LOG.India June 2011

INDIA

COLD CALL: There’s business and support. But where are the cold-chain cos?...08IILF IS HERE: Industry’s first enterprise-only awards were given away in May...12

KK Kaul, VP (Head - SCM), LG Electronics India Ltd, has set up the Korean giant’s India supply-chain from scratch. Here’s how.

Page 34

Moving Life’s Goods

June 2011 Vol. 4 — No.10 `100INDIA

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

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

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

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

Method In Motion

October 2010 | Vol. 4 – No.2

IndIa’s LeadIng LOgIstIcs MagazIne

` 100

www.logisticsweek.com

THE ANSWER IS: Our expert offers solutions for your warehouse woes...44

THE FINE PRINT 24How to avoid heartburns when signing SLAs.

eDITORIAL >

5INDIA| June 2011 | www.logisticsweek.com

It is a common refrain here and abroad that Indians are not good at innovation. Bullshit. I think that while saying so, people con-fuse invention with innovation. Let me get that straight for the

purpose of this piece: Invention is creating something new; inno-vation is improving upon something – a process or a device – that already exists. When I look hard, I see examples of innovation, or at least the spirit of innovation, all around me.

I see it when I drive to work. When I pass the busy spots where there is a jamming of cars and bikes from all sides because the road is narrow, where some construction activity is perpetually on, and there is no traffic constable in sight, the traffic still moves – even if exasperatingly slowly.

Motorists, bikers and pedestrians will use every inch of available space to move ahead. There is a silent understanding between the motorists, bikers and pedestrians that anyone who finds any maneuvering room will move ahead. Road rage and accidents rarely happen at these spots – people in Mumbai know that every second gone waste and every dent caused is money lost. So the traffic moves, even if at snail’s pace, but it moves (I am not counting the days when we have the religious processions on our roads). I am willing to bet my last shirt who can show me that traffic can move amid such conditions in any part of the world. Yes, accidents and road rages happen in the city – Mumbai tops the country in the number of fatalities and injuries from road accidents – but almost all of that happens when the roads are wide enough and the vehicles are speeding.

Bizarre example of innovation, I know. It will sure look bizarre when it annoys you and it is bound to annoy those like us who believe in systems and processes. But look at this phenomenon with a calm mind, look harder and you will notice – it’s an example of collective innovation at work. If it’s necessity that breeds invention, it’s constraint that fathers innovation. At these spots, the infrastructure is in shambles, roads are narrow or perpetually dug up, and poorly planned flyovers/metro-rail/monorails, since they are such great conduits for easy bribe-money, keep coming up with regularity, people using these roads are left to fend for themselves. So strangers silently cooperate with each other and break rules. The traffic moves. And nobody gets hurt. Brilliant.

Expand the principles hidden in this example and apply it to our economy and you will know why India is growing fast, despite the poor physical, administrative, and academic infrastructure. We are a nation of innovators. We will find ways to move ahead even when there are none.

That brings me to an awards function we organized in May. You guessed it – it was themed on innovation. Log.India and Drive India Enterprise Solutions Limited (a Tata Group company) jointly organized the IILF (India International Logistics Forum) Innovation Awards that were given away at a function held at the Taj President on May 20.

What happened during that day is as important as what

happened before it. I was a part of the jury and I can tell you now that we did not get the number of entries that we expected. We got big names – Larsen & Toubro, Ericsson, Dr. Reddy’s, etc. to apply for the awards. But the numbers of entries were not good. Thankfully, at the final stage we had enough entries to choose from and I can confidently say, that for the first enterprise-only and ‘innovation’ award, the response exceeded expectations. That said, it was difficult to find true examples of innovation in a number of entries. Some applicants had confused ‘innovation in logistics and supply-chain’ with ‘implementing a new project’ even if the project was used to solve the same problem elsewhere. Instead, we were looking for individual examples (not projects) where one would have worked outside or against the norm, used unconventional ideas and improved efficiency. The winners had done exactly that – an FMCG company had tweaked its factory-to-depot replenishment model and focused extensively on distributor-service levels to achieve huge improvements in savings and efficiency at the retail-shelf level.

Another winner had simply used big placards to tag pallets at the warehouses so the pallet-numbers can be seen from a distance – the workers now did not need to go close to every single pallet to jot their numbers – a similar method is used by car resellers to tag cars. Cumulatively, the pallet-tagging method saved a lot of time, and hence money, at the warehouse level. Simple, efficient, and unconventional. That’s what we were looking for.

Sadly, such cases were few and far between among the entries that we received. The reasons could be many – the awards are new for the industry, it needs to be marketed better the next time, and so on. But if someone may have a view – and there are many who think so – that examples of innovation are hard to come by in our industry, I will totally not buy that. I think we just need to look hard enough.

Aanand [email protected]

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

Aanand PandeyEditor

Constraint Is The Father Of Innovation

ContentsAnAlysisFresh Look At Cold Chain Sector The cold chain sector is f inally getting its due both from the government and the industry.

Upshot3rd Annual Supply-Chain Summit and IILF Awards: GlimpsesIt's a constant attempt by supply-chain divisions of user companies to check spiralling costs. India Supply Chain Cost, seems to have addressed this effectively by bringing together the men who manage the daily hassles.

ColUmnThe Question Of PeopleA skill-gap definitely exists. However, just mindlessly accumulating labor need not necessarily be the solution to the problem.

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INDIA| June 2011 | www.logisticsweek.com6

skills Pay the BillsThe logistics industry is plagued by a huge skill deficit. The lack of training institutes only adds to its woes. Here are a few tips on what LSPs and the user industry need to do to bring in the much-required change.

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FeAtUreCross ConnectionLack of proper communication and understanding between clients and service providers leads to friction when it comes to formulating service-level agreements.


JUne 2011

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BenChmArKinG

BACK to BAsiCs

pAnorAmA

Whether you are a warehouse manager, or a warehouse owner or just a supply-chain enthusiast wanting to know more about warehouse management, we have an expert you can turn to every month for all your queries.

We explore three terminologies: RFID, Management Information Systems, and Key Performance Indicators.

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

ADVeRtIseRs InDeX

ARMSTRONG Limited. ............................................. 41

BLR Logistiks .......................................................... 32

Capricorn Logistics ................................................. 43

Cemat ..................................................................... 51

CII Institue Of Logistics ........................................... 42

Container Logistics & Infrastructure summit ........... 26

DIESL ......................................................................BC

EXIDE Industrial ...................................................... 55

Gandhi Automation .................................................... 9

Hormann India pvt Ltd ..............................................11

Mahindra Navistar ..............................................30-31

Manforce Trucks .................................................... IFC

Oilfield Warehouse & Services. ................................ 49

Pharma & helathcare supply chain.. .......................... 3

Phenix ................................................................... IBC

RK Foodland Pvt Ltd ................................................ 47

Safexpress .............................................................. 45

Saudi Transtec ........................................................ 28

Schaefer Systems International Pvt Ltd ....................17

Shree Rajlaxmi Logistics Limited ............................. 21

Shree Rajlaxmi Logistics Limited ............................. 23

State Bank Of India ..................................................19

Tristar ..................................................................... 27

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

INDIA

ON TOP: Things that top retail SCM performers do to stay ahead of the game...10

LOSE CONTROL: How Japan’s tragedy has affected global logistics...16

How Abhijit Upadhye, Senior Director, National Supply Chain, McDonald’s India, runs the logistics of a huge, fast-growing chain keeping things lean.Page 18

ServedSmart

May 2011 Vol. 4 — No.9 `100

INDIA





Method In Motion



` 100


HIGH WATERS: An in-depth report on the maritime cargo trade in India...32

FAST FORWARD 46Trials and triumphs of the express courier industry.

mAy 2011

CoVer storyLooking Good

34

LG Electronics India has been growing at an unprecedented rate. A detailed report on how KK Kaul, Vice-President (Head - SCM), LGEIL, runs the supply-chain of the company.

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< AnAlysis

INDIA| June 2011 | www.logisticsweek.com

Fresh Look At Cold Chain Sector The cold chain sector is finally getting its due both from the government and the industry. in a curtain raiser, Pamela Cheema reports on the new developments.

An empowered group of ministers on food will meet to take a definite

view on the total requirement of food grains under the Food Security Act and then we will take a view on export.

— sharad Pawar, Agriculture Minister

on the government’s decision to lift the export ban on wheat and non-basmati

rice, in an interview with livemint.

Train of ThoughT

Seeking cooperation of states in containing price rise, efforts are needed to improve farm productivity in agriculture, develop rural infrastructure and revamp public distribution system to address supply issues and contain inflation.

— D. subbarao, RBi governor

while speaking at 24th Conference of the State Financial Secretaries.

With local retail chains and global retailers eyeing the Indian market, there is a greater demand for advanced warehousing services. The private warehousing sector which is highly fragmented should reorganize itself.

— Anil Khanna, MD, Blue Dart Express

in an interview with India Infoline.

Globalization of today’s business operations calls for a special emphasis on the performance of supply networks. Green logistics in combination with intelligent systems can reduce burden on the environment.

— Dr Khaled Al Mazrouei, Founding President of

Green Aviation logistics Group, Middle East

on the trend of entrepreneurship in Indian logistics, in an interview with

livemint.

As an emerging market with an economy which is developing at an exu-

berant and attractive growth rate, India needs an efficient and effective cold supply chain system which will continue to propel its growth upwards. While in the past cold chains or what in effect is the cold supply chain, were scarcely understood or worse, misinter-preted, leading to parlous con-ditions in the economy, today there appears to be widespread awareness that cold chains will vastly strengthen the economy. The government and industry too are reexamining the sector and have understood its poten-tial for buoying the economy.

natural AdvantagesAccording to the Federation

of Indian Chambers of Com-merce and Industry, food wast-age reached the incredible figure of 3̀0,000 crore in 2010 (it has declined from the strat-ospheric level of `58,000 crore in 2004!). This despite the fact that India is the second largest producer of fruits and vegeta-bles in the world, but with cold storage facilities available for only 10 percent of the produce. Industry sources disclose that the country is the fifth largest producer of eggs and the sixth largest producer of fish, but with an abysmal supply chain system, 35 percent of produc-tion is consigned with depress-ing regularity to the trash can. India has certain vital attributes and natural resources – it has 52 percent of the total land that can be cultivated as against 11

percent in the rest of the world and 20 diverse agro-climatic re-gions in the country. These ad-vantages, if properly harnessed, could equip the country to feed not just its own people, but the rest of the world. A well-defined logistics and cold supply chain system working in tandem could power the country to this enviable position and also im-measurably energize its growth.

“Apart from rejuvenating its own economy, India could be the food basket of the world if we had an efficient cold chain supply system,” says Pawanexh Kohli, Founder of CrossTree techno-visors and Senior Vice-President, Arshiya International Ltd. “To be the food basket you have to export food to Europe, Dubai, Singapore, the US and maybe, one day, Africa and only

Apart from rejuvenating its own economy, India could be the food basket of the world if we had an efficient cold chain supply system."

— Pawanexh Kohli,Founder of CrossTree

techno-visors and Senior Vice President, Arshiya

International Ltd.

10 INDIA| June 2011 | www.logisticsweek.com

< AnAlysis

the cold chain will allow India to expand its portfolio of food exports.”Mr. Kohli received the Cold Chain Personality of The Year (Individual) award at the KPMG-Supply Chain Leadership Council Summit Awards on De-cember 3, 2010.

Huge Market Increasingly, the consumption pattern of Indian consumers is changing swiftly with more customers consuming frozen food and vegetables. Malls and food courts across the country, even in Tier-II and Tier-III cit-ies, stock abundant quantities of perishable food to cater to this ever-increasing market. But acute deficiencies in the cold chain supply system have prevented this nascent industry from fulfilling its true potential and growth.

The market for cold chain supply systems is estimated to

balloon to $9 billion by 2015 according to Mr. Kohli, who apart from being a cold chain specialist, offers innovative advice with a few professional peers on the website www.crosstree.info. Their entrepre-neurial vim has cleared many of the misconceptions about the industry which now stands on the threshold of growth. The industry, however, will have to clear the obstacles in its path before it can dream of unfet-tered growth.

Hard RealitiesThe cold chain industry’s dreams of proliferation have been turfed out by hard realities on ground. Says Abhijit Upad-hye, Senior Director-National Supply Chain, McDonald’s In-dia: “There’s not enough de-mand for quality cold chains be-cause high costs prevent usage of such facilities. A lot of compa-nies are ready to compromise on such facilities. We are one of the few users of cold chains.”

But Mr. Kohli cites deeper reasons for the malaise. He believes that the industry has been established “in a very fragmented and unstructured way” by small and medium en-terprises (SMEs) and single en-trepreneurs in a manner which has not permitted development of skill sets. “The ground work has to be laid out carefully for any new industry which starts off,” argues Mr. Kohli. “After all, even with the software in-dustry it took 12-15 years be-fore it reached the stage where an Infosys could happen. So similarly, the cold chain in-dustry which at one level has been around for 25 years, but at another level, where we are talking about a structured cold chain industry with organized

sourcing and moving of goods from one place to another, it has happened at a real scale for not more than four or five years. So this has not permitted any development of skill sets.”

The complicated nature of the industry has also hampered growth. In any other supply chain when a factory manufac-tures a product, the supply chain delivers it to the market, with an attractive price realization ac-cruing to the product. The cold supply chain is the only supply chain which not only transports the value of the product, but actually affects the value realiza-tion of the product.

This is due to the fact that the cold supply chain transports fresh products which have to be delivered in a particular time matrix, else the price declines. Defective supply-chain Service Level Agreements (SLAs) and an inability to maintain required parameters force the price to slide further. “Any ordinary per-son who gets into the business,” notes Mr. Kohli, discussing the subject with great fervor, “is sud-denly affected by debit notes, and penalties because he did not re-alize the operational excellence that needs to be maintained. While the rest of the supply chain says, ‘I’m carrying boxes’, in the cold chain you need to under-stand the product.”

Poor industry KnowledgeA further impediment to the de-velopment of cold supply chains has been the government’s in-ability to understand the in-dustry. For the government, the growth of cold chains has been unfortunately linked with the construction of cold stores which are just a component in a complicated supply chain. In-dustry sources reveal that over

the last 20 years the government has indulgently loosened its purse strings for the construc-tion of cold stores. This has led to a proliferation of cold stores, especially in Uttar Pradesh and West Bengal. “Uttar Pradesh and West Bengal have above 50 percent of the cold storage ca-pacity in India,” reveals Pradeep Dubey, General Manager, Snow-man Frozen Foods Limited,” but most of them are just single commodity stores. In UP, where 41 percent of the stores are lo-cated, most of them are used for storing only potatoes.”

The construction of cold stores cannot be arbitrarily equated with the development of the cold supply chain indus-try. “Look, anyone who sells anything knows that you need to move to the market,” remarks Mr. Kohli candidly. “In the cold store, if you are going to store things long enough, it’s going

“There’s not enough demand for quality cold chains because high costs prevent usage of such facilities."

— Abhijit Upadhye,Senior Director-National

Supply Chain, McDonald’s India

Uttar Pradesh and West Bengal have above 50 percent of the cold storage capacity in India."

— Pradeep Dubey,General Manager,

Snowman Frozen Foods Limited


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to perish. And this is how the situation is in the cold chain sector, we have 12 percent of transport and 88 percent of storage when it should be the right op-posite! You produce some-thing, please move to the market, reach the con-sumer and sell it. Don’t store it, for God’s sake!”

Financial incentivesThe government appears to have read the script well and in the Budget 2011-12 has attempted to make generous provi-sions for the cold chain sector. Some of the salient features of the Budget are that full infrastructure status with Viability Gap Funding has been an-nounced for the industry. Customs duty to set up cold storages has been further reduced to 2.5 percent, while excise duty has been exempted on all cold chain equipment.

Fifteen more mega food parks will be set up in the country (15 such parks were sanctioned in the last fiscal).

With the financial buffer of the budget, the mood in the industry appears to be reasonably upbeat. Purvin Patel, Chief Operating Officer, Radhakrishna Foodland Pvt. Ltd, empha-sizes that “new investments are coming in whether it’s in cold chains or movement of goods and products. There will be a good return on investment for the right business model, with the right clients and the right approach.” The government is hoovering up its investment in the cold chain sector and ac-cording to Mr Kohli (he is a member of the task force set up by the Centre and the Confederation of Indian Industry (CII) in 2006-07 which is still active) is planning an investment up to `8,000 crore in the agri-business which includes the cold chain sector.

The government’s largesse, combined with its newfound sense of purpose and understanding of the sector, could mean that cream salad days are here for the cold chain indus-try in India.

New investments are coming in whether it’s in cold chains or movement of goods and products. There will be a good return on investment for the right business model, with the right clients and the right approach."

— Purvin Patel,Chief Operating Officer, Radhakrishna Foodland

Pvt. Ltd

Sources:*newsroom-meattradenewsdaily.co.uk, *www.ibef.org*N.Viswanadham, Indian School of Business, Working Paper

1212

Third Annual Supply-Chain Summit and IILF Awards: Glimpses

Kishore Chaukar, Managing Director, Tata Industries, inaugurates the Third Annual Supply Chain Summit. Ajay Chopra, CEO, Drive India Enterprise Solutions Limited (in the background) gave the welcome note.

Delegates imbibe the track deliberations at the summit.

INDIA|June 2011| www.logisticsweek.com

< EvEnt REpoRt

On May 20, Taj President Mumbai rolled out the carpet for logistics industry's first enterprise-only supply-chain summit and innovation awards. Presented here are a few

moments from the gala event.

13INDIA|June 2011| www.logisticsweek.com

(L-R) Nitin Agarwal, Competence Center Head - Strategy, Miebach Consulting; MR Sundaresan, Director - Operations, Dell India; Amit Dev Banerjee, Head - Supply Chain (Parts), Tata Motors; Abhijit Chaudhuri, Director - Supply Chain, Ispat Industries, partici-pate in a panel discussion titled 'Building A Change-Ready Supply Chain'.

(L-R) Prem Verm, CEO, TML Distribution Limited; Juzar Mustan, Country Head (India), TKM Global

Logistics; Brahmanandam Gadipudi, Additional Vice-President and Head

- SCM, Tata Teleservices; Ashu Gupta, Associate Vice-President,

Distribution and Logistics, Wockhardt; Mayank Kaushik,

Manager (MT-9), Supply Chain Division, Maruti Suzuki, deliberate on the topic 'Choosing The Right

LSP'.

Nikhil Chalakkal, Project Consultant, Supply Chain Struc-ture, Material Flow and Process, Mie-bach Consulting, and Sarang KV, Project Manager, Miebach Consulting present the theme paper on 'Embracing Change in SCM'.

Speakers Sarang KV of Miebach Consulting, Prem Verma of TMDL, and Sandeep Maini, Chairman, Maini Group consult notes.

14 INDIA|June 2011| www.logisticsweek.com

< pRimER

Ajay Chopra presents the 'IILF-ISC Best Innovation in Technology' award to the HyperCity team.

Lt Col Vijay Nair (Veteran), GM, Supply-Chain Management, HyperCity Retail (India), presents the IILF-ISC 'Best Innovation in Logistics - Transportation' Award to the Larsen & Toubro (L&T) team.

Vikram M Kulkarni, Head - Parts & Aggregate Business, Tata Motors, presents the IILF-ISC 'Green Supply-Chain Innovation' Award to the Ericsson India team.

Pooja Pant, the danseuse enacts a Kathak performance at the Awards function, and pays tribute to the Divine Creator.

Dr Rakesh Singh, Director, Durgadevi Saraf Institute of Management presents the IILF-ISC 'Best Innovation In Supply-Chain Strategy' Award to the Marico team.

15INDIA|June 2011| www.logisticsweek.com

Jacob Joseph, Publisher, Log.India presents 'Best Innovation in Supply Chain - Technology' Award to the HyperCity team.

Delegates make notes during one of the many well-received presentations at the summit.

Kathak dancers create a vivid imagery of the season of spring - that marks new beginnings.


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RPADmInI PAGADAlA General Manager, TPG Consulting, Mumbai

A skill-gap in the logistics industry defi nitely exists. However, just mindlessly accumulating labor need not necessarily be the solution to the problem.

RECENTLY, I WAS invited to a conference to be part of a panel discussion to discuss the skill-gap issue in the Indian supply chain. Dr. Rakesh Singh, Director, DSIM (Durgadevi Saraf Institute of Management Institute) and co-pan-elist had mentioned to me earlier, “There is no discussion. We have a skill gap. Period.” Dr. Singh couldn’t be more correct.

There is a dearth of eff icient and com-petent people in the industry – from the boardrooms all the way to the f loor. As any proficient manager will tell you, people are the key to a profitable business and that re-quires talented people, which is sadly lack-ing. We have debated enough that there aren’t enough institutions that teach Indus-trial Engineering the way we want our future employees to be taught. Even in cases where f irms have pulled up their socks and con-ducted training in-house, people do not stay. This is a familiar situation. Instead of trying to squeeze blood from a stone, I would like to touch upon three disparate issues related to people.

People As Panacea?Recently, a client approached us to seek out advice on setting up labor standards at his facility. During our conversation, I was as-tounded to learn the real reason for want-ing to set up such standards in his facility. He was facing a lot of problems at his facil-ity. As a service provider, when there was a problem even if it may have been caused ow-ing to a fault from the user’s side, the fi rst thing his customers accused him of was not having enough people. That seemed the easi-est indictment. My client fi gured that if he had a mathematical formula that calculated the number of people needed based on the throughput he handled, he could prove to the client that deploying enough labor wasn’t the problem. This would save him a good bit of anxiety. This attitude of adding labor as pan-acea seems a prevalent attitude in the service providers businesses.

In another case, when I had gauged the throughput at the facility, I commented to the 3PL on the large number of people working on

The Question Of People

Non-compliant to new OHS regulations

Inefficient warehouse planning

Outdated storage systems

Labour intensive operation

Unable to meet KPI

Lack of local support

Poor use of available headroom

Too many error in piece picking operations

Non-compliant to FEM safety standards

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

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Non-compliant to new OHS regulations

Inefficient warehouse planning

Outdated storage systems

Labour intensive operation

Unable to meet KPI

Lack of local support

Poor use of available headroom

Too many error in piece picking operations

Non-compliant to FEM safety standards

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

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

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< Column

the operations. In response, the 3PL said they weren’t al-lowed to reduce the number of people as it was perceived by the user as not deploying enough resources – even when the number of people seemed to me double the size required.

Labor is perceived as cheap in India. Readers may get tired of me saying this often that labor in India is cheap as compared to the West, but it is by no means cheaper compared to other Asian resources. Also, taking in more labor means a lost opportunity cost in having to man-age them, and also buying more equipment for them to man so as to make up for slower productivity. While it is agreed that labor is a rare commodity, the attitude about using labor superfluously and, more importantly, as a solution to all problems needs to be checked. It would help to recall Brook’s Law about how adding manpower to a late project delays it even further.

Women As Better EmployeesSome time ago, I was conducting a classroom training session on best practices in the DC (Distribution Cent-er) of an apparel manufacturer in the United States. My audience was the pickers whom I had to convince about some of the best practices we propose. The first session had the pickers from the first shift, by some chance, an all-women team. As I poured my heart out telling them about the need to drag three cartons at a time, instead of one carton, they seemed to get it. I told them that this best practice alone was going to save them time and make them more productive, but best of all it was going to save them two thirds of the walking they did in a day. I looked around to see nodding heads at having under-stood something of importance.

After this, my second set of audience came in. I went over the same slides and videos and was yet again telling them how they could be walking two-thirds less. I stopped short after some time when I took in who my audience were. I realized I had a room full of 6-foot tall men trying to stifle their yawns. I perceived at that point that it wouldn’t mean anything to them if they didn’t have to walk at all or that it would matter to them if their productivity improved by 30 percent. While this may be a one-off incident, most experi-enced managers who have run facilities for a long time will tell you that women are better employees on the floor. Typi-cally, they are more accurate in their work and loyal too. This may be something that one ought to consider.

Young And Clueless A few years ago, when I mentioned to people my pro-fessional involvement was Supply Chain, some, with-out batting an eyelid, would ask back, “So, what do you supply?” Torn between not wanting to offend them and wanting to answer them correctly, I would say, “Well,

just about everything”. In the last six years, elevator con-versations have upgraded to: “Which aspect of Supply Chain? Warehouse consulting? But that’s too niche!” We have all become experts in no time at all. We obviously understand the terminologies and the vernaculars but at the same time, I often run into students who want to know what’s in it for them. Business school grads still have to be coaxed into signing on the dotted line.

The question of people has been the greatest chal-lenge to us as a firm – in finding them and, worst yet, in retaining them. This sentiment is echoed not just in the corporate world but also on the floor with respect to the pickers and the loaders.

At the panel discussion, the event I mentioned at the beginning of this column, Tej Nirmal Singh of Ericsson India pointed out that people working in supply chain often complain of the lack of rewards or recognition. In my opinion, people do not hang around long enough to get their rewards. As a friend pointed out at the same conference, the question on the top of a lot of young

minds seems to be, “If I am going to be in Supply Chain, can I hope to become a CEO?” Without much ado, I can tell you “Absolutely”. But like everything else, you have to earn it. More importantly, you have to hang around long enough to earn it. Without getting your hands dirty, without burning the Friday night oil, without sweating it out, it’s probably not going to happen. The ‘CEO in-tuition’ doesn’t just come out of nowhere. It comes after having worked for several years. Today, in India, I know Vice-Presidents and Supply-Chain heads of companies who have about 10-12 years of work experience. This is unheard of in the West where the average work experi-ence of a VP is about 20 years. Supply-chain in India is a young field. If you are a young professional in the supply-chain thinking about leaving the field, think again. As altruistic as this may sound, my interests lie in bringing in talent into the supply-chain fraternity.

Any proficient manager will tell you, people are the key to a profitable business and that requires talented people, which is sadly lacking.

The author can be reached at [email protected].

20

< OpiniOn


The logistics industry is plagued by a huge skill deficit. The lack of training institutes only adds to its woes. Here are a few tips on what LSPs and the user industry need to do to bring in the much-required change.

20

< OpiniOn

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

Skills Pay The Bills

In a fast emerging economy, with robust in-dustrial growth, considering all other factors it is the logistics industry that will acquire an important place. Efficient and effective lo-gistics management has become an essential determinant of business success. Especially in India, the high level of inefficiency in lo-gistics activities is a matter of grave concern. this inefficiency triggers down to all modes of logistics.

India lies in the zone of countries with poor level of infrastructure, low It penetra-tion, limited number of players, and to top it, is fragmented. It does not compare well even with countries like Phillipines, Indo-nesia and other south asian countries, not to speak of south Korea, Hong Kong, singa-pore and Japan.

What adds to our woes is that the unorgan-ized sector accounts for a major share of the logistics market, while the integrated logistics service provider carry only a very small share. this is likely to change in the near future as In-dia comes out as an important emerging mar-

ket. We might soon see the organized players increasing in size by building themselves up or by acquiring smaller players.

analyzing The skill gapWhatever happens to the structure of the lo-gistics industry, the industry valued at `4 tril-lion, already plagued by a huge skill deficit, will find it difficult to attract better talent. the required pace of quality and improvement de-mands a rapid development of capabilities of the logistics service provider and skill devel-opment will emerge as a key capability.

almost all the forums at supply chain today discuss skill deficit as a major concern for both – the LsP and the user industry. Most often these discussions tend to look from the angle of attractiveness of the industry. the subject often ends with putting the blame on low re-muneration level as well as the poor image of the industry, and the discussion ends up with “what needs to be done to retain talent in the logistics industry”.

according to me, though these issues are

22

< OpiniOn

INDIA| June 2011 | www.logisticsweek.com 22

important and an integral part of skill deficit in the in-dustry, the skill gap can be broadly classified in three categories:

1 at the operational level, there is a dearth of truck drivers, load supervisors, warehouse managers and sea farers. a study conducted by KPMG and the CII Institute of Logistics clearly says that the demand for truck driv-ers will increase to 5 million by 2015, as against 3 mil-lion truck drivers that exist today. Of the 3 million, most of them are illiterate without any formal training.

the demand for loading supervisors is expected to be around 0.5 million in 2015, compared to the 0.3 million working in the industry today. the loading su-pervisors’ position carries a lot of responsibility, but they do not have any formal training and most of them are semi-literate. Even if we go by what the KPMG re-port indicates that 50 percent of the manpower will be generated internally, there is a huge need for training and attracting young talent as loading supervisors. the same goes for warehouse managers too. By 2015, we will need 35,000 warehouse managers, but there is no training institute which can seriously train for such skills. the operational needs of the industry as far as skilled labor is concerned will undergo a tre-mendous change because of India’s central position in the world economy. It will also raise the needs for training because of technological changes as well as customer expectations.

2 the mid-level managers, both in LsP or user indus-try, are of poor quality. there is no good training insti-tute which can cater to the needs of these managers and transform them from executives to managers and then to leaders. the large number of business schools offer executive development programs, but they are caught in a trap of their own understanding and hence end up rep-licating what is present in books, ignoring the practice that exists, as well as the practice that will be followed in future. On-the-job training is of poor quality primarily because of an industry which is highly fragmented and seems to be less innovative.

3 the third level of skill def iciency is at the leader-ship level where the supply-chain heads and senior managers come from different backgrounds and tend to follow practices they have followed earlier and make incremental changes, which are more opera-tional rather than strategic in nature. this skill gap arises primarily because even the teaching at business schools, both at Post Graduate and advanced Manage-ment programs, is caught in the trap of operations

management, which is highly academic and quantita-tive. Most supply-chain papers are operational heavy and lack a cross-functional approach to understand-ing supply-chain issues. they fail to provide a modern day supply-chain perspective as they are taught by professors who have left behind the trends that dic-tate the growth of the industry.

The solutionI often wonder why in a country like India where a large number of people with matriculation and intermediate qualifications are looking for jobs as watchmen, drivers,

soldiers, sailors, factory works, there continues to be a dearth of people in logistics operations. It would be wise and the right time for logistics players to set up training institutes. they could do this by availing the skill Devel-opment fund from the Union Government and starting a knowledge awareness program so that the unemployed youth of this country can be employed in this sun rise industry. I sincerely hope that logistics players looking at newer opportunities of business in the same domain will take an initiative.

as far as the middle and top management education lev-el is concerned, the industry should partner with business skills having a capability and intent to cater to the logistics industry. this way they can create a talent management program that caters to the operational as well as strate-gic needs of the industry and create a faculty who could help the industry build its talent. Business schools can be partners with an advance Management Program catering to the leaders of this industry and be more practical and contemporary so that it benefits the future leaders of this industry. the future leaders are those who can visualize the future of the industry and be prepared for its growth.

On-the-job training is of poor quality primarily because of an industry which is highly fragmented and seems to be less innovative.

The author can be reached at [email protected]

24 INDIA| June 2011 | www.logisticsweek.com24 INDIA| June 2011 | www.logisticsweek.com

CR O< feature

25

Lack of proper communication and understanding between clients and service providers leads to friction when it comes to formulating service-level agreements. Remya Philip gets behind the details.

INDIA| June 2011 | www.logisticsweek.com 25

“Each time we sign a contract with a service provider, it is a learning

experience,” says Tej Nirmal Singh, Head – Supply Chain, Ericsson India Pvt. Ltd., from his infinite experience with service level agreements or SLAs. “Every contract teaches us something new and is an improvement over the last one we signed.”

An SLA, as the name suggests, is a contractual agreement signed between the customer and the serv-ice provider that states the terms and conditions of their relationship. Although it seems simple, in real-ity establishing this relationship is quite complicated and is the reason for much chaos and dysfunction in supply-chain management.

Depending on the nature and breadth of the contract signed there are multiple kinds of SLAs. However, essentially most of them consist of clauses mutually agreed upon by the parties involved, in relation to timely deliveries, quality of products and relevant transportation. Hitesh Gos-sain, Senior Vice-President, Credence Logistics, says, “Matters related to turnaround time reduction, uptime on equipment, total cost savings, re-duction of losses like those caused in in-transit, moisture content losses and pilferage are some of the terms stated in an SLA.”

Defining exactly what goes into an SLA is a tedious task. It could vary depending on the service that needs to be rendered as well as on the par-ties involved. “Scope of work, desired LSP profile, pre-requisites needed, contractual period, standard opera-tion procedure, user obligations, rate schedule with tax applicable, MIS customized reporting, penalty and bonus schedule, share of business, arbitration, and termination, all fall under the purview of an SLA,” says Mayank Kaushik, Manager (MT-9), Supply Chain Division, Maruti Suzu-ki, emphasizing on the broad nature and scope of an SLA.

Ramanand Bhatt, Chief Techni-cal Officer, VRL Logistics, classifies SLAs into two types – time-sensitive agreements and non-time sensitive agreements. “The non-time sensitive agreements do not specify when the goods would reach but the delivery happens within eight days. Such a delivery naturally costs lesser. Time-sensitive delivery agreements, on the contrary, define the transit time based on a matrix we have prepared.”

Penalties are issued on the LSPs if they fail to deliver as per the stated conditions and incentives are ob-tained in cases when the LSP con-cludes a service before time. Penalties could be equivalent to direct and in-direct losses owing to SLA deviation.

ConnectionR O S S

Mr. Gossain says, “Failure to live up to stated agreements could result in revoking of the associated bank deposits/earnest money deposits, or even a pre-closure of contracts.”

Confirming this, Mr. Kaushik says, “Assigned penalties are levied for non-performance or non-compliance with the set standards which will affect the LSPs periodic performance rating. This will be followed with reduction in the share of business. After having left no stone unturned, if there is still no improvement over a period of time, which is actually in the rarest of rare cases, the concerned LSP may have to exit with due notice.”

the Blame GameUnreasonable SLAs set up by the cli-ent and agreed to by the LSP is one of the biggest pain points facing the service level agreement predicament. Elaborating on this, Col. Vijay Nair, General Manager – Supply Chain, HyperCity (India) Retail, says, “Often clients demand for things that they themselves cannot attain but expect the LSP to, which is very irrational on the part of the client.”

In the area of manpower, often the manpower that is employed is not skilled as per the requirements agreed upon while signing the con-tract. This naturally affects the qual-ity of service.


“They are one-sided and are typi-cally accepted by vendors who are desperate to get in for business ex-pansion and are unaware of the pos-sible on-ground realities. By the time this is realized, the same process initiates for a new vendor again,” ex-plains Mr. Gossain, as being one of the reasons for concern.

Mr. Bhatt says clients have high expectations leading them to make unreasonable demands with respect to turnaround time or transshipment specifications. “Sometimes the de-mands may not make practical sense to the way we function. For example, a client asking for nine tons of mate-rial to be moved over a long distance but insisting that the service must in-volve no transshipment.”

Stating extreme customer de-pendency as one of the main reasons of concern for clients, Mr. Singh says that LSPs are often quick at pointing

Clarity must be achieved on each and every thing mentioned in the SLA and we must take in writing that there will be no hidden charges.”

— Col. Vijay Nair,General Manager - Supply

Chain, HyperCity (India) Retail.

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FUEL SUPPLY 46Exploring oil-and-gas upstream and midstream supply-chain biz

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Page 34

EYES FRONT

I N D I A’ S N O.1 LO G I S T I C S M AG A Z I N E

fingers at the client companies for inappropriate information given by us, for their poor performance.

There is also constant resistance by the LSPs to accept their faults and failures by looking for escape routes, excuses and trying to take advantage of any lacunae that may be present in the existing system. “Initial reluctance to comply with the desired key performance pa-rameters citing uncontrollable environmental factors is a com-mon trend among LSPs,” says Mr. Kaushik.

The deplorable infrastructure issues in India only add to the com-plexities. Mr. Bhatt explained this stating, “When going by road, the documentation that needs to be carried out is highly unorganized and complicated. The goods and service tax is supposed to solve this problem but the question is when.”

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Problems with the roads and funds, and creating permits for trucks are plenty, and are seriously affecting the seamless movement of trucks and thereby the observance of several SLA parameters.

“The way the supply chain func-tions is not always constant,” points out Col. Nair. “Factors related to transportation, infrastructure, warehousing or labor standards are constantly changing. Such vagaries in the supply chain often make func-tioning as per the SLAs difficult.” There’s a set process of going about the service that an LSP is expected to follow but it is not infrequently that

LSPs take short cuts and try to get things done in the cheapest possible manner.

According to Mr. Bhatt, owing to the high transportation costs pack-aging is compromised on to keep the costs low, eventually encouraging overloading.

Better Safe than SorryGiven the volatile nature of a client-LSP relationship, there are several things that client companies can watch out for while formulating an SLA. “Detailed logistics cycle flow, desired and achievable key perform-ance indicators and key result areas, communication network and report-ing hierarchy to be followed and user-friendly system facilitation are some of the important aspects that need to be discussed and clearly stated in an SLA,” says Mr. Kaushik. A clear

understanding of the traffic regula-tions and relevant laws of the land are factors that client companies tend to underestimate.

Reading and understanding the entire agreement in absolute detail is essential before signing it. “The agreement must be clear on each and every thing mentioned in the SLA and we must take in writing that there will be no hidden charges,” asserted Col. Nair. For example, loading may be mentioned in the agreement but the labor involved for the same may not. LSPs often cite such loopholes as hidden charges.

A perfect SLA is almost utopian

but the key to attaining one lies in learning from experience. Mr. Singh stressed on the need to refine SLAs based on experiences in order to make them foolproof. “Setting the right parameters that should be in-culcated in the SLA is the most cru-cial decision that needs to be made. And it is these parameters that deter-mine whether the SLA is measurable and achievable,” he adds.

All legalities related to the insur-ance of products should be taken care of and clients should always be equipped with contingency plans in times of failure. “Any arbitration needed must be under the client’s ju-risdiction,” insists Col. Nair.

Mr. Gossain says, “If the SLAs are mutually agreed upon and the screening criteria is more than just commercials, and includes compe-tency mapping and technical evalu-

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there must also always be in place a review system to keep checking that the stated parameters are being adhered to and this check must happen periodically.


ation, then delivery of SLAs would definitely be better.”

There must also always be in place a review system to keep check-ing that the stated parameters are being adhered to and this check must happen periodically. “The root cause of the problem lies in the lack of courage by LSPs to state certain things precisely, hence leaving much of it to a benefit of doubt situation. Such situations always give the LSPs an advantage of twisting and turn-ing things according to their con-venience,” says Mr. Singh.

However, all said and done, there are unforeseen factors like the cata-strophic failure of infrastructure, drastic changes in government reg-ulations, strikes, or sudden spikes in equipment costs, etc. that can crop up anytime and cannot be ac-counted for.

Working together fruitfullyFrom what can be seen, much of the problem lies in the initial stages of formulating an SLA, and revolves around stating what needs to be stat-ed, sufficiently and at the right time. The client and the service provider need to find ample time to discuss the various parameters and ensure they are reasonable and mutually agreed upon. This will surely offer clarity in the relationship.

The LSPs could do with more un-derstanding from their clients, espe-cially at times when uncontrollable factors play spoil sport. Mr. Singh recommends, “We need to behave like a partner facilitating collabora-tive relationships, and discuss the SLAs with the service providers hear-ing them out as well, rather than sim-ply forcing it on them.”

A two-way relationship, by which clients share their value systems, con-cerned costing and business models can help the two parties to discuss their needs adequately and also find scope for further improvements. “It is important to treat your LSPs as equal partners and not with a myopic view of the relationship being a principal-agent one. Work together especially in the initial stages of the project until it matures and operations stabilize. Continuously monitor the operations and key performance indicators to ensure that they are on track,” says Mr. Kaushik when asked how the client-LSP friction can be resolved.

“Both the client and LSP need to be honest in their intent and capabilities. At a time of crisis the issues should also be resolved by discussions that both the parties are equally involved in. Once resolved the arrangement can continue as planned, if not, clients must be able to put their feet down and terminate the arrangement in a pro-fessional manner,” advises Col. Nair.

Therefore a collaborative rela-tionship between the clients and service providers is definitely the need of the hour.

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Setting the right parameters that should be inculcated in the SLA is the most crucial decision that needs to be made. And it is these parameters that determine whether the SLA is measurable and achievable.”

— tej Nirmal Singh,Head - Supply Chain, Ericsson

India Pvt. Ltd

< Cover Story

KK Kaul,Vice-President (Head - SCM), lG Electronics India Pvt. ltd.

< Cover Story

Photo: Ramlath Kavil

35INDIA| June 2011 | www.logisticsweek.com 35

Photos: Vikram Barwal

He has been working with the company since LG India set up operations in In-dia in 1997. Growing

with an establishment does have its advantages. You become familiar with the system. You are part of the growth. You know the history. You learn from your mistakes and take forward the positives. You have seen the innovations that worked and those that didn’t. You have watched people join and leave or stay on. And all this has added to the experience. So it’s no surprise when after 15 minutes into the meeting with KK Kaul, Vice-President (Head - SCM), LG Electronics India Pvt Ltd (LGEIL), the man not only begins to reel off figures and statistics related to vari-ous departments and products, but also speaks on the dynamics of busi-ness in general and the portfolio he handles in particular. He can tackle a topic that most people wouldn’t touch with a bargepole. That’s expe-rience and authority. Fourteen years with a company does that to you.

Comfortably settled in his office

after having concluded a meeting with his team, Mr. Kaul requires no prodding and is ready to speak on is-sues about inadequate transportation and corrugated infrastructure (more about that later). But for now, Mr. Kaul must explain the inside story of how, according to a survey conducted by market research GfK Group last year, LG continues to be ranked No. 1 in most product categories, except LCDs where it comes up No. 2, Audio: No. 3, and cell phones as No. 4, and unknown to the common man how the supply-chain department keeps the machinery well-oiled.

A little knowledge of that can be gleaned by looking around his office. Occupying an entire wall sits a white-board displaying rows and columns of figures under various headers. Ask him about the figures, and smiling, Mr. Kaul says the figures represent up-to-the-minute data on raw mate-rials inventory, manufacturing sales, targets, end-products inventory, etc. “The chart is crucial to us as it gives us a holistic picture of our position across the board of our targets to be met,” he says.

Manufacturing MomentumLGEIL manufactures a range of products spanning washing ma-chines, color televisions, monitors, refrigerators, air-conditioners, mi-crowave ovens, DVD, cell phones, and Optical Disk Drives (See Box: LG India: Production Numbers) at its two plants in Greater Noida operational since 1998 and at Ranjangaon in Pune since 2004, besides employing

n Annual turnover: `19,350 crore in 2011n Manufacturing plants: Noida, Punen Electronic Manufacturing Companies (EMS):

8 (Dehradun, Rourkee, Rudrapur, Baddi, Noida, Kolhapur, Pune, and Rajpura)

n Logistics Service Providers: Noida (35), Pune (21), C&FAs (29)

n Dealers: 1,400n Sub-dealers: 32,000n SKUs: 1,000n Components sourcing locations: China,

Korea, Thailand, Malaysia, Indonesia, and Japan n Technology providers: Oracle, JDAn Warehouses: 53n Inventory turn: DIO: 27 days, Warehouse shelf

inventory turn: 4 daysn Distributors and Stockists: 700n Supply-chain employees: 140

lGEIl Supply-Chain: at a Glance

ooking oodLG electronics India believes in reaching products to people on-demand. Somebody impressed the market with a sense of enterprise, depth of vision, efficiency of service and the durability of products. Jayashree Mendes meets the vice-President (Head – SCM) of LG electronics India, KK Kaul, the man behind this movement.


< Cover Story

the services of third-party manu-facturers. While LGEIL has several firsts to its credit, in manufacturing it was the first company to produce DVD Writers in the country.

The move to rope in electronic manufacturing services (EMS) or third-party manufacturers arose in 2002 after LGEIL realized that supply was not keeping up with demand. The Noida plant was run-ning to full capacity.

Over the next six years, LGEIL has meticulously added 15 EMS com-panies to exclusively manufacture goods for them. To ensure quality, LGEIL provides the EMS companies with components such as picture tubes, panels, chips, compressors, LCDs, etc., that it sources globally for its own two plants.

Today, the EMS companies manufacture 25 percent of the to-tal number of goods produced by LGEIL. For logistics purposes and to ensure that the components reach the EMS companies on time, the locations of the EMS companies are based at Dehradun, Rourkee, Rudrapur, Baddi, Noida, Kolhapur, Pune and Rajpura. The locations are significant in that they are either close to LG’s Greater Noida plant or the Pune one, thus making trans-portation and access easier.

It is common for MNCs like LG, Panasonic, Samsung, or Ericsson (LOG.India January 2011 issue), who have global manufacturing units to source components and raw materi-als from global suppliers. Mr. Kaul says, “We source major and locally

36

unavailable components like pic-ture tubes, LCDs, chips, panels, compressors, etc. from established Asian companies, most of who are our subsidiaries. The components come in from China, Korea, Thai-land, Malaysia, Indonesia, and Japan.”Except for deciding on price and the order, the logistics of raw materials and components is over-seen by the supply-chain depart-ment under Mr. Kaul.

In keeping with its long-term plans, LGEIL is planning to set up a third manufacturing plant, most like-ly to come up in West or South India.

LGEIL's goods come out of two manufacturing units based out in Greater

Noida and Pune, besides its 15 electronic manufacturing services companies.

Twelve years ago when LGEIL set up manufacturing facilities, it was still testing the demand waters and the focus was small investment in large capacities. Today, more surefooted, the investment on the expected plant can go up to `2,000 crore. According to Mr. Kaul, “Our research tells us there still remains about 50-60 per-cent of the market which is untapped. We have a strong product range and should be able to permeate the mar-ket deeper seeing the demand poten-tial. The supply-chain is also working out ways to meet the new challenges as growing customer bases will cre-ate logistical challenges.”

Simultaneously, LGEIL is invest-ing `800 crore in ramping up pro-duction at its Noida plant. LGEIL ex-pects the increase in production to commensurate with a three-fold in-crease in revenue by 2015. Currently, the company exports 20 percent of produced goods to Africa, the Gulf countries, Europe, the US and the CIS countries.

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The People Who Move lG: The lSPs3PL Service Providers - Warehousing n Associated Agencies (Mumbai)n Premier Coach & Synthetic Productsn Newaskar Logistics Servicesn Aparna Agency Pvt. Ltd n Shree Logisticsn Kandarp Traders n APL Logistics Pvt Ltdn DHL Lemuir Logistics Pvt. Ltd


experience CountsMr. Kaul’s association with LGEIL started when the company first came to India as Goldstar, by tying up with a local manufacturer. At that time, regulations in India did not al-low for a foreign company to set up a fully-owned subsidiary. Mr. Kaul and a small team of people set up the India arm for LG Electronics. In his words, “The Korean headquarters were apprehensive about the accept-ance of the brand. They had a hands-on approach on all functions and processes in India. Today LGEIL has come a long way to functioning on its own, with the Korean headquar-ters mainly providing the design of the products and the technology to run processes.”

Mr. Kaul’s years of experience at managing imports, exports, plan-ning, procurement, and his per-ception of excise and sales tax laws helped him build up the infrastruc-ture for LGEIL from scratch. A grad-

uation from Delhi University and a degree in Materials Management from Bhartiya Vidyapeeth Delhi completed his education. The first three years with Eicher Good Earth honed him in procurement, sales and imports, and only improved with the next three years at Samtel. It was, however, the six years that he spent with Rajasthan Petro Synthet-ics where he learnt project manage-ment and the subtleties of setting up new projects. Mr. Kaul says, “I drew on my experience and accomplished a lot more at LGEIL, right from fore-casting to manufacturing to build-ing the supply-chain. I have been part of the team that established the line of production, quality, set requirements and price, juggled transportation, managed import of raw materials and finished goods in keeping with Customs clearance.”

the Supply-Chain Process At a time when most companies are dissatisfied with the high logistics cost, Mr. Kaul says quietly and with some pride, “Our logistics cost is 3.01 percent on net sale after deduc-tion of excise duty, including our ex-port freight cost.” So how does the company keep it so low?

He adds, “We experimented with several production and distribution models over the last few years. The exponential growth in demand and constantly catering to newer and distant locations buoyed us to im-prove our supply-chain. But it was the implementation of GSCP (Global Supply Chain Planning) in 2008 that streamlined all our operations.”

Year 2008 also changed a lot of things for LG globally with the im-plementation of new IT systems and changing its transportation functions through adoption of IT. Earlier, the Korean chaebol found it hard not only to keep up with the fast-growing company, but concur-rently tracking demand, supply, in-ventory, manufacturing, raw materi-

als, logistics and distribution. It was onerous to compute collective data that would allow the company to see its progress at a quick glance, and in real-time. The Indian arm had to regularly send across long detailed excel sheets of data. The Korean headquarters required a system to synchronize forecasts, production and sales that would eliminate the issues of inaccurate shipping, plan-ning and inventory. The Global Sup-ply Chain Planning was established.

The GSCP integrates control of the entire business process from re-ceiving orders, production to sales, and inventory, with an online link of LG companies around the world. In-tegrated with the Oracle ERP systems of LG worldwide, the end result of the deployment of GSCP enables the company to close the gap between demand and supply. It also provides the previous week’s performance re-sults and capability matrix.

The difference in GSCP from the earlier IT tools that LG Electronics has been using is that it combines design, parts supply, procurement, production, supply-chain, and cost management into an integrated process thus allowing the company to know how much to produce. For that to happen, Mr. Kaul clarifies, it is crucial that all the branch person-nel from every department collabo-rate on the weekly Sales & Opera-

GSCP integrates control of the entire business process from receiving orders, production to sales, and inventory, with an online link of LG companies around the world.


< Cover Story

Forecasting ParadigmForecasting for LGEIL is at three levels: Inventory, production, and sales. The company adopts a short-term forecasting of up to six weeks, and a mid-term one for four months.

For LGEIL, it is important that the company procures right. Some of the components that it imports have long lead times. For instance, fol-lowing the earthquake and the tsu-nami in Japan, companies round the world had to look elsewhere to fulfi ll their supply of raw materials, which otherwise came from that country. This impacted production and sup-ply. Mr. Kaul says with some satisfac-tion, “Our short-term forecasting is 95 percent accurate, though of course we are working at improving it. Since we need to place orders for some components at least three months in advance, we have maintained a fore-casting model of 16 weeks.”

The stress on accuracy becomes even more pertinent considering that it imports about 35-40 percent of components which total about 60 percent in value terms.

LGEIL executes demand forecast-ing by using GDMI (Global Demand Management Innovation) . The solu-tion used for demand forecasting is integrated with the demand fulfi ll-ment system. Based on the previous year’s seasonality demands, trends in the previous quarter across each product, the company arrives at ex-pected demand in the coming sea-son. It works on three layers: market feedback, Global Aspiration and supply-chain capabilities – all of which lead to a single sales plan. For instance, For instance, from Target Aspiration, LGEIL has deducted a higher turnover can only be accrued by focusing on high-value products.

The results of the inventory and demand forecasting are passed on to the EMS companies and to its own production department. To main-tain the rhythm, all the various de-partments straighten out forecast-

ing by the 6th of every month, by the 12th all the divisions fi le in their data in the system, and by the 16th the schedule for the next month will be pinned up on the production de-partment’s display board.

LGEIL’s sales department sends across its forecasting data to a cen-tralized server on the last Thursday of the month for the following month, while keeping fi gures tentative for the next three months. The produc-tion department picks up the plan and based on the closing stock and demand forecasting decides on the numbers to be manufactured. Mr. Kaul says, “At the time of sales fore-casting, we also decide on the prod-ucts that should be sent across to a particular region, how and when.”

With the new plant coming up by 2013, LGEIL is mulling the capacity it needs to fi t based on a tentative de-mand forecasting it has visualized till 2015.

Inventory ControlLGEIL’s strategy is to strike a bal-ance between inventory levels and

Forecasting accuracy is pertinent considering that LGeIL imports about 35-40 percent of components which total about 60 percent in terms of value.

tions Planning (S&OP) to decide on production and sales plans.

Prior to deploying GSCP, LGE also faced problems in managing inventory. At a time when it needed to be at 42 days of inventory, it had 10 to 15 days more of inventory. LGE rolled out 12 Inventory Optimiza-tion solutions thus releasing it from millions of cash fl ow that’s no long-er tied to inventory.

Considering that LGEIL outsourc-es its transportation, the company often faced simple theft, misrepre-sentation of inventory, counterfeit-ing and piracy. This was restricted by installing deployed Global Digital Logistics System (GDLS) which aids in better route optimization, as well as improved loading and tendering capabilities. Playing on its existing Oracle ERP and EXEWMS, the trans-portation solution provides execu-tion capabilities to its shippers and 3PL partners.

LGEIL believes that outsourcing non-value added activities, like transportation and warehouses, to third-party can help create focus from operational activity to strategic value add operations.

n Washing machines: 16 lakhn Color televisions: 40 lakh n Monitors: 10 lakh n Refrigerators: 40 lakhn Air-conditioners: 12 lakhn Microwave ovens: 8 lakhn DVDs: 8 lakhn Mobile phones: 60 lakhn Optical Disk Drives: 120 lakh*Figures are per annum

lGEIl: Production Numbers*


optimum utilization of capacity. It also has to deal with high rates of product obsolescence and evolving customer needs. The GSCP main-tains a record of all inventories, but according to Mr. Kaul, “one always tries to decrease inventory turn at warehouses”.

He adds, “Days of inventory out-standing or DIO for finished goods is 27 days (including in transit), while monthly warehouse shelf in-ventory turn is 4 days. We try to en-sure that goods move out of the Dis-tribution Center in less than 30 days. Our focus this year is on reducing DIO, because of shortened product life cycles. That’s why our forecast-ing has to be incisive.”

LGEIL takes care of the life-cycle of products, especially end-of-life (EOL) products, through a carefully controlled production plan. It sells EOL products through schemes, and some find its way into smaller and rural towns. In urban areas, this ap-pears difficult as few or no dealers want to be saddled with old and out-dated models. The GSCP tool, while

keeping track of EOL products, also throws up data of where these prod-ucts could be deployed and sold.

LGEIL follows the hub-and-spoke model. So the final goods are moved from its various factories to the central DC at Noida and Ranjan-gaon, from where it moves to its 53 warehouses. A staunch subscriber to the outsourcing theory, Mr. Kaul believes that outsourcing non-value added activities to third-party can help create focus from operational activity to strategic value add opera-tions. This is the reason why LGEIL has outsourced most activities such as transportation and warehouses.

Choosing the right PartnersTowards the end of each year, LGEIL conducts a ‘global bidding’ to choose five shipping lines for its imports and to ship its products across the country. Most major shipping lines participate and send in their quote for a year’s business with their serv-ice conditions. It requires five ship-ping lines to import its containers numbering approximately 24,000

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< Cover Story

TEU per year, of which an estimated 12,000 TEUs are exported every year through Nhava Sheva port alone.

Here are a few more firsts to LGEIL’s credit, according to Mr. Kaul. In India, it was the first con-sumer durables company to use the sea route to ship goods. The first sea movement was from Kandla port to Kochi, and then extended to Coim-batore and later on to Chennai.

It also started sending out goods by rail using the services of the private container train operators (PCTOs),

moved to using trucks that allowed for double stacking.

Up to 2008, LGEIL primarily used road transportation. As consumer durables bear the burden of ‘season-ality’, a festival season in a particu-lar area means that supply could go as high as four times compared to the other months in the year. Citing an instance, Mr. Kaul says, “During Onam in South India, demand for white goods and electronic items go up four times. Similarly, the Dasse-hra or Durga festival in September sees a shoot up in demand in Eastern India. While March and April see a drastic rise for air-condition and re-frigerator compressors.”

outbound LogisticsTo meet the fourfold increase in de-mand, it has to speed up the manu-facturing and transportation to these respective cities. A drawback of hav-ing several manufacturing industries based out of North India, mainly Baddi and Dehradun, invariably sees a huge demand for vehicle require-ments. Trucks move from northern India to the rest of the country. In-flow of trucks to the north is few and this means less backload from the

and introduced the concept of using high cube containers. In rail, LGEIL moves full rail rack to Kochi, Kolkata and Guwahati. Rail transport is fre-quently used from Pune to Kochi and Guwahati, Noida to South (Chennai, Hyderabad and Bangalore).

Mobile phones are shipped by air as they are prone to constant change in prices, high obsolescence and the need to supply on demand thus mak-ing sure that inventory is minimal.

In 1997, it started using closed body trucks for distribution and

An LGEIL warehouse at Greater Noida.

Every day LGEIL sends out 7,500 trucks from its various manufacturing units to its 53 warehouses across the country.


south or the east to the north. The lack of backload sometimes creates problems in terms of long hauls and shortage of trucks.

Currently, LGEIL channelizes approximately 7,500 vehicles every month from its various manufactur-ing locations to branch DCs. But it was the constraint of availability of quality vehicles that led the company to explore multi-modal transporta-tion. Besides this, approximately 24,000 vehicles are sent out from branch DCs every month, for second-ary transportation, to various dealers and distributors all over India.

Arvind Kumar Lohia, Managing Director, East India Transport Agen-cy (A unit of EITA India Ltd), and an LGEIL transportation partner, says, “Since the products are in high volume and fragile in nature, we cater with customized vehicles. A challenge is to cater to seasonal fluctuation which is

endemic with such a products range. It requires constant planning and shifting our fleet strength to those lo-cations where they need to send their products as well as arranging for the return goods from those locations.”

Siddharth Adya, Managing Di-rector, South Asia Region, at APL Logistics, a 3PL partner managing the regional distribution center at Chennai, says, “Retaining labor is a challenge. Hiring quality people with the right skill sets is a constant challenge, particularly in a high-vol-ume facility like this one.”

APL Logistics handles all the ware-house function for LGEIL at Chennai like Inbound Inventory Management, Outbound such as handling ship-ments to dealers and modern trade and institution sales; Storage, and Transportation Management and Co-ordination including update of proof of delivery in LGE’s Oracle system.

41

Anoop Chauhan, Regional Head (SCM - Business Development) at DHL Lemuir, a 3PL partner to LGEIL, says, “Consumer durables are sensi-tive to damage. We have customized trucks and tracking that ascertain that goods move as per the client’s requirements. The purpose of bring-ing us in was to ensure that goods are available on the shelf when the dealer needs it.”

It was the constraint of availability of quality vehicles that led the company to explore multi-modal transportation.


< Cover Story

pany and each division would deal with the distributor separately. This caused a certain amount of confu-sion in the supply-chain. Soon there arose issues and allegations in terms of margins or the lack of it, product quality, and reverse logistics. LGEIL (possibly, another first way back in 2003) charted a new course and went to the regional distributors (RDs) directly, thus doing away with na-tional distributors. Mr. Kaul says, “We thought that only local people would know their own market. This has worked well for us.”

It also began offering higher mar-gins to help them scale up their busi-ness from LG products. The expertise of the RDs also helps LGEIL to near correctly send out the right product batches and manage the reverse logis-tics too. Vishaal Dutta, Regional Man-ager (Maharashtra), LGEIL says, “The customer returns are handled by the

customer support department direct-ly, while the returns from dealers are handled by the supply chain. Trans-portation used is the same which goes for the delivery of the products to such dealers. In Maharashtra, we have a warehouse in Bhiwandi and goods are moved to the warehouses of our trade partners. We deal directly with dealers and distributors who in turn supply to sub-dealers.”

So how does it distinguish be-tween urban and rural supply-chain? “We don’t,” says Mr. Kaul. “Actually, you’d be surprised that goods that find their way to urban places also find their way to rural, though on a smaller scale because of power out-ages or lack of electricity.”

As is evident at LGEIL, there’s much required to do something sim-ple and keep it that way. See demand and push supply, so goes the saying at LGEIL.

regional DistributionTen years ago, the consumer dura-bles and electronics trade was in dis-array in terms of distribution. Most companies preferred to go with national distributors, who in turn sent out the goods to dealers. Deal-ers did not deal with the company directly. Also, companies manufac-turing several products had created separate divisions within their com-

the expertise of the regional distributors helps LGeIL to near correctly send out the right product batches and manage the reverse logistics too.


< Here To Help

I work at a warehouse that stores telecom equipment. Since most of the equipment is sensitive, they need careful han-dling. I have limited manpower handling the equipment. How can I reduce the damages without increasing manpower?Product damage in a warehouse is almost as common as air and water. It is so common that it has become invis-ible, covered by budget allowances and insurance. The cost of damages in warehouses runs into billions of whatever currency you choose.

In telecom, the damaged product is not just about the immediate cost of the lost products. If it is salvageable, it will need to be assessed and a repair arranged. It is very important for a warehouse manager to sensitize the manpower on the kind of material they are handling so that they can take the necessary precautions. Training on material handling is also imperative and this should include the following:

n Knowing the correct way of stacking the boxes.n Understanding the Material Stacking Height. n Precautions to be taken while loading and unloading,

and during the movement of material.Manual movement of material also accounts for the

damages, hence some material handling equipment can also be used in order to reduce the damages.

Getting the orders right and the right SKUs is critical for a retail-store warehouse. How can I ensure that the right SKU are picked up against the order placed hence ensur-ing stock accuracy? What IT tool can I use?One of the critical success factors of efficient warehouse

management is stock accuracy which leaves no room for picking errors. The error in picking usually occurs when stock is mixed up. For efficient operations, your ware-house inventory system must be able to identify what product is stored in each location, as well as the quantity of each product in every location. Hence it’s imperative to define warehouse layout and stock locators.

The stocks should be stacked separately preferably one SKU in a pallet. Similar looking SKUs can be tagged and display boards with SKU details can be put up. The back office must prepare picking lists with an exact loca-tion for each item which helps the picks pick right SKU.

There are various WMS systems available today which can be customized as per your requirement. WMS pro-grams enable centralized management of tasks such as tracking inventory levels and stock locations. WMS sys-tems may be standalone applications or part of an Enter-prise Resource Planning system.

My warehouse measures approximately 30,000 sq ft. How do I measure the utilization of per-square-foot rate and find whether I am making maximum use of space?Inefficient warehouse space utilization reduces the bot-tom line. In order to measure space utilization, which is based on cubic feet used/cubic feet available it is impor-tant to know the amount of space that can be made avail-able for storage, out of the total warehouse area available. There are various factors on which this depends:n The storage capacity of the warehouse itself, which is

directly a function of the physical aspects of the layout, the width of the aisles, the storage methods, the types of material handling equipment.

n Number of SKUs.n Extend of palletization.n Stacking norms.

The following points can help increase space utilization:n Utilize vertical space. n Reduce wastage in terms of utility area.nSelect the right material handling and storage

equipment.

Whether you are a warehouse manager, or a warehouse owner or just a supply-chain enthusiast wanting to know more about warehouse management, we have an expert you can turn to every month for all your queries, on this page. Starting this issue, Pooja Dayal, Head-Business Excellence Function, DIESL, will answer readers’ questions on teething issues they face in the area of warehouse management.

How can I reduce damages to goods without increasing manpower?

Pooja DayalHead-Business Excellence Function, DIESL

An error in picking occurs when stock is mixed up. For efficient operations, the warehouse inventory system must be able to identify what product is stored in each location, as well as the quantity of each product in every location.

Please mail your queries related to warehouse management to [email protected]


< primer

Radio Frequency Identification (RFID)

Key Performance Indicator (KPI)

Back to Basics

RFID is a technology that in-corporates the use of electro-

magnetic or electrostatic coupling in the radio frequency (RF) portion of the electromagnetic spectrum to uniquely identify an object, person or animal. It has come into increas-ing use in the logistics industry as an alternative to bar code.

The objects could be anything physical, such as equipment, pallets, or even individual units of product, in order to be identified by RFID. The RFID tags can be active or passive. Ac-tive tags contain a power source and emit a signal constantly. Passive tags receive power from the radio waves sent by the scanner or reader.

It has various applications in the industry. From the retail point of view, RFID can improve the retailer’s in-ventory management, replenishment to achieve timely and efficient trans-portation and inventory tracking, in-crease efficiency, and reduce errors. In the area of warehousing, RFID can be used to automate operations re-lated to inventory and pick up. In the distribution domain, using RFID can greatly accelerate the speed of delivery and distribution process, and improve selection efficiency and accuracy, and reduce labor and distribution costs.

Some of the advantages of RFID are:n The ability to be read over longer

KPIs are used by organizations to evaluate their success or the success of a particular activity

that they have undertaken. In this way, KPIs enable an organization to define and measure its progress. Choosing the right KPIs is a crucial decision that sup-ply chain managers need to make. The decision can be taken only after understanding what exactly the important goals of the organization are.

To identify the areas that require improvements so that KPIs can be developed accordingly, various techniques are used to assess the present state of a business and its key activities. A common method for choosing KPIs is to apply a management framework such as the Balanced Scorecard.

Some of the parameters that can be used as in-dicators include cost variances, budget ratio, order processing cycle, production cycle times, downtime, outsourcing percentage, load utilization, out of stock percentage, obsolescent stock percentage, recycling percentage, back order percentage, just-in-time per-centage, energy efficiency ratio, peak capacity per-centage, supplier ratio, vendor rating, internal satis-faction levels, etc.

MIS is a computer-based system that provides managers with

information for organizing, evaluat-ing and efficiently running their de-partments. An MIS can include soft-ware that helps in decision making, data resources such as databases, the hardware resources of a system, deci-sion support systems, people man-agement and project management applications, and any computerized processes that enables the depart-ment to run efficiently.

Analyzing these reports from time to time enable management accountants to solve business problems such as that of costing a product, service or a business-wide strategy. By studying these system

reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually. MIS can collate into coherent reports unmanageable volumes of data that would other-wise be useless to decision makers. In the past, data had to be manu-ally processed for filing and analysis but with MIS it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole.

Such an improved reporting of business processes provided by MIS leads to a sleek production process which naturally enables more efficien-cy in managing the supply chain.

In this section, we revisit some basic concepts – everyday logistics and supply-chain terms that need a brush up (or update) every now and then.

Can you help us with more such terms – used everyday but seldom revisited? Please mail your suggestions to [email protected]. If chosen, we will be happy to publish your suggestion with due credit.

Management Information System (MIS)

distances.n The elimination of requirement for “line of sight” reads.n Added capacity to contain information.n The RFID tag data can be updated or changed.

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< PAnoRAMA

Treating Food RightIntelligent Agrifood Chains and Networks

offers a timely discussion of the current state of food logistics, and indicates the major ICT problems that can occur during produc-tion, warehousing, transportation and retail-ing. Emphasis is given to new technologies and intelligent systems that are able to process time-dependent information, handle emer-gencies, and support logistics operations in food management.

In particular, the authors explain how telematics and RFID can be implemented in the supply chain. The book also includes real-life case studies, in which actual food logistics

The book examines the historical transfor-mation taking place in China today as it

evolves from global manufacturer to global consumer marketplace and its impact on future retail supply chain management.

The book is divided into four key sections. It offers a background on China’s economy and infrastructure followed by an insight into the ef-fects of internet design technology. It also dwells on ways of building more dynamic, sustainable and resilient transportation networks to enable supply chain innovation. In the last section, Lev-esque offers a tactical perspective on the funda-

the Green to Gold Business PlaybookBy Daniel C. Esty, P.J. SimmonsPublisher: WileyPrice: `1,253

Intelligent Agrifood chains and net-worksBy Michael Bourlakis, Ilias P. Vlachos, Vasileios Zeimpekis Publisher: WileyPrice: `8,469

the shipping Point: the Rise of china and the Future of Retail supply chain ManagementBy Peter J. LevesquePublisher: Wiley Price: `2,240

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problems and their solutions are presented demonstrating how systemic and logistics ap-proaches may be combined.

The book is directed at academics, research-ers, and students seeking the necessary back-ground in terms of the interplay between the food supply chain and ICT.

and strategies that have been shown to cut costs, reduce risks, drive revenues, and build brand identity.

The book explains in detail how each busi-ness function or department can achieve an eco-advantage over the competition and also offers frameworks, checklists, and action plans applicable to any business–big or small, in manufacturing or services.

mentals of logistics network design and success-ful supply chain execution in China.

The book puts together practical expertise and insight in examining the opportunities that exist in both consumer retail and supply chain management over the next decade in China.

Sustainability Guide

The China Way

Through this book, the authors offer strong business advice for gaining com-

petitive advantage through sustainability action in buildings and operations, informa-tion technology, product design, sourcing, manufacturing, logistics and transportation and other key business functions.

With rising energy and natural resource costs, intensifi ed regulations, investor pres-sures, and a growing demand for environ-mentally-friendly products, sustainability is no longer an option—it’s a business impera-tive. In this light, unlike many green busi-ness books, this book skips the environmen-tal ideology and deals exclusively with tools

Material Management Logistics Warehousing

· Navi Mumbai · Mumbai · Chennai · Delhi · Visakhapatnam · Mundra · Dubai · Oman · Houston TX ·

Visakhapatnam Special Economic Zone, Duvvada, Visakhapatnam-530049

www.ows.net.in | Tel: +91-22-67698932 | Fax: +91-22-27612008 | [email protected]

OWS adjudged THE BEST SEZ unit Services for 2008 09 by EPCES.

Award presen by Hon. , . tya M. Scindia

on 18th May at New Delhi to Mr. Vinay R Sharma, MD & Mr. Vineet Sharma Director OWS

ed THE BEST SEZ unit Services for 2008 09

by Hon

Oil & Gas Services“Beyond your Imagination”


ResouRce centeR Journals, Case Studies, Research Reports

Maximize The Utilization Of Your Vessels By Muller+Blanck

Muller+Blanck are well-known developers of professional software solutions for ship-owners and liner operators. For more than 20 years, shipping companies all over the world have placed their trust in Capstan, their first-class stowage preplanning system.

The paper explains how Capstan al-lows you to manage all the information of a whole voyage. Planning ahead for all ports of a voyage is an easy task - Capstan3 considers a voyage as a whole and provides fast switching among the different situa-tions. The paper addresses how two of the most important issues in the shipping in-dustry i.e. maximum utilization and safety as well as easy control and flexibility can be achieved using Capstan. For maximum utilization and safety it states the following three solutions: Transparent IDE & Import

Handling, Comfortable Bay-Plan Evalua-tion, Extensive Check-Module, with a brief explanation on each of them.

Easy control and flexibility through Cap-stan can be ensured through calculations that assure online tank-updates and flexible documents for on board-management.Search Tags: Muller+Blanck, Capstan, vessel utilization

Development, Implementation and Validation Of An Automated Turnout Inspection VehicleBy Harsco Rail

This paper presents the development, dem-onstration and validation of an Automated Switch Inspection Vehicle (ASIV) for auto-mated inspection of rail portions of turn-outs to include switch points, stock rails, closure rails, and frogs.

The ASIV vehicle consists of a hi-rail truck with specially designed high-image-acquisition-rate laser rail profile measur-

ing systems with new generation analysis software that analyzes key turnout rail in-formation. This analysis comprises both safety and maintenance related switch rail information including shape and configu-ration of switch rail and frog, vertical and side wear on stock and closure rails, relative height of switch and stock rail, gap between switch and stock rail, etc.

The paper also presents results of de-tailed tests with over 300 sets of turnout measurements across sampling intervals, wear and safety analysis of switch and stock rail profiles, and matching of meas-ured rail profiles with field observations and measurements.

The overall results presented in the pa-per show that this inspection system has the ability to measure turnout rail safety and maintenance parameters and identify prob-lems to include potential derailment loca-tions and damage sites on turnouts. Search Tags: Harsco rail, ASIV, automated turnout

shippers Are changing their transportation Paradigms to Address capacity shortages And Rising Freight RatesBlogger: Dan GoodwillWith rising demand, shippers are facing a broad array of challenges in 2011. Goodwill reasons how a tightening transportation equipment supply is being triggered by driver shortages, new U.S. government regulations and by a reluctance of carrier executives to add capacity. This coupled with rising freight rates and fuel surcharges, are causing shippers to revisit their freight transportation paradigms.

Informed shippers realize that there are limitations as to what they can do to offset these market driven forces. To retain their business volumes, he suggests that shippers must meet the demands of their clients in terms of order sizes and transit times. As discussed in his previous blogs, large retailers are seeking greater control over their inbound freight transportation. Within these parameters, he states that shippers are exploring opportunities to blunt the impact of some of these changes. Through this post, Goodwill reflects on his recent conversations with shippers and his review of various published reports, and offers some of the strategies and tactics they are employing or investigating.search tags: dan goodwill, transportation, freight

Visibility, the Antidote to supply chain opacityBlogger: trevor MilesMiles writes of the causes for supply chain opacity and

offers some ways of reducing it. He mentions how the Blackberry owners, in a webinar hosted by SCMWorld on April 28, 2011, stated that product portfolio complexity is required to compete in a consumer market with ever changing requirements. This is in stark contrast to many pundits who advocate reducing supply chain complexity, the primary cause of opacity, by reducing the product portfolio. Although he agrees that a sound product portfolio analysis is something everyone should do, he stresses that outsourcing and mass customizations aren’t going anywhere. He suggests that we need to embrace complexity by providing visibility.

In today’s highly outsourced environment, visibility must span several tiers of the supply chain from customer through OEM to contract manufacturer and on to the component suppliers. If you have distributors, then at least get a ‘sell through’ measure of demand, not just a ‘sell in.’

Miles however asserts that just access to data across the supply chain is not visibility. Without a manner in which to respond rapidly and profitably to actual demand, access to data adds nothing. Being able to detect changes from the plan, understand the consequences of the changes on customer commits, capacity requirements, or component requirements, and evaluate alternative courses of action in both financial and operational terms quickly and effectively, is the clue to gaining visibility. Only this will reduce the opacity in today’s supply chains. search tags: supply chain opacity, trevor miles, visibility

— Compiled by Remya Philip

BloGosPheRe


< PAnoRAMA

ICR849-2 FlexLens from SICK is a code reader config-ured with live image and auto setup that allows rapid

image and data transfer via Ethernet. It enables fast, om-ni-directional reading of printed and direct part marked 1D and 2D codes. Such omni-directional identification helps identify objects that are not aligned as well.

The c-mount lens and illumination with adjustable reading distances allow reliable decoding of low contrast codes making it ideal for a wide range of solutions. The dy-namic parameter switching makes decoding of different code qualities possible with just one setting. It comes with a high-resolution, 4 megapixel imager for large field of view. The industrial IP65 housing (with optional hood and cap) makes it usable in tough environmental conditions.

The code reader serves as a fast and cost-effective identification device for automotive manufacturers and the logistics automation and packaging industries.

Key Features: Omni-directional reading of codes C-mount lens 4 megapixel imagerManufacturer: SICKSelling Point: Live image and auto setup

Excel Systems’ Y-cam is a wireless IP camera that pro-duces video at a maximum frame rate of 30fps dis-

played at up to 640x480 resolution, therefore allowing clear and smooth images to be viewed. The frame rate automatically adjusts to the available bandwidth.

It comes with alarm tools that will keep you notified if any motion is detected and has built-in functions that can generate alarm triggers via email, and by uploading images straight to a website. Unlike conventional activity detec-tion, the Y-cam uses vector information to detect motion, therefore achieving better reliability against false alarms.

The device can connect directly to a network or the Internet, either over wireless (802.11b/g) networking, or over 10/100 with the supplied network cable. The Y-cam utilizes encryption methods such as WEP, and even the more powerful WPA and WPA2, so you can be sure your camera will only be accessed by authorized users. It supports up to 16 simultaneous remote users thereby al-lowing multi-client access. This allows easy and efficient video conferencing with minimum setup. Password pro-tection also ensures no one is able to access the cameras without authorization.

Key Features: Affordable and simple to use monitoring solution

Monitoring different sites, in different locations, all from one screen Monitoring offices or retail premises whilst away or

from homeManufacturer: Excel SystemsSelling Point: MPEG-4 compression for reduced bandwidth and storage and color low-light view.

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OWS Bags Best SEZ Unit - Services AwardOil Field Warehouse & Services Pvt. Ltd.

was adjudged – The BEST SEZ UNIT - services 2008-09 by Export Promotion Council for EOUs and SEZs (EPCES) under the Ministry of Commerce.

The EPCES motivates entrepreneurs in the SEZs and EOUs who perform best in their respective segments. The categories under which annual awards are given are divided into many which include IT, Hard-ware, Software, Handicrafts, Engineering, Jewelry, Food and Agro, ready-made gar-ments, leather products, Chemical and allied products etc.

Oil Field Warehouse & Services estab-lished in 2006 to provide services from Vi-zag SEZ to the Oil & Gas Sector has been a great success from 1st year itself because of its innovative services and positive approach to the services and progressive thinking. OWS has extended its service to the West Coast also and offer similar services from Mundra Port & SEZ for clients on this side of the country.

OWS provides services in material man-agement and related logistics from Special Economic Zone

The award was received by Mr. Vinay R Sharma, MD and Mr. Vineet Sharma, Direc-

tor of Oil Field Warehouse & Services Pvt. Ltd from Hon’ble Minister of State Com-merce and Industry Mr. Jyotiraditya M Scin-dia on 18th May 2011 at Delhi.

Sharing the proud moment Mr. Sharma said “It is a matter of great honor for entire OWS team, its clients, and vendors and I am thankful to all for their support and confi-dence reposed in OWS”. Mr. Vineet had an opportunity to share few moments with an Ex-Scindian as both the Minister and Vineet

are ex-students of The Scindia School, Gwalior. Mr. Vineet Sharma Alumni of IIM Bangalore gleaming with hap-piness said “it is a motivation to achieve more, surpass expectations and create value for all stake holders of com-pany”. OWS has offices, branches at Sohar in Oman, Dubai & very recently entered USA by setting new company in Houston TX. Vineet looks after all international operations of OWS & its group companies from Dubai.

Recently OWS has entered into joint venture with ASCO the biggest service provider to Oil & Gas sector like shore base management, Marine services, International Freight move-ment and environmental services from various locations from North

America to Australia. New entity is named as OWSASCO OFFSHORE PVT. LTD.

This is first ever award received by Lo-gistics and Material Management Company in Oil and Gas Sector. OWS has created an-other bench mark for the industry to follow. Future plans of OWS has many new and in-novative services to the Oil & Gas companies that will add value, reduce costs and bring efficiency with safety.

6, Sona Udyog, Bldg. No.4, Parsi Panchayat Road, Andheri (East), Mumbai - 400 069, Tel: 022-61162345 www.logistics.com

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· Navi Mumbai · Mumbai · Chennai · Delhi · Visakhapatnam · Mundra · Dubai · Oman · Houston TX ·

Visakhapatnam Special Economic Zone, Duvvada, Visakhapatnam-530049

www.ows.net.in | Tel: +91-22-67698932 | Fax: +91-22-27612008 | [email protected]

OWS adjudged THE BEST SEZ unit - Services for 2008 - 09 by EPCES.

Award presented by Hon. Minister of State, Commerce & Industry Mr. Jyotiraditya M. Scindia

on 18th May at New Delhi to Mr. Vinay R Sharma, MD & Mr. Vineet Sharma Director OWS

Oil & Gas Services“Beyond your Imagination”

Imprint Feature


< PAnoRAMA

sVI 2620

Micropanels are best manufactured on a special flat panel line engineered for maximum flexibil-

ity production. Due to large variations in shape and size of the subassembly panels, special attention has been paid to control and panel transportation arrangements during welding procedures.

Micropanel production capacity is multiplied by fully automatic, robotized micropanel welding sta-tions. The station operator loads a sheet into a cas-

SVI 2620, a bag form, f ill and seal machine from Bosch can be used to pack a wide range of prod-

ucts for the foodstuff, confectionery and pesticide segments. It is ideal to use for different bag shapes such as pillow bags, gusseted bags, block-bottom bags, etc.

The device can produce 120 bags per minute, with a maximum bag width of 260 mm and f ill volume of 2 liters. It possesses memory for 96 programs and servo-technology for all functions, enabling the se-lection of cycle independent programs at the touch of a button. With an easy to use operational panel it en-sures minimum f ilm wastage as well as fast and easy changeover with quick change sets. The color touch screen HMI helps keep a check on process monitor-ing and data input plausibility.

The vacuum assisted belt draw-off and synchro-nously moving sealing jaws allow for high-speed reproducible seams with minimum packaging ma-terial overlap. It comes with an inbuilt packaging material reel spindle and splicing and cutting aids.

Constant high seal-ing force up to 8000 N during the entire cross seam sealing process guarantees consistent quality of the longitu-dinal seam.

Key Features: Servo controlled in-

termittent motion machine High speeds with fast

product flow resulting in higher productivity Monitoring of ‘Prod-

uct in cross seam’

Manufacturer: BoschSelling Point: State-of-the art, microprocessor controlled servo-technology and electronics

New Products, Technologies, Solutions

Robotized Micropanel Production lines Solution

Product

sette on the input conveyor; the station picks it up, positions, welds and f inalizes the process automati-cally. As a total solution for demanding micropanel manufacture, the cell’s numeric control combines co-ordination information from the code used by f lame cutting torches.

With their proven high arc time ratio (over 80%) and utility ratio (100%), user-friendly robot portals signif icantly raise the productivity of steel panel pro-duction lines. A robot portal may consist of a sturdy robot welding gantry with 3 external robot axes, and a 6-axis welding robot combined with PEMA Vision, a patented machine-vision-based robot program-ming unit.

Key Features: User-friendliness and fast work programming Robotized welding stations Service portal for finalizing micropanelsManufacturer: PEMASelling Point: Over 80 pc arc time ratio and 100 pc utility ratio

lAunchPAD


Interface

Could you tell us about your R&D facility in New Delhi? What are the technologies being developed here?The facility was set up 1.5 years back and is solely owned by VoCollect. In India, we develop software projects such as voice algorithms and so on.

What has been the market response to your technology?We are getting into the commercial Indian market now. India, with her international trading partners needs to satisfy stringent packaging and shipping de-mands. Also with growing competition, it will soon be necessary to increase accuracy and to efficiently manage work flow.

What would be the time-frame required to set up a voice managed solution at a warehouse? How long would it take to train an employee to use the system?VoCollect solutions are integrated with WMS. It takes a maximum setup time of 90 days and a minimum set up time of less than 30 days.

Training staff is subject to their ability to learn, but un-der normal circumstances it does not require more than

half a day to train people to use the technology.

Are you opting to go with any local partners in India?In terms of partners, we are looking at companies that specialize in systems integration. System integrators would decide what data is collected and what data goes into the WMS. Integrators can charge a support fee and since the solutions are customized, it opens up possibili-ties for long term relationships with clients.

Has VoCollect previously installed its applications in India? We have no Indian customers yet.

What are some of the technologies VoCollect is working on?VoCollect solutions are best designed for noisy and harsh environments. We are also looking at providing workflow support. So far, operations supported are primarily only picking. But in future, we are planning on adding receiv-ing, put away and other processes to the systems.

Another technology we are working on is a wrist held RFID-scanner+headset that can be coupled along with the WMS solution.

Smart Reset can be supplied in different levels of design, to better satisfy various operating re-quirements while complying with local stand-ards. Available in hot-galvanized steel with over-baked epoxy coating and smooth finish or fine satin-finish AISI 304 stainless steel, it is complete with galvanized curtain winding pipe with vertical uprights fitted with special self-lubricating sliding guide installed on a shock-absorbing spring system. The DSC electronic safety device ensures reverse motion when door is closing if an obstacle is hit. A heavy duty mo-tor (3 phase 400 V), comes with an electrically operated hand brake with a provision for manu-al opening device. The full size flexible curtain entirely made of class 2 self-extinguishing pol-yester, with no horizontal strengthening parts, which slides inside the side hinges and features

self-repairing properties and high resistance to air and wind pressure to 120 km/h.

Simultaneously, the company has launched industrial overhead doors that make the best use of transit openings, is weather resistant, and offers maximum safety. These overhead doors ensure a better use of inside space as the side runners vertically move the door along the wall and parallel to the ceiling. The heat insu-lation and soundproofing ensured by heat-in-sulated panels improve working conditions on the premises and ensure energy savings. The panels can also be manufactured with the ad-dition of practical portholes or full aluminum sections featuring polycarbonate or unbreak-able glass panels, wire meshing or air grilles. The doors are available in three models: Lisbon model, Bay model, and Gold Alu model.

Vocollect, Inc. is a developer and manufacturer of voice solutions for mobile workers worldwide. Joe Pajer, ceO and President of Vocollect, Inc. speaks to Frewin Francis about his India plans.

Gandhi automations has launched two products: Smart reset, a rapid roll-up door with self-repairing full curtain; and automatic industrial Overhead doors.

“Our solutions offer high RoI”

Joe PajerCEO and President, Vocollect, Inc.

Opening Doors

Top: Smart Reset - Rapid roll-up door. Right: Retract-able Tail Lift.

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How reverse supply

chain can make or

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The HyperCity supply-chain team led by

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inspired show >> Page 34EYES FRONT

I N D I A’ S N O.1 LO G I S T I C S M AG A Z I N E INDIA

WHAT‘S IN A NAME 22What is the right term? Is it logistics? Or is it supply chain? PLAYING IT SAFE 44

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

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< FEATURE

Page 34

Mission Replenish

December 2010 Vol. 4 — No.4 `100

INDIA





Method In Motion



` 100


GCPL supply-chain’s replenishment model

holds many takeaways for peer companies.

And the man in the thick of the action is Rakesh

Sinha, COO (Marketing & Operations), Godrej

Consumer Products Ltd. (GCPL) >>

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

INDIA

MEETING OF TITANS 16CSCMP’s 2010 conference at San Diego was bigger and richer than ever

MARITIME‘S ALBATROSS 38Policy and infra issues that are hurting India’s maritime growth

MORE FOR LESS 34Four levers that can help improve transport efficiency

Prem K Verma, CEO, TML Distribution Company Limited, a Tata Motors subsidiary, discusses supply-chain in depth and offers innovative strategies >>

Page 22

Outside The Box

November 2010 Vol. 4 — No.3 `100INDIA





Method In Motion



` 100


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• Need for Mechanization at Indian ports

• Draft Constraints (which hinder entry of

large vessels to most major ports)

• The Policy Conundrum

• Regulatory Issues (The TAMP Factor)

• Labor Management at Ports

• PPP: Challenges and Opportunities

• Major and Non-Major ports: Lessons to

be Learned

warehousing

HANDBOOK

Book your copy NOW and avail of the early bird discountEmail: [email protected]

INdIaWe Transport Information


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Copy Now!

• Need for Mechanization at Indian ports

• Draft Constraints (which hinder entry of

• The Policy Conundrum

• Regulatory Issues (The TAMP Factor)

• Labor Management at Ports

• PPP: Challenges and Opportunities

• Major and Non-Major ports: Lessons to

warehousing

HANDBOOK

Coming Soon!

Ports of India HANDBOOK

JNPT MaTerial HaNdliNg? gaTeway TerMiNal iNTerNaTioNal

PrivaTe liMiTed iNdia gaTeway TerMiNal PrivaTe liMiTed PSa

SiCal TerMiNalS liMiTed CHeNNai CoNTaiNer PrivaTe lMiTed

viSakHaPaTNaM MuNdra PorT kriSHNaPaTNaM PorT kolkaTa PorT

MuMbai PorT abg kaNdla PorT MarMugao PorT New MaNgalore

koCHi PorTkaraikal PorT digHi PorT dHaMra PorT PiPavav PorT

Haldia PorT ParadiP goa TuTiCoriN JNPT MaTerial HaNdliNg?

gaTeway TerMiNal iNTerNaTioNal PrivaTe liMiTed iNdia gaTeway

TerMiNal PrivaTe liMiTed PSa SiCal TerMiNalS liMiTed CHeNNai

CoNTaiNer PrivaTe lMiTed viSakHaPaTNaM MuNdra PorT

kriSHNaPaTNaM PorT kolkaTa PorT MuMbai PorT abg kaNdla PorT

MarMugao PorT New MaNgalore koCHi PorTkaraikal PorT digHi

PorT dHaMra PorT PiPavav PorT Haldia PorT ParadiP goa TuTiCoriN

JNPT MaTerial HaNdliNg? gaTeway TerMiNal iNTerNaTioNal

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MuMbai PorT abg kaNdla PorT MarMugao PorT New MaNgalore

koCHi PorTkaraikal PorT digHi PorT dHaMra PorT PiPavav PorT

Haldia PorT ParadiP goa TuTiCoriN

The handbook looks into all the issues related to the major Indian ports with experts’ views of a roadmap to possible solutions for ports

infrastructure and performance excellence. The main topics to be covered will be:

LOG.INDIA and Logisticsweek present you ‘Roadmap to Performance Excellence’, a

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< EVENTS

June 2011

June 8 and 9, 2011Coast asiathe ocean Pearl Hotel, MangaloreCoast Asia 2011 will address the overall develop-ment on the coastal segment covering a broad spectrum of industries covering marine industry, air/railway/road/shipping, renewable energy, dam-aging effects of soil erosion, sea spoil, pollution control, eco systems, waste management, forest development, fisheries, rain water harvesting, health & safety. Coast Asia 2011, an expo and seminar, will be an all India event and is been attended by the marine/maritime industry players, scientists, entrepreneurs, respective department government officials, etc.

Some of the prominent exhibitors will come from the area of port infrastructure, port construc-tion & development, cargo handling, offshore technology, shipbuilding/shipyard industry, oil tankers, marine equipment, ship management systems, ship operation & equipment, ship safety equipment, marine technology, ship owners, high-way authorities of india, road contractors, airport development authorities, hotels, railway authori-ties, solar, wind, hydro & biomass, pollution control manufacturing units, eco-friendly resorts etc.organized by: Bangalore Media CentreTel: +91-80-22370656

June 10 – 12, 2011indiaMart iMeX 2011Chennai trade Centre, ChennaiAutomotive Engineering Show, Chennai, is the only tradeshow of its kind dedicated only to solutions for automotive manufacturing. It is the 4th exclusive fair on automotive engineering and vehicle manufactur-ing plants.

The event is a showcase of processes, systems and technologies or ‘enablers’ in automotive manu-facturing.

The unique rationale of the event is very strong penetration within the automotive manufacturing region.

Manufacturing technologies, equipment, tools and methods of assembly form the subject matter of this show. So no finished auto-component, product or vehicle will be displayed.

Participants at the show will range from some of the industry’s biggest technology suppliers and buyer delegations and a host of and component makers. organized by: Focussed Event Management Private LimitedTel: +91 22 32019137/40201000

June 18 and 19, 2011FranCHise & retail oPPortunities sHow -

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CHandigarHChandigarh Hotel tajFranchise & Retail Opportunities Show - Chandigarh 2011 will offer an opportunity for franchisers and retail-ers to present their company to potential business buyer and Investors under one roof. The show is designed to bring together the brightest business concepts & poten-tial investors from the Central region of India targeting states like Madhya Pradesh, Chattisgarh, Maharashtra, Rajasthan and Uttar Pradesh.

The exhibitors profile includes franchisers, retail service provider, marketing & selling persons, and franchisee and business opportunity companies.organized by: Franchise India Holdings Ltd.Tel: +91 11 32563453

June 20 – 22, 2011indeseC eXPoPragati Maidan, new delhiINDESEC is India’s exhibition and conference for the homeland security industry. Now in its 4th year, this focused, international exhibition will portray a wide spectrum of products and the latest technologies serving solutions for border security, coastal secu-rity, airport security, surveillance, UAVs, infrastructure security and cyber security. INDESEC provides the unique opportunity to seek and source the latest equipment while networking with the homeland secu-rity industry.

Profile for exhibit includes maritime and coastal security, border security, airport security, transport security, critical infrastructure security, disaster man-agement, counter-terror intelligence, real time infor-mation networks, chemical, biological, radiation and nuclear (CBRN), surveillance and target acquisition, armored vehicles, border fencing, non-lethal weapons, Optronics, communications, CCTV and access control, unmanned aerial vehicles, and helicopters.organized by: Informa IndiaTel: +91 22 40203300

July 7 and 8, 2011ForeCasting and deMand ManageMentdsiMs campus, goregaon, MumbaiForecasting and Demand Planning are two key issues that are limiting the profitable growth of industries. Dr. Rakesh Singh and Prof. Piyush Shah from DSIMS and Prof. Vaidy Jayaraman from University of Miami have announced a workshop to help organisations improve their Forecasting and Demand Planning processes. They will use real life case studies and simulations to convey the latest tools and techniques. investment: `12,500Contact: Ms. Jesal TannaTel: +91 22 6681 2311

Endorsed by

RNI No. MAHENG/2007/23777 l Registration No.MH/MR/South-279/2011-13. Allowed to post at Patrika Channel Sorting Office G.P.O. Mumbai - 400001. Date of mailing: 5th of every month issue. Published on 1st day of every month

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