warehouses for Storage Capacity of 3240 & 3520 pal-lets locations for FG/SPM and RM/PPM respectively were planned. The Input to the warehouse was 24x7 and the Output was in one shift of 8 hrs. Throughput re-quirement of 80 pallets/hour was derived from detailed input/output calculations for timely fulfillment of orders during peak dispatches.

Godrej Efacec Scope of Supply for Intas Projectt Solution Conceptualization & Designt 2 nos. dedicated Stacker Crane

(28 mtrs tall)t 6760 Storage locations double

deep systemt Mechanical & Electrical Aisle

Equipmentt PLC Control Systemt Warehouse Management Systemt Integration with SAPt Project Managementt Training & Manuals

(The article has been provided by Mr. Shakti Choube who Heads Sales & Marketing function at M/s Godrej Efacec Automation & Robotics Ltd.)

casestudy as/rs

42 SCMPr July 2013

AS / RS File Photo

“Godrej Efacec AS/RS provided the much needed Dense Storage and High Throughput. The system meets all our requirements.”

– A D Bhimani (Sr. GM & Plant Head during

handover of system)

Key Benefits of the Solutionl Dense Storage allowing more

space for production. lIncreased Efficiency due to high

speed operations.lConsistent High system uptimelReal time & Accurate Inventory

ControllMIS ReportslEase of operations through inte-

gration with ERPlManpower savings

The SolutionSince INTAS has been allotted land in SEZ, actual foot print available for development was less. INTAS has planned to build a mega manufacturing facility and thus faced major space constraints for warehouse to support the desired inventory. Secondly, throughput demand on warehouse was significantly high & integration with ERP was a must to ensure faster & flawless operation. After a thorough study and evaluating multiple warehousing solutions, it was obvious that only Automated Storage & Retrieval System (AS/RS) could deliver the desired results for INTAS. Hence, INTAS opted for the latest & best warehousing technology viz. AS/RS.

Two AS/RS warehouses of 60m (L) x 7m (W) x 28m (H) were planned & built

which accommodated 6760 pallet loca-tions and delivered phenomenally high throughput of 80 pallets/hour with 2 dedi-cated Automated Stacker Cranes.

Selection of Right PartnerINTAS selected Godrej Efacec Automation & Robotics Ltd. over major international & local competition for the two AS/RS installations viz. FG/SPM & RM/PPMAuto Warehouse.

Godrej Efacec an Indo-European joint venture is the pioneer and leading supplier of AS/RS in India. The company has success-fully designed, supplied, installed & com-missioned AS/RS for many Pharmaceutical companies and thereby well versed with the Good Automated Manufacturing Practice (GAMP) and offers customized software and control systems that are designed for adher-ence to US FDA validation norms which are of prime significance for Pharmaceutical companies. Godrej Efacec Warehouse Man-agement Software (WMS) works seamlessly upwards with ERP and downwards with Bar Code and material flow system.

43SCMPr July 2013

As Asian economies rebound from the Global Financial crisis, most are in a far stronger position than pre crisis, their GDP ‘s are up,

employment levels are high, most countries are posting positive growth factors. MNC’s are ramping up production to meet higher demands, disposable incomes rise and life style changes are taking place, not least eat-ing habits.

The days of daily shopping at the wet market, is now being replaced by regular vis-its to the cold store, where sales of frozen foods are rapidly growing,

To service this growing demand for fro-zen food, a new industry of cold store op-erators is growing throughout Asia. These operators are moving away from the smaller custom built units, and are building, multi user units with goods stored on pallets with a variety of cold store cells to accommodate a wide range of frozen goods, in varying temperatures up to -30C

The cost of running a cold store can be up to 10 times the cost of an ambient warehouse, therefore careful planning is necessary to obtain the optimal return on this investment.

With the growth of the Cold Supply Chain, a number of European and American cold store operators are moving into Asia, bringing with them the latest technology.

Invariably these systems are designed to max out use of the footprint and available height.

This means moving away from the more conventional racking systems such as Dou-ble Deep and Drive in racks, to systems, which will provide increased pallet locations, as well as offering the facility for individual case picking is necessary.

The key to designing any new Cold Store is to plan the storage system design at the Greenfield Site stage, where the dimensions of Cold Store suit the system to be used. It is still surprising that we see designs on the drawing board, which do not consider criti-cal dimensions of the racking system.

European operators have realized that size matters, for example a 15,000 pallet cold store only requires marginally more electric-ity to run than a 30,000 pallet store, at the same temperature, provide both rooms have the same number of doors.

The positioning of doors and access to the cold room with airlocks can have a sig-nificant bearing on the power consumed, for high activity cold stores the use of pal-let conveyors delivering pallets in and out of the cold store, with operatives using heated cab trucks can reduce cold air loss and sub-stantially increase operational efficiency. The use of smaller personnel doors, in the larger stores have now become regular feature.

Investment in high quality fast reaction

Brian G MilesBrian Miles is the Regional Managing Director of Schaefer Systems International Pte Ltd.

Getting the Best Value from Your Cold Store

The key to designing any new Cold Store is to plan the storage system design at the Greenfield Site stage, says Brian Miles.

n KnOWleDGe n sTraTeGY n BesT PraCTiCe n TrenDs n human resource

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44 SCMPr July 2013 44

doors, which open and close automatically can reduce air movement into the coldroom, and ice forming

By far the most popular storage option for the Modern Cold Store is Mobile pallet rack-ing, where banks of Selective Pallet Racking are mounted on electrically driven mobile bases, set on tracks inlaid to the concrete surface. In Europe over 80 per cent of cold stores now, use Mobile racking system.

In Asia, customers have also been fast to appreciate the benefits of these systems, with one supplier having built over 50 installa-tions in Asia over the last 8 years

With the use of adjustable pallet racking, the end user has 100 per cent selectivity of every pallet, with lower levels available for case picking. Albeit at the expense of access aisles, as only one aisle is available per block, which could consist of as many as 5-8 dou-ble entry racks. This requires some careful assessment of pallet movements and case-picking requirements per hour / day, as only one truck can practically work in one aisle.

Previously considered operationally too slow, new hand held controls with RF (Ra-dio Frequency) operation on the materials handling equipment, allow the racks to be moved immediately the reach truck exits the aisle, with an average time of less than 1 minute to reopen the next aisle, double pallet cycles of 20-25 pallet movements per hour is achievable.

The use of Mobile pallet Racking, which was once considered one the most expensive options, has proved to be extremely cost ef-fective, particularly so for a new Greenfield sites, where the cold room can be designed to suit the optimum operational features of Mobile Racking.

All the cost of mobile racking is in the first 2m therefore Cold Store Consultants should be encouraged to max out the height to suit their Material Handling equipment, typically 12m+ for a reach truck operation or 16+m for Very Narrow Aisle. Optimum rack lengths are between 30-40m, too short rack runs will require more movement of the racks.

Mobile racks are now offered with a number of safety features protecting pedes-trian and fork lift access, they can be fitted with automatic zone picking features which

will subdivide the operational aisle into 2 or 3 smaller aisles for case picking. Night park-ing is another feature when the cold store is non- operational, it allows the aisle to be divided equally between all aisles to permit airflow when racks are stationary.

Another important feature of Mobile racks is that the aisle lighting can be fitted to the rack, which only lights when the aisle is opened, this can reduce the use of power, and reduce energy and heat created. Using high-energy 250-watt bulbs over conven-tional 400-watt ceiling fittings, which can require another 200 watts to reduce the heat; it is possible to reduce the cost of lighting in the cold store by up to 80 per cent.

Whilst flow racks remain a popular choice for operations which handle high numbers of homogenous product but with limited Sku’s (line items) requiring first in first out (FIFO), their cost per pallet location can be prohibitive. Channel Storage using an elec-trically operated satellite, which operates on a rail set below the pallet is an excellent economical solution. The satellite, which is operated by the Material Handling driver, can automatically store or retrieve to both first in last out and first in first out designs. It has a shuffle mode which will again auto-matically shuffle pallets from the on load to the off load position, it will can undertake an inventory count of the number of pallets stored per channel.

Though most system uses rechargeable batteries, Schaefer have introduced a system, which works from a direct rack power sup-ply, which suits high activity stores working 24/7. Batteries can lose about 25 per cent of their power capacity when working at ex-treme temperatures, so this alternative system is now very popular in cold stores particularly stores designed with Automated Storage and Retrieval System (AS/RS) systems.

Singapore currently has the highest cold room at 30+m high in South East Asia, with an aisle changing AS/RS; similar systems have been installed in Vietnam and China although not to the same height. These sys-tems provide full-automated storage, which can operate 24 hour a day, they can be pro-vided with picking tunnels to allow, opera-tives to work at the lower levels case picking to pallets or belt conveyors.

Singapore currently has the highest cold room at 30+m high in South East Asia, with an aisle changing AS/RS; similar systems have been installed in Vietnam and China although not to the same height.

Frontiers in Supply Chain Education

Any organizations require professional Supply Chain Manager, who can effectively understand and manage multi-layered, multi modal, integrated global operations

both, Internally and their supply chain partners. SCMPro evaluates current SCM education Options in India.

46 SCMPr July 2013

n KNOWLEDGE n STRATEGY n BEST PRACTICE n TRENDS n human resource

Education spEcial

47SCMPr July 2013 47

In an article in Wall Street Journal on June 5th, The Hot New M.B.A.: Supply-Chain Manage-ment” Teresa McCarthy, director of Bryant’s global supply chain management program says

“Employers don’t want cobbled-together courses; they want a real, content-laden supply-chain program.” Truly said.

For long, India Inc. has been looking at areas of cost reduction along traditional lines – in purchases, consumption and utilities. However, one of the major contributors of costs and inefficiencies for India Inc. is the supply chain. A McKinsey report states that “the waste caused by poor logistics will be around 5% of the GDP by 2020. If tackled in an integrated and coordinated manner, this can be reduced by half and India’s transport fuel requirement reduced by 15 to 20 per cent.” One of the reasons for this state of affairs is the current education ecosystem in Supply Chain. The increasing irrelevance of the traditional functional perspective used in business education and the changing economic forces have mandated that industry abandon the vertical, functional divi-sion of the organization which follows the traditional procurement, manufacturing, and physical distribu-tion operations in favor of a more horizontal, cross-functional structure that emphasizes process manage-ment. Firms are redefining logistics to encompass the integration of all these activities to achieve coordinat-ed planning, implementation, and control of goods, services, and information flows throughout the firm.

Supply Chain Management can be re-defined as “Extending logistical integration to include manage-ment of logistics networks both within and across company boundaries to generate cost savings and/or better customer service over the total chain of organi-zations involved in supply, production, and delivery of final goods for consumption is termed supply chain management (SCM)” In a survey done by Clinton et al. report strong agreement (mean of 4.4 on a 1 to 5 scale) with the following statement: “My firm has in-creased its organizational commitment to a more com-

prehensive integrated supply chain during the past two years.” In a related question, more than 34 percent of the sample firms reported that they now have an ex-ecutive position with the words “supply chain” in the title. Slowly, but surely, supply chain management is attracting the attention it needs. And specializations in SCM are now catching up.

Supply chain organizations require professionals who can effectively understand and manage multi-lay-ered, multi modal, integrated global operations both

Frontiers in Supply Chain Education

SYmBIOSIS INSTITuTE Of OPERATIONS mANAGEmENT Program Objective: To Train the Engineers to become the Techno- managers by giving them a Industry and global exposure.Subjects : Operations Management, Supply Chain Management, Project Management as core subjects Program highlights: Operations as Core curriculum:Faculty with rich Industry and Academic experience, Program struc-ture has got consistent national awards, Regular update of curriculum to align with the practice & Student exchange programs.Interactions with Industries, Global b-schools and Universities.Facilitiating the Global certifications from APICS, ISM. Having good placement record.Holistic development of the Individual by imparting the soft skills and personality development programs. Eligiblity: Only Engineers (B.E/BTech) in any field - having interest in Operations area.For criteria: Pls check for the updates in www.siom.in Duration: 4 Semester / 2 yearsCourse start date: Normally 1st week of June How to apply: Through Symbiosis National Aptitude Test (SNAP) only. (2nd week of Dec)Advt for SNAP can be expected in Sept /October for the same. Pls refer www.siom.in Contact: Tel No: (0253) 2391750 / 2376108Fax: (0253) 2379959, Email: admissions@siom.in

Education spEcial

48 SCMPr July 2013

PGDm – SPECIALIzATION IN LOGISTICS AND SuPPLY ChAIN mANAGEmENT fROm DSImS

Program Objective: This Operations and Supply Chain Management program is designed to introduce the key concepts needed to enable a business to organize and run an efficient Supply Chain.

The program looks at contemporary issues in Operations and Supply Chain Management and creates a deep understanding of the issues involved. It equips the participants with a good understanding of the ground level situation and enables him to take decisions keeping in mind the global impact of the decisions.

Overall, the program would lead the participant to adopt an integrated approach and create a competitive advantage for the organization.Subjects:The PGDM is a two year program, organized around six trimesters, spread across the two years. To help bring all students to a common and level playing field, DSIMS offers a two week long Boot Camp that focuses on basics of Finance, Quantitative Tech-niques, Communication Skills, Use of office productivity tools like Excel, Word and Power Point.

Program HighlightsApart from an industry ready course, eminent faculty pool and a contemporary curriculum, the PGDM offers a few unique features that distinguishes it.

For the first time in the Indian management education, two unique features are offered by DSIMS – The once a week industry immersion where you are mentored by an industry expert and a MiM which equips you with a wider perspective than you would otherwise develop.l Industry Immersionl MiMl Rural Immersionl International Immersionl Seminars and Conclaves in each functional areaThese initiatives jointly offer you an advantage that no other course can offer. To know more about our initiatives, please keep browsing through our links above.

EligibilityTo be eligible for admission, you must meet the following requirements:l Have a Bachelor’s degree in any discipline from a recognized University with minimum 50% marks in final year/semester.l GMAT/CAT/CMAT/ATMA score *l Any other entrance exam recognized by AICTE.

DurationsTwo years full time

Course Start date16th August 2013How to applyApplications can be either purchased from the institute office or downloaded from www.dsims.org.in. Filled in applications should be sent to the institute.

BOX 3:

PGDM – Specialization in Logistics and Supply Chain Management from DSIMS

Program Objective: This Operations and Supply Chain Management program is designed to introduce the key concepts needed to enable a business to organize and run an efficient Supply Chain.

The program looks at contemporary issues in Operations and Supply Chain Management and creates a deep understanding of the issues involved. It equips the participants with a good understanding of the ground level situation and enables him to take decisions keeping in mind the global impact of the decisions.

Overall, the program would lead the participant to adopt an integrated approach and create a competitive advantage for the organization.

Subjects

The PGDM is a two year program, organized around six trimesters, spread across the two years. To help bring all students to a common and level playing field, DSIMS offers a two week long Boot Camp that focuses on basics of Finance, Quantitative Techniques, Communication Skills, Use of office productivity tools like Excel, Word and Power Point.

First Year SubjectsTrimester 1 Trimester 2 Trimester 3

Organizational Psychology Organization Behavior Human Resources ManagementStatistics Uncertainty, Data and Models Corporate StrategyFinancial Accounting Cost and Management Accounting Financial ManagementMacro Economics for Business Prices and Markets Business AnalyticsMarketing & Sales I Marketing & Sales II Geo-Politics and BusinessTheory of Business Operations Management Strategic Operations

Income Tax Legal Environment of Business (Tax) IT in Business

Second Year SubjectsTrimester 4 Trimester 5 Trimester 6 Warehousing Transportation Business Forecasting and Demand Planning

International Logistics Supply Chain Management Enterprise Planning Systems

Process Management and BPR World Class Manufacturing Operations Strategy

Production Planning and Control Network Modelling Risk Management

Quality Management IT for Supply Chain Factory Physics and Process Simulation

Service Operations and Retailing Operations for Service Providers Sustainability and Green Supply Chain

Program Highlights

Apart from an industry ready course, eminent faculty pool and a contemporary curriculum, the PGDM offers a few unique features that distinguishes it.

For the first time in the Indian management education, two unique features are offered by DSIMS – The once a week

industry immersion where you are mentored by an industry expert and a MiM which equips you with a wider

perspective than you would otherwise develop.

BOX 3:

PGDM – Specialization in Logistics and Supply Chain Management from DSIMS

Program Objective: This Operations and Supply Chain Management program is designed to introduce the key concepts needed to enable a business to organize and run an efficient Supply Chain.

The program looks at contemporary issues in Operations and Supply Chain Management and creates a deep understanding of the issues involved. It equips the participants with a good understanding of the ground level situation and enables him to take decisions keeping in mind the global impact of the decisions.

Overall, the program would lead the participant to adopt an integrated approach and create a competitive advantage for the organization.

Subjects

The PGDM is a two year program, organized around six trimesters, spread across the two years. To help bring all students to a common and level playing field, DSIMS offers a two week long Boot Camp that focuses on basics of Finance, Quantitative Techniques, Communication Skills, Use of office productivity tools like Excel, Word and Power Point.

First Year SubjectsTrimester 1 Trimester 2 Trimester 3

Organizational Psychology Organization Behavior Human Resources ManagementStatistics Uncertainty, Data and Models Corporate StrategyFinancial Accounting Cost and Management Accounting Financial ManagementMacro Economics for Business Prices and Markets Business AnalyticsMarketing & Sales I Marketing & Sales II Geo-Politics and BusinessTheory of Business Operations Management Strategic Operations

Income Tax Legal Environment of Business (Tax) IT in Business

Second Year SubjectsTrimester 4 Trimester 5 Trimester 6 Warehousing Transportation Business Forecasting and Demand Planning

International Logistics Supply Chain Management Enterprise Planning Systems

Process Management and BPR World Class Manufacturing Operations Strategy

Production Planning and Control Network Modelling Risk Management

Quality Management IT for Supply Chain Factory Physics and Process Simulation

Service Operations and Retailing Operations for Service Providers Sustainability and Green Supply Chain

Program Highlights

Apart from an industry ready course, eminent faculty pool and a contemporary curriculum, the PGDM offers a few unique features that distinguishes it.

For the first time in the Indian management education, two unique features are offered by DSIMS – The once a week

industry immersion where you are mentored by an industry expert and a MiM which equips you with a wider

perspective than you would otherwise develop.

First Year Subjects

Second Year Subjects

Education spEcial

49SCMPr July 2013

within enterprises and between their supply chain partners. This is true all across the globe. The princi-pal concerns of the senior logistics managers SCM Pro has met over the past few months cite inability to find employees trained in integrated SCM – employees who can systematically coordinate the of activities and processes of procurement, production, and delivery of products and services to maximize customer satisfac-tion - as their major concern.

What ails Supply Chain Education?One of the biggest challenges for a holistic SCM education is the inability of academicians to break out of the “functional silos” they are so used to. In many B-Schools, faculty in purchasing, operations management, and logistics and transportation op-erate independently. This results in duplication of classes. Another issue with education in India is the tendency to create an omnibus course curriculum, with the emphasis on the breadth rather than depth of courses. The result is a student who enters her ca-reer as a jack of all trades and master of none. At the same time, the current curriculum design for Sup-ply Chain Management does not permit investiga-tion into current topics with any detail. In most col-leges, faculty members are not comfortable teaching in areas beyond their expertise. This is perfectly fine at the first glance, but the demands of post modern industry is for a professional who has an integrated view of supply chains and is able to bring is expertise across a broader realm of issues. The current curricu-lum is not integration oriented. We get a functionally brilliant professional, but who fails when she has to create and maintain partnerships with vendors, cus-tomers, and service providers.

All the Supply Chain professionals we spoke to want programs that have a multidisciplinary approach that can integrate fundamental product and process technologies with the business aspects of logistics and operations - an integrated curriculum that incorpo-rates all aspects of the value chain.

MSU business faculties enjoy a rich history of cross-functional collaboration. The first step toward integration was the creation in 1978 of a program in materials and logistics management that emphasized the relationships among procurement, production, and logistics. The program used common courses as the foundation for students majoring or concentrat-ing in these three areas. It was an improvement over a strictly functional perspective, but still did not achieve a high level of integration. There was topic overlap, and concepts were functionally oriented. For example, the procurement view of the supply chain emphasized

WELINGKAR INSTITuTE Of mANAGEmENT (WE SChOOL) Post Graduate Program in Supply Chain Management

(PGP-SCM) Objective of the program:This program will develop skills for the professionals to optimize or-ganization profitability through effective management of supply chain encompassing the below given essentials:1. Developing fundamental understanding of the basic flow of mate-rial in the supply chain 2. Learn the skills to leverage the advantage of proper supply chain. 3. Enhance ones skill to design result oriented strategies of supply chain.

SuBjECTS OffEREDSEMESTER I SEMESTER IIPrinciples of Management Stores ManagementOrganizational Behaviour Logistics and Distribution ManagementBusiness Communication World Class manufacturingProduction Management Global Supply Chain Management and Outsourced ManufacturingPurchasing and Materials ERP and web-based Supply Management Chain Management Program Highlights:1. Course curriculum is designed based on professional inputs from diverse fields. This includes both industry and academia. 2. Content of the course is planned with an affluent theoretical and practical approach. 3. Comfort of a working professional has been taken into considera-tion with distance learning and Sunday classes. 4. This course can be adapted by all fresher, supervisors, Jr level execu-tives and middle level Managers who wish to build their career in SCM. Eligibility:1. Graduate in any faculty from a recognized University 2. Final year degree students awaiting results can apply for the above programs. 3. Note: HSC with 2 years work experience and Diploma holder (SSC plus 3 years / HSC plus 2 years) can also take admission for Certificate Program in Supply Chain Management (CSM)Duration: 11 MonthsCourse commencement: PG / Certificate Programs will commence twice a year (July & January). How to apply: The candidate can apply to this program through our website www.welingkaronline.org or else they can visit the institute on the below given address.

Contact: Prin. L. N. Welingkar Institute of Management Development and Research. L. N. Road, Next to R. A. Podar College, Matunga (C.Rly.), Mumbai – 400019. Tel: 022- 24198600 Extn : 8155 / 8156 / 8157 / 8158 / 8161 / 8162.Prashant: 9892595456 Email: autonomous@welingkar.org

University of Petroleum & Energy StudiesTell something about UPES – Coursesand the Cutting Edge?Born out of a unique vision, UPES is India'sfirst energy university and Asia's first andonly energy & core sector university. UGCandNAAC recognized, UPES offers over 46graduate, postgraduate and doctoralprograms to more than 5000 students in thehigh growth sectors of oil & gas, power,aviation, shipping, automobile,infrastructure, electronics, IT and logistics &supply chain. The Centre for ContinuingEducation (CCE) at UPES offers executiveprograms through distance learning modefor the working professionals.

What is the general criterion foradmission and which are the variousoptions available to a student?The CCE programs are open to workingprofessionals from the energy sector andallied industry with a minimum workexperience of 2 years and at least 50%marks at the graduation level. CCE offersMBAinOil &Gas, Power, Logistics &SupplyChain andAviationManagement forworkingprofessionals and also the part-timedoctoral programs in the same domains. Allthese programs are for three years each.

Are the courses being offered haveacceptance universally including thecorporate world?Yes indeed. CCE today has approximately2500 students pursuing their executiveMBAor part-timedoctoral programs, andall thesecandidates are currently employed in the

sector at various levels, and are eithersponsored by their respective organizationsor are pursuing the program in order toenhance their education for better prospectsin the current organizations.

Are students benefiting from onlineeducation, is the technology availabletodaymakes the process worthwhile?CCE doesn’t offer these programs throughon-line mode as of now but would belaunching the e-learning module shortly.

Comment on the accreditation bodies inIndia and the process to choose the bestdistance learning school?I think the role all the accreditation bodiesare playing in India is quite pivotal. It has notonly strengthened the part-time educationsystem, it has also given confidence topeople who can’t afford to leave their jobs

and pursue higher education as a full-timeactivity.

And the process to choose the best or Iwill say the most relevant distance learningschool is to check its accreditations andapprovals and its backgroundandacademicvigor in offering the desired distancelearning programs.

Is bank loan and scholarships availableto distance learners?UPES doesn’t offer any scholarships orbank loans for its distance learningprograms.

Is distance education of high quality?What is the future of eLearning?Yes, UPES takes pride in offering itsdistance learning programs and has in theprocess constituted the centre forcontinuing education as one of its centers ofexcellence in the university system. In orderto offer quality education through distancelearning, CCE today has a separate andindependent team of professionals workingin it, with an exclusive website and amarketing and communication officepremises.With more and more people joining the

internet bandwagon, e-learning is the future,especially with working professionalsoperating out of remote locations andtransferable jobs, e-learning is the mantraand also the lone survivor. But the onlyworryis about the bandwidth, or the quality of ITservices provided by the e-learninginstitutes to its students.

Dr. Parag Diwan, Vice Chancellor

Advertorial

final distance:Layout 1 5/31/2013 4:37 PM Page 8

AdvertoriAl

Education spEcial

52 SCMPr July 2013

EPGPSCm fROm ISCmProgram ObjectiveThe EPGPSCM is an executive education program aimed at providing the working executive a chance to learn how to run a well oiled supply chain program. The course is aimed at the practicing manager and hence will involve judgment of the students.

Seminars and WorkshopsTo supplement the curriculum, students have to attend a few workshops and seminars. Students will have to attend these events to complete the course. Some of the areas covered will be:1. Project management 2. Communication Skills3. Humanitarian Logistics4. Sustainability and Green Operations

Program Highlights1 To develop an understanding of key drivers of supply chain

performance and the relationship with other functions of the company such as marketing, HR and finance.

2. To impart analytical and problem solving skills necessary to develop solutions for a variety of supply chain management and logistics issues including the use of IT in supply chain optimization.

3 To understand the complexity of inter-firm and intra-firm coordination in implementing firm wide programs

4. To develop the ability to design and formulate integrated sup-ply chain strategy and logistics systems, tuned to suit corpo-rate strategy, market requirements and competitive realities.

5. To understand which information should be exchanged in a supply chain and how it should be used to benefit the entire supply chain.

6. To identify improvement opportunities that exist within sup-ply chains in different industries and to quantify the improve-ments that different strategies offer.

7. To understand barriers companies face during the implemen-tation of new supply chain strategies

EligibilityStudents who wish to enroll for EPGPSCM have to meet the fol-lowing eligibility criteria:1. A graduate in any discipline2. Working knowledge of computers

DurationEleven Months Week end program. Classes will be held for two days a week – Saturday and Sunday.The timings are:Saturdays – 4.30 PM to 9.00 PMSundays – 9.30 AM to 2.00 PMCourse Start date17th August 2013

How to applyInterested candidates are requested to either down load the brochure from the institute’s partner website at www.dsims.org.in location or buy the same from our partner office at:Durgadevi Saraf Institute of Management Studies,1st Floor, S V Road, Malad West, Mumbai 400064On Monday to Saturday, between 10.00 AM and 6.00 PM, by paying a fee of Rs. 1000.

BOX: 4

EPGPSCM from ISCM

Program ObjectiveThe EPGPSCM is an executive education program aimed at providing the working executive a chance to learn how to run a well oiled supply chain program. The course is aimed at the practicing manager and hence will involve judgment of the students.

SubjectsSr. No Term I Term II1 Business Economics Basics of SCM 2 Human Resource Management Third Party and Fourth Party Logistics 3 Statistics for Managerial Decision Making Operations of Service Providers 4 Marketing and Sales Management Warehousing & Transportation Management 5 Basic Finance for Non Finance Technology in SCM 6 Theory of Business Understanding Strategy

Sr. No Term III Term IV1 Integrated Logistics Service Providers Supply Chain Risk Management 2 Operations Management Forecasting & Demand Planning 3 Sales & Distribution in SCM Shipping & Air Logistics 4 Strategic Profitability Management Retail Logistics 5 Strategic Sourcing Legal & Tax Aspects in SCM 6 Supply Chain Network Design Supply Chain Simulation

To supplement the curriculum, students have to attend a few workshops and seminars. Students will have to attend these events to complete the course. Some of the areas covered will be:

Seminars and Workshops

1. Project management 2. Communication Skills3. Humanitarian Logistics4. Sustainability and Green Operations

Program Highlights

1. To develop an understanding of key drivers of supply chain performance and the relationship with other functions of the company such as marketing, HR and finance.

BOX: 4

EPGPSCM from ISCM

Program ObjectiveThe EPGPSCM is an executive education program aimed at providing the working executive a chance to learn how to run a well oiled supply chain program. The course is aimed at the practicing manager and hence will involve judgment of the students.

SubjectsSr. No Term I Term II1 Business Economics Basics of SCM 2 Human Resource Management Third Party and Fourth Party Logistics 3 Statistics for Managerial Decision Making Operations of Service Providers 4 Marketing and Sales Management Warehousing & Transportation Management 5 Basic Finance for Non Finance Technology in SCM 6 Theory of Business Understanding Strategy

Sr. No Term III Term IV1 Integrated Logistics Service Providers Supply Chain Risk Management 2 Operations Management Forecasting & Demand Planning 3 Sales & Distribution in SCM Shipping & Air Logistics 4 Strategic Profitability Management Retail Logistics 5 Strategic Sourcing Legal & Tax Aspects in SCM 6 Supply Chain Network Design Supply Chain Simulation

To supplement the curriculum, students have to attend a few workshops and seminars. Students will have to attend these events to complete the course. Some of the areas covered will be:

Seminars and Workshops

1. Project management 2. Communication Skills3. Humanitarian Logistics4. Sustainability and Green Operations

Program Highlights

1. To develop an understanding of key drivers of supply chain performance and the relationship with other functions of the company such as marketing, HR and finance.

Subjects

Education spEcial

53SCMPr July 2013

suppliers, while the logistics view of the supply chain emphasized customers.

One problem with a cross-departmental ap-proach involves traditional university measurement systems. Since teaching lines are often allocated on the basis of credit-hour generation, there is strong incentive for a department to teach introductory courses and neglect advanced courses. In addition, assigning an introductory course to one department and faculty member results in a somewhat limited view, depending on the teacher’s academic focus and experience. If the instructor is charismatic, stu-dents tend to be drawn to the functional area of that faculty member, which further affects credit-hour generation and faculty line allocation. As in industry, traditional performance measures drive a functional orientation.

Colleges in India should take a cue from their counterparts in the US who have joined the Univer-sity Alliances program run by software company SAP AG, to give students hands-on training with the lo-gistics technology they will be expected to use in the workplace. SAP has added more than 250 schools to the program in the past 18 months, and now counts more than 1,300 partner institutions.

A look at the future of SCMAs we globalize and move up the value chain, our supply chains will need to be more integrative. And

the transformation should start from the curriculum for the budding professional. The major thrust of this approach is:n Understand the role of marketing segmentation,

targeting, and positioning as an integrated pat of the value chain.

n Acceptance of the fact that increasingly geography will become history – organizations would decide their plant locations, sourcing, and sales locations based on cost and competitiveness considerations rather than proximity.

n Develop vertical coordination and integration be-tween organizations and operations. In the absence of well developed courses in Supply

Chain Management, Indian professionals tend to ac-quire a certification from institutions across the globe – like APICS, CPSM from ISM, and a host of domes-tic institutions, some of whom offer well differentiated courses.

One mandatory requirement for SCM education is the use of Simulation in classroom to provide an integrated platform for understanding the nuances of a modern value chain. The combination of classroom learning, and internship with logistics firms, yields graduates who can excel in entry-level management positions and who understand how functional roles integrate with other activities, within and external to the firm. The overall goal is to produce graduates who can think systematically about the supply chain.

www.scmp.in

...think supply chainIndustry Portal for the Supply Chain Professional

The field of supply chain management has be-come tremendously important to companies in an increasingly competitive global market-place. It is a network of suppliers, manufactur-ers, C&Fs, and distributors which focuses on transforming the raw material into semi finished or finished good and distributing the same to the end users. Supply chain management is important both in the physical goods industry as well as pure services industry. Management of supply chain is to facilitate flow of informa-tion, material, and services from the supplier to the final customer. SCM focuses on cementing the relationships between the supplier and the buyer. Supply chain management is essential to company success and customer satisfaction. In essence, supply chain management inte-grates supply and demand management within and across companies.

SCM drives coordination of processes and activities with and across marketing, sales, product design, finance, and information tech-nology. Continual advancement in information technology and the expanding IT infrastructure are introducing new opportunities to improve service and efficiencies, and given the amount of business value at stake, the opportunities are very high. It contributes to business per-formance by finding out ways to get goods to the customer better, faster and cheaper.

SCM aims to improve the efficiency, pro-ductivity and profitability of the entire process. When the customer has direct access to global suppliers, the number of competing vendors in

any category is huge. Global markets have cre-ated stiff competition in the market place there-by compelling companies to maintain competi-tive prices. Thus, the ability to produce a given product at a lower cost can give any company tremendous competitive advantage irrespec-tive of its geographical location. At the same time, increased volumes in the global market add substantially to the companies bottom-line. SCM is all about achieving higher volumes and better service levels either by reducing or without having to raise costs.

Supply chain managers are essentially the implementers of the procurement strategy, the manufacturing plan and the distribution scheme in alignment with the goals of the company. Since the industry realizes the extent to which the synergy of all these activities determines the overall profitability of any firm, a lot of effort is directed towards improving the efficiency of supply chain. Strategic Sourcing, tracking the material, Productivity Management, Total Qual-ity Management (TQM), Enterprise Resource Planning (ERP) are the vital tools for successful implementation of SCM.

With the ever increasing complexity of supply chain operations, organizations are seeking for specialized managers who are exclusively trained in supply chain manage-ment. We at Prin. L. N. Welingkar Institute of Management Development and Research Mumbai have designed this program keeping in mind the ever increasing demand of trained professionals.

Scope of Supply Chain Management

AdvertoriAl

55SCMPr July 2013

Without doubt, people are the greatest creator of value in a company. In harmonizing products, services and business processes, it is people who become the value enablers. Without which, success is neither assured nor sustainable, writes Darryl Judd.

Beyond the horizon The next Generation of Talent Management Practices

In today’s business environ-ment and the global economy, talent is the most strategic as-set an organisation holds and without doubt, people are the

greatest creator of value. In harmoniz-ing products, services and business processes, it is people who become the value enablers. Without which, suc-cess is neither assured nor sustainable.

Organisations that recognise and embrace the link between people, company performance and who ac-tively invest in next generation talent management programs will lead the market in the long term.

With this as backdrop, we must ask what is coming next and what

does this mean for organisations bat-tling to attract and retain talent?

According to a recent white paper from Oracle, the next generation of talent management practices and solutions will largely be driven by economic evolution, demographic changes and technology advance-ments . All of which make sense when we consider these factors and the dramatic manner in which they are influencing the way people work, companies are organized, and the way talent is sourced and managed.

In today’s post GFC world, busi-nesses have seen structural changes to the global economy. The long-term impact of these changes are only now

being felt. They impact ourin our abil-ity to compete for the best people and theydrivechanges in talent manage-ment strategies. Thesechanges include;n The knowledge economy: The

transition to a knowledge economy has transformed the way we value companies. Talent is now a required strategic asset. Key changes in the fu-ture include a continued blurring of the line between inside and outside talent that will result in an expansion of the talent management scope.n Globalisation:The top expan-

sion prospects for global companies now include less traditional markets of the BRIC nations (Brazil, Russia, India and China) as well as Eastern

Darryl Judd COO, Logistics Executivedarrylj@logisticsexecutve.com

n KnoWLedGe n StrAteGy n BeSt PrACtiCe n trendS n human resource

talent

56 SCMPr July 2013

Europe, Mexico and the rest of emerging Asia—not the usual suspects. This contin-ued expansion provides both challenges and opportunities around talent sourcing, talent utilisation, diversity and risk management.n Skills gaps and structural unemploy-

ment: An ever-increasing pace of change means organisations will face more struc-tural unemployment challenges (an inabil-ity to redistribute pools of talent no longer required to locations where it is needed) and skill gap issues. As a result, reskilling and continuous learning cultures will become increasingly important, as will the ability to rapidly and accurately identify current skills and talent in the organisation.

Demographic factors are also driving changes in talent management such as gen-eration geographies, longer lifespans and workplace diversity.

Baby Boomer retirement has been top-of-mind for many years particularly in mature economies like the United States, however an even more significant demo-graphic changes are happening outside the U.S, where population growth rates and aging populations are poised to stifle local economies. The ability for organisations to successfully tap into global talent or effec-tively move talent from areas of abundance to scarcity is becoming a strategic issue.

It’s also no secret that we are living longer, however the aging of the global workforce is only half of the story. Increased health and longevity mean that seniors are work-ing longer. This enables organisations to keep experienced team members into their retirement years. Whilst this is a significant benefit to ensuring retained human capital IP, it also complicates workforce planning and raises generational challenges related to long-term succession planning.

Couple the above with an increasing workplace and team diversity, which is principally being fueled by globalization and demographic changes. A more diverse pool of talent affords new opportunities such as hiring workers who are underrep-resented in the workforce of a particular country to gain competitive advantage. For all the benefits of diversity, it also can carry risks related to team cohesion, cultural bias, and initial productivity.

There is also a dramatic increase in the traditional use of outside talent. The use of contingent workersis way up and will in-crease even more in the future. In the study undertaken by Oracle more than 35 per cent of employers planned to increase their use of contingent workers by 50 per cent or more and labor law firm Littler Mendelson believes that contingency employment could eventu-ally represent 50 per cent of our workforce. As a comparison in 2003, contingentworkers represented just 13 per cent of the workforce.

The blurring of the line between em-ployees within the organization and those outside it is also drivingtalent management changes, particularly around sourcing, strategic workforce planning and employ-eeengagement. Given these changes, execu-tives in leading companies are increasingly focused on talent management issues and workplace alignment, recognizing that tal-ent, wherever it comes from, is their only sustainable competitive advantage.

In an effort to turn challenge into oppor-tunity, leading-edge organizations have in-creased their efforts to tap into wider talent markets and build a network of intellectual human capital engagement platforms that extend notonly to employees but also cus-tomers, partners and the public at large in an effort to create an extendedconnection to the potential talent.

Employers are embracing workplace alignment principles and technology engage-ment platforms that extend beyond the tra-ditional careers sites and are investing in rich web-enabled platforms that are easily inte-grated to the ever-increasing mobile technol-ogy platforms like smart-phones and tablets. This enables organisations to source and col-laborate on knowledge work with any part of the world, tapping into a global talent pool.

It’s not just employers watching these technology developments closely either. In-creasingly potential employees are adopting new gadgets and technology in their person-al lives. As such they will increasingly expect similar tools and levels of empowerment in their professional lives. They will judge em-ployers by their commitment to employee enablement and the company’s ability to quickly transition from consumer technol-ogy to enterprise technology.

In developing countries, one issue that technology cannot fix is the large number of youth workers now entering the workforce.

The challenge that this creates is for com-panies that operate exclusively in developed countries, and yet it presents opportunities for larger multinationals that operate in both developed and developing countries. The capabilities of multinationals to suc-cessfully develop and transfer talent from areas of abundance to areasof scarcity in the short term, and to permanently relocate operations to areas of talent abundance in thelong term, will be important drivers of talent differentiation in the coming years.

Smaller companies or those that require a local presence in a particular developed geog-raphy need to consider how to leverage and connect with talent in the developing world via technology, virtual presence, human capi-tal partners and training organisations.

It’s clear that organizations are increas-ingly deriving value from talent and that the future workforce planning is becoming a greater strategic asset to the company. Linking people to sustainable company performance with a coherent workplace alignment and engagement platforms will ensure connectivity to wider and a more diverse talent but once there is a recogni-tion that it’s an investment that will drive profits for tomorrow.

Organizations are increasingly

deriving value from talent and that the future workforce planning is becoming a greater strategic asset to the company. Linking people to sustainable company performance with a coherent workplace alignment and engagement platforms will ensure connectivity to wider and a more diverse talent.

event report

57SCMPr July 2013

The 1st edition of Pharma Sup-ply Chain Summit - 2013 ti-tled “UNLOCKING THE POTENTIAL FOR HIGHER

GROWTH” organised by SCMPro and supported by Agility, Icertis and Tranfreez, was successfully concluded on 14th June at The Lalit, Mumbai. The one day event witnessed the crème of Supply Chain pro-fessionals from corporate such as Novartis, Bayer, Cipla, Bilcare, Watson,Aurobindo, Biocon etc along with select LSPs congregate to hear Industry Experts, Consultants and Academicians deliberate on the pain areas affecting the Pharma Supply Chain.

The keynote presentation was by Dr. Rakesh Singh, Director DSIMS on ‘Chal-lenges in Pharma Supply Chain. Dr. Singh

enlightened the delegates with current chal-lenges faced by the industry. And also point-ed out that India with one of the largest US FDI approved Pharmaceutical companies; need to be prepared to take advantage of the opportunities provided by the global busi-ness environment.

Paul Good - CEO Agility, spoke on the critical topic of Managing Temperature Controlled Supply Chain in Pharma Verti-cal. He highlighted the importance of un-interrupted series of Supply Chain manage-ment processes to ensure the shelf life for Pharma products.

The most appreciated session of the day was titled “Big Fight”, a panel discussion bringing together manufacturers, CFA’s and distributors together to deliberate on one of the most pressing pain points for the industry - on storage and distribution. The panel con-sisted of Ashu Gupta, AVP, Mylan Pharma, Javin Bhinde, Director, Syncore Consulting, Manoj Lekhrajani, CEO, Pharmapoint and Upendra Dinani, Director, D.Vijay Pharma. The discussion was moderated by Arif Sid-diqui, founder, Coign Consulting. The dis-cussion shed light on the various grey areas of storage and distribution, and the role each stakeholder plays in ensuring drugs reach the consumer in the right potency .

Niranjan Umarane – Director, ICERTIS deliberated on ‘Transport Optimization to deliver superior supply chain performance’.

The concluding session of the summit was on “Skill Set Requirement for the Indus-try”. The session started with a presentation

“Unlocking the Potential for Higher Growth”ON June 14th 2013, over 60+ Supply Chain professionals from Pharma verticals and related Service provider stepped away from their day to day SCM duties to take part in one day Summit on Pharma Supply Chain Summit organised by SCMPro team.

SCMPro - Pharma Supply Chain Summit 2013

BIG Fight:

(L to R): Arif Siddiqui, Upendra

Dinani, Manoj Lekhrajani, Ashu

Gupta and Javin Bhinde

event report

58 SCMPr July 2013 58

by Abhijit Chaudhuri, JMD, Milestone Consulting, followed by a panel discussion on the topic. The panel discussion was moderated by Rishabh Bindlish of Accenture and the panellists included Narayan Rao CV, Head Supply Chain , Aurobindo Pharma, Prasad Deshpande of Biocon, Dayanand Deshpande, of Syn-Core Consulting Group and Abhijit Chauduri - JMD of Milestone Consulting Group.

Look out for the proceedings of the conference in our next issue of SCM Pro.

Panel Discussion on ‘Skill Set Challenges for Pharma Supply Chain’: Prasad Deshpande, Narayan Rao CV, Rishabh Bindlish, Abhijit Chaudhuri and Dayanand Deshpande

Delegates Registrations

High Tea Networking

Keynote Presentation: Dr. Rakesh Singh, presenting

“Challenges in Pharma Integrated Supply Chain”

First Floor, Amar Megaplex, S. No. 110, Plot No. 11/24, Baner, Pune, IndiaTel.: +91 20 6627 7777

Email: info@icertis.com www.icertis.com

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