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logistics and warehousing


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logistics and warehousing CWC internship report

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logistics and warehousing

  1. 1. Jaypee Business School A constituent of Jaypee Institute of Information Technology (Declared Deemed to be University u/s 3 of UGC Act) A-10, Sector 62, Noida (UP) India 201 307 Logistics and Warehousing Corporate Internship Report Internship Report submitted as a partial requirement for the award of the two year Master of Business Administration Programme MBA 2012-14 Name: Nitin Sharma Central Warehousing Corporation, Inland Container Depot, Patparganj Corporate Internship Supervisor: Mr. Anang Pal, Manager Mr. V.K Dikshit (IMPORT) Manager JBS-Faculty Supervisor: Dr. Rajnish Kumar Misra Start Date for Internship: April 17th , 2013 End Date for Internship: June 18th , 2013 Report Date: July 1st , 2013
  2. 2. SELF CERTIFICATE This is to certify that, I Nitin Sharma have completed the project report titled “LOGISTIC AND WAREHOUSING” under the guidance of Mr. V.K. Dikshit, ” for the fulfilment of the award of MASTER OF BUSINESS ADMINISTRATION from JAYPEE BUSINESS SCHOOL, NOIDA.This is the original piece of work and i have neither copied it from anywhere nor submitted it earlier elsewhere. Nitin Sharma (12609199) MBA 1st year.
  3. 3. ACKNOWLEDGEMENT I wish to express my gratitude to those who, in some or the other way, helped me in accomplishing this challenging project on “LOGISTICS AND WAREHOUSING”. No amount of written expression can show my deepest sense of gratitude to my mentor MR. V.K. DIKSHIT (IMPORT MANAGER) who motivated me to receive enormous amount of input and inspiration at the various stages during my project preparation and assisted me in bringing out my project in the present form. I thankfully acknowledge an active support by my mentor who overwhelmingly shared his knowledge with me and strengthened my conceptual framework. I also thank MR N.K VINAYAK, who has sincerely supported me with the valuable insights into the completion of this project. I am also thankful to all the Faculties of MASTER OF BUSINESS ADMINISTRATION from JAYPEE BUSINESS SCHOOL, NOIDA. Who supported me in various ways and enlightened me about the valuable information pertaining to my project work. Nitin Sharma (12609199) MBA 1st year
  4. 4. TABLE OF CONTENTS 1. Executive Summary 2. Introduction & Objectives 3. Company‘s Profile 4. Industry Analysis 5. Financial Analysis 6. Detailed Study/ Research Project 7. Conclusion & Recommendations 8. Key Learning‘s 9. References
  5. 5. EXECUTIVE SUMMARY This project has been a great learning experience for me at the same time it gave me enough scope to implement my analytical ability. This project was undertaken with the sole objective to study LOGISTICS AND WAREHOUSING, and the associated with IMPORT AND EXPORT. Under this project the methodology adopted was focus discussion and close observation through in-house study and data is collected from various primary and secondary sources. CENTRAL WAREHOUSING CORPORATION (CWC) a premier Warehousing Agency in India, established during 1957 providing logistics support to the agricultural sector, is one of the biggest public warehouse operators in the country offering logistics services to a diverse group of clients. It operates in all the major components of Logistics, but has a very strong hold on the Warehousing segment. CWC also offers services in the area of clearing & forwarding, handling & transportation, procurement & distribution. INLAND CONTAINER DEPOT (ICD) PATPARGANJ offers services in the area of handling & transportation, Warehousing, clearing & forwarding from customs, shipping line and Bank payment. Main objective of ICD PPG is to offer all the logistics services under the one roof. The challenges facing warehouse management today has been greater than before due to globalization, shorter lead time, high customer service level and changing market trends. As a result, the role of warehouse has changed just from storing and issuing of goods to important strategic roles. Today warehouse must operate with high efficiency to meet the various requirements in a logistics system. As a result, many companies are investing in information technology tools such as warehouse management system (WMS), bar code, RFID and EDI in their operations to ensure the information flow is smooth to collect and plan the warehouse operations.
  6. 6. INTRODUCTION Logistics services market India is on a growth trajectory owing to rapid globalization and 100% FDI allowance. Logistics services broadly encompass courier services, freight forwarding, third party logistics and reverse logistics. Growth in international trade is providing huge impetus to the demand for the logistics services. Growing competition in retail sector transcends need of reverse logistics to handle returns and store up gradation. Third party logistics providers need to customize their services and charge competitive rates to benefit from retail boom in India. One of the major segments contributing to a rapidly growing logistics industry is the warehousing business. The growth in international trade coupled with the rise in containerization levels has led to high demand for warehouses. This creates tremendous opportunity for the private sector. The market, which is valued at INR 20 bn, is expected to grow due to the demand generated by importers and exporters for specialized services. The report begins with an overview of the industry indicating market size, growth, current state of the market and the infrastructural resources available. The report highlights various types of warehouses, categorized on the basis of ownership and usage. THE ROLE OF THE WAREHOUSE IN THE LOGISTICS SYSTEM: • The warehouse is where the supply chain holds or stores goods. • Objectives of warehousing include – Transportation – consolidation – Product mixing – Docking – Service – Protection against contingencies
  7. 7. OBJECTIVES: The main objective of this project report is to get the practical knowledge of functions in logistics. To know the significance of Warehouse management in the logistics industry. To find the strength, weakness, opportunities, threats of the warehouse management system. SCOPE OF THE REPORT: The report covers the overview of Indian logistics industry, Study of marketing aspects of ICD (ppg). To understand the logistics process in CWC-ICD (ppg). Analysis of Warehouse Management of ICD (ppg). To Analysis the Marketing, Operational (Export/Import process), Financial Aspects ,MIS and Record management of CWC- ICD(ppg). PROJECT DETAILS The present storage capacity available with CWC is 10.65 million tonnes, which comprises of agriculture warehouses, container terminal, air-cargo complexes and industrial warehouses. There is potential growth in all the four types of warehouses. To make a strong foothold in the field of Industrial warehousing and to keep CWC ahead of its competitors in the field of storage, to create a Warehouse Management System with an integrated RFID-based technology that will improve the entire inventory handling process by providing an automated, systematic and accurate warehouse management cycle that is error-free, efficient and updated real-time.
  8. 8. COMPANY PROFILE NAME: Central Warehousing Corporation (CWC) LOGO: INDUSTRY: Logistics and Warehousing CORPORATE & REGISTEED OFFICE: Central Warehousing Corporation, 4/1 Siri Institutional Area, Hauz Khas, New Delhi-110 016 WEBSITE: Central Warehousing Corporation (CWC), a premier Warehousing Agency in India, established during 1957 providing logistics support to the agricultural sector, is one of the biggest public warehouse operators in the country offering logistics services to a diverse group of clients. CWC is operating 492 Warehouses across the country with a storage capacity of 10.80 million tonnes providing warehousing services for a wide range of products ranging from agricultural produce to sophisticated industrial products. Warehousing activities of CWC include food grain warehouses, industrial warehousing, custom bonded warehouses, container freight stations, inland clearance depots and aircargo complexes. Apart from storage and handling, CWC also offers services in the area of clearing & forwarding, handling & transportation, procurement & distribution, disinfestations services, fumigation services and other ancillary activities. CWC also offers consultancy services/ training for the construction of warehousing infrastructure to different agencies. Though the corporation was established with the main objective to provide scientific warehouse facilities for the agricultural produce, in course of 60 years of its existence its mission has undergone a change. Its mission is not only to provide warehousing facilities but also logistics service and related activities with value added services to a multi clientele. It is emerging as a
  9. 9. leading market facilitator by providing integrated warehousing infrastructure and other logistic services. MISSION To provide total quality service in the field of warehousing, logistic services and related activities with value addition to the customer‘s satisfaction. VISION To emerge as a leading market facilitator by providing integrated warehousing infrastructure and other logistic services, as a support to India‘s economy with emphasis on customer‘s delight. OBJECTIVES a. To meet the changing needs of agriculture, trade, industry and other sectors by providing scientific warehousing, logistic services and related infrastructural facilities. b. To assist in the implementation of the Warehousing (Development & Regulation) Act, 2007 with a view to expand credit through banking institutions against warehoused goods. c. Efficient human resource management in order to enhance productivity & customer‘s satisfaction and reduce losses during warehousing & distribution. d. To be a major player in providing pest control services. Services Provided: Storage: Scientific storage and handling services for more than 400 commodities include Agricultural produce, Industrial raw-materials, finished goods and variety of hygroscopic and perishable items.
  10. 10. Scientific Storage Facilities for more than 200 commodities including hygroscopic and perishable items through network of 465 warehouses in India with its 5,200 trained personnel. Import and Export Warehousing facilities at its 36 Container Freight Stations in ports and inland stations. Bonded Warehousing facilities . Disinfestation services. Handling, Transportation & Storage of ISO Containers. Services at ICD / CFS 1) Exports i) Receipt of export cargo ii) In-House customs examination iii) Export cargo aggregation and storage iv) Preshipment Disinfestations of containers as well as of export cargo. v) Cargo stuffing under custom supervision 2) Imports i) Movement of Import containers from the port ii) De-stuffing of LCL and FCL containers iii) Customs Examination iv) Bonded Warehousing facilities Bonding Facility CWC operates 66 Custom Bonded Warehouses with a total operated capacity of nearly 0.42 million Mts. The concept of custom Bonded Warehousing has been promoted with a view to facilitate deferred payment of custom duty to encourage entrepreneurs and export oriented units to carry out their operations with least investment. These bonded Warehouses are located all over the country at places well - connected with the port towns for smooth movement of goods to and from the discharge points.
  11. 11. Container Train Operations With a category-I licence from the Indian Railways for running container trains on pan India basis, CWC is presently operating container trains transporting EXIM containers between Loni (Delhi) - J.N.Port (Navi Mumbai) and Loni - Mundra. CWC runs about 300 trains in these sectors and handles about 26,000 TEUs annually. It is also operating Container Rail Terminals at Loni and Kalamboli (Navi Mumbai ) on PPP model. These terminals are also being used by other train operators as common user facility. Air Cargo Complex Ambitious expansion of CWC over the years has also brought CWC in the operation of Aircargo Complexes which is a major step towards providing complete services as a multi-modal transport operator.Presently, CWC is operating 4 Aircargo Complexes at the International Airports of Amritsar, Goa, Singanallur and Virugambakkam besides managing the accompanied/mishandled cargo warehouse at Indira Gandhi International Airport at New Delhi. Railside complexes Railways has vast network for not only operating passenger trains but also for freight movement, an imminent need was assessed to augment the utilization level of Railway transportation system so as to reduce the pressure on road traffic by making it cost effective and efficient operation for the trade. As such, concept of Rail Side Warehousing facilities was evolved by the Corporation as value addition to the rail transport system which extends benefits to the users in avoiding multiple handling of their stocks and resultant escapable losses on this account; curtailing handling cost and having a hassle free efficient operation. For transforming the concept into tangible shape, CWC successfully developed a pilot project of Rail Side Warehousing facility at Whitefield, Bangalore in association with South Western Railway in February 2002 and on the strength of fruitful effect of this project on the front of increase in traffic/freight revenue and the kind of satisfaction that trade enjoyed out of it on
  12. 12. availing this value added services in the arena of rail transportation, CWC and Ministry of Railway joined their hand in the avenue of developing Rail Side Warehousing facilities at 22 strategic locations of Railway Terminal to provide better services through total logistic solution to Rail users for, not only to attract additional traffic, but also to provide a cost beneficial and efficient transport cum storage service to the trade under single window concept. A subsidiary in the name of “Central Railside Warehouse Company Ltd.” Was incorporated on 10.07.2007, under the Companies Act 1956 which commenced its business on 24.07.2007. Disinfestations and Pest Control Services Govt. Of India, vide Notification dated 23rd March 1968, entrusted additional responsibility to CWC to undertake Disinfestations/Pest Control Services beyond its warehouses in respect of Agricultural produce or other notified commodities. Over the years, CWC has developed the expertise in Pest Management in the following areas • Storage Pest Management. • Container Fumigation. • Ship Fumigation(on Board) • Pre-shipment fumigation of Export Cargo Rail Coach disinfestations • Aircraft disinfestations • Disinfestations of Hotels & Restaurants • Disinfestations of Commercial Complexes & Office premises. • Disinfestations of Airports & Ports • Disinfestations of Delhi Metro Rail Premises CWC the only organization in the public sector recognized by the Directorate of Plant Protection Quarantine and Storage, Ministry of Agriculture, Govt. Of India as well as the Export Inspection Council of India to undertake Pre-shipment fumigation and Ship (on board) fumigation of exportable commodities. CWC earned a major breakthrough in infestations of aircrafts of Air India using timer device. CWC has thus earned the status of a National Pest Control Agency.
  13. 13. CWC has taken lead in accreditation of its pest control operators under newly introduced National Standards on Phytosanitary Measures NSPM 11 & 12 to facilitate MBr fumigation treatment of export/import cargo carrying wood packaging material (WPM) in compliance to the FAO/IPPC guidelines issued through International Standard on Phytosanitary Measures ISPM - 15. Under this accreditation regime, the Corporation is catering to quarantine treatments at the following major centres:- CFS-JN Port CFS-Panambur (Mangalore) CFS-Tuticorin (Tamil Nadu). ICD-Patparganj (Delhi) CFS-Tuticorin (Tamil Nadu). CW-Nampally (Hyderabad) CFS-Chennai CW-Kakinada (Hyderabad) CFS-Adalaj (Ahmedabad) CWC-Regional Office, Bhopal CFS-Kandla Port (Gandhidham) CWC-Regional Office, Kolkata CFS-Vizag CW-Cochin (Hyderabad) CFS-Whitefield (Bangalore) CWC-Regional Office, Mumbai Inland Container Depot (Patparganj) Central Warehousing Corporation having consolidated its growth in the field of conventional warehousing, realised the need and importance of Inland Clearance Depot / Container Freight Stations which are an essential infrastructure for increasing containerization and hence decided to establish india's first dry port at ICD, Patparganj way back in 1985 which is a single window clearing place for Imports and Exports.
  14. 14. The Inland Container Depot, Patparganj, Delhi was commissioned on 25-02-1985. It is located 1525 km. From gateway ports of JNPT / NSICT /GTI &1100 km. From Mundra port. A brief note showing the infrastructure facilities available at ICD, Patparganj . LOGISTICS SUPPORT M/s Suman Forwarding Agency (P) Ltd. have been appointed as handling & transport contractor for handling & transportation of ISO Containers between ICD-PPG to ICD-Loni / TKD / including handling / transportation of factory stuffed containers • ICD-Loni 26 KM. • ICD-Tughlakabad 28 KM. • Gateway Port JNPT/ NSICT / GTI 1525 KM. • Gateway Port Mundra 1100 KM Central Warehousing Corporation having consolidated its growth in the field of conventional warehousing, realized the need and importance of Inland Clearance Depot / Container Freight Stations which are an essential infrastructure for increasing containerization and hence decided to establish India‘s first dry port at ICD, Patparganj way back in 1985 which is a single window clearing place for Imports and Exports. Capacity COVERED - 27293 MT OPEN - 10812 MT TOTAL - 38105 MT Capacity of Container Yard AT 2 STACK HIGH - 622 TEUs AT 3 STACK HIGH - 933 TEUs
  15. 15. INDUSTRY ANALYSIS LOGISTICS INDUSTRY IN INDIA India has become the prime destination for logistics service providers all over the world. The demand for logistics services in India has been largely driven by the remarkable growth of the economy. The growth is being projected at 9-10 per cent in next few years, with the CAGR(compounded annual growth rate) expected to grow at a rate of 7-8 per cent. This growth is expected to gain greater momentum due to the exponential growth of the Indian economy. India is also experiencing a big retail boom as the buying capacity of the middle and upper middle segment of the population has scaled new heights. Many large multinationals from the retail industry are planning to set up operation in India and large local retailers are also planning to expand their operations. But with the infrastructure largely under-developed and incapable of catering to a growing economy, logistics management in India becomes too complex. The poor condition of infrastructure directly translates to higher turnover, pushing up the operating costs and reducing efficiency. There are other problems such as complex regulatory compliance and limited adoption and utilization of technology, which has resulted in increased paperwork and inability to communicate effectively with customers. In spite of dismal infrastructural scenario, the hopes of the logistics sector are kept up by the various upcoming infrastructural projects like logistics parks and hubs and other initiatives by public and private sector. The future of the logistics sector depends not only on the continued development of infrastructure but also on the capability of the service providers in adapting themselves and making optimal utilization of technology. India is emerging as one of the world‘s leading consumer market with the raise of middle income group. Estimated at US$991 billion in 2020, Total consumption expenditure is expected to grow to nearly US$ 3.6 trillion in 2020. Food, housing & consumer durable and transport &communication are expected to be the top 3 categories, accounting for 65% of consumption in2020. The FMCG sector alone is expected to grow at a base rate of 12 % annually
  16. 16. to become an INR 4000 billion industry by 2020. The logistics sector is expected to play an important role in accessing this emerging market and enabling this growth. INDUSTRY TRENDS Transportation: Container cargo represents only about 30% (by value) of India‘s external trade-much lower when compared with the global containerized cargo average of 70-75%. At a growth rate of 12%, India‘s container cargo traffic is estimated to reach 15 million TEUs by FY16E from about 7.5 million TEUs now (at 12 major ports). In comparison, China has created capacity at its ports to handle more than 100 million TEUs a year. Out of the 15 mn TEUs of total container traffic, we estimate EXIM rail container traffic to be 5 mn TEUs by FY16E. This would be a huge opportunity and will significantly benefit container rail operators. Rising investment in the rail and port spaces also fuels growth in allied industries like wagon manufacturing, port handling equipment, railway electrification systems and construction companies. To reduce the transportation cost and for quicker movement of cargo Multimodal transport operation is introduced (MTO). MTO helps exporters with less documentation for instance single document for all modes of transport. Third Party Logistics (3PL): Outsourcing is everywhere. Logistics industry is no exception. Logistics services like transportation, warehousing, cross docking, Inventory management, packaging and freight forwarding all are part of third party logistic services. Companies in India currently outsource an estimated of 52% of logistics. And 3PL industry is estimated to be US$1.5bn in FY14. 3PL represents only 1% of logistics cost emphasis its significance in the industry. Future is no doubt lying in outsourcing. As the growth in the 3PL market is expected to be in the range of 25-30% CAGR over FY11-14E. As of now, the 3PL activity is limited to only few industries like automotive, IT hardware, telecom and infrastructure equipment. The organized 3PL market in India can be categorized into three major segments – public sector, private sector and foreign
  17. 17. entrants. Some of the major players in each category are: TVS logistics, DIESL (TATA), Panalpina, TCI, Gati, Allcargo, V Trans, Total, VRL and Reliance etc. Private Participation: The industry is becoming more competent with the entry of global giants like Gazeley Broekmen (Wal-Marts logistics partner), CH Robinson and Kerry logistics and large Indian corporate houses like Tata, Reliance and Bharti group. A series of mergers and acquisition like DHL acquired Blue Dart, TNT acquired Speed age Express Cargo Service and Fedex bought over Pafex, are also leading to consolidation industry at various levels and segments. Many of these companies are planning to broaden their areas of operation and are also planning to develop their own logistic parks across the country. If the trend continues as per the estimates, the market share of the organized logistics players is expected to double from 6% in2013 to approx. 12% by 2020. Express logistics: Organized players have monopoly over the express logistics industry. 65%of express business is in the hands of organized players, while semi-organized and unorganized players accounts for 25% and the remaining 10% of the market by EMS Speed Post. But altogether different picture can be witnessed in the domestic segment. In domestic front, unorganized players hold 41% of the market share based on price advantage. While organized players accounts for 45% and EMS Speed Post the remaining 14%. Warehouses: Recently, warehouses have become key growth drivers in the logistics industry. Apart from conventional storing services, warehouses now providing value-added services like consolidation and breaking up of cargo, packaging, labeling, bar coding and reverse logistics etc. warehousing and related activities account for approx. 20% of the total logistics industry. Most of the
  18. 18. warehousing space in India lies with unorganized players in domestic front, which is causing wide supply and demand gap in storage space. According to KPMG, an additional120million square feet of warehousing space is needed by 2013 to bridge this gap. Currently, the organized warehousing industry in India has a capacity of approx. 80millionmetric tonnes and is growing at 35 to 40 per cent per annum. An investment of approximately US$ 500million is being planned by various logistics companies for the development of about45million square feet of warehouse space by 2013.Many players in this segment such as Multimodal Logistics Park, Mega Food Parks and Free Trade Warehousing Zones have planned next generation storage models. Logistic parks: About 110 logistics parks spread over approximately 3,500 acres at an estimated cost of $1 bn are expected to be operational and an estimated 45 mn ft2 of warehousing space with an investment of $ 500 mn is expected to be developed by various logistics companies by2020.Majority of these logistics parks are planned in close proximity to state capitals. However, availability of large land parcels at relatively low cost, connectivity to multiple markets across states and industrial clusters has led to the emergence of some tier-2 and tier-3 cities as favored destinations for the development of logistics parks and warehouses. Government Initiatives and regulations Initiatives: To emphasis the significance of transportation in logistics industry and to increase the competence in the sector government introduced private participation, especially in port sector. The major initiative in transport infrastructure is introduction of National Maritime Development Program (NMDP) with an investment of Rs 568bn. NMDP would be addressing the challenges of the growing international traffic demand of the country along with developing the port facilities at par with world standards. While liberalizing the railway services, government opened the doors of container business to the private parties. A total of 15 players immediately entered the market. FDI regulations In general 100% FDI under the automatic route is permitted for all logistic services FDI up to 100% subject to FIPB approval is permitted for courier services.
  19. 19. FDI up to 49% under the automatic route is permitted for air transport services, including air cargo services. 100% FDI is permitted in Ports and Harbours under automatic route 100% FDI is permitted under the automatic route for storage and warehousing including warehousing of agricultural products with cold storage. 100% FDI is permitted in transport and transport support services through automatic route. Indian Logistics Industry- Future Trends There have been several key indicators to the future trend in the Indian logistics sector. The demand for logistics services has been largely driven by the remarkable growth of the Indian economy. Logistics spend in India is estimated to be around 13% of the GDP, which is comparatively higher than other developed countries. The air transport sector‘s contribution has been around 0.2 per cent of the country‘s GDP, while the transport sector‘s contribution to the GDP has been growing over the last couple of years. India‘s air cargo is predicted to grow at over CAGR of 11.5 per cent in the next few years. The contribution of the marine transport sector has also been around 0.2% to the country‘s GDP. The sector‘s contribution to the GDP has been increasing mostly because of the growing economic developments in the country. The role of the shipping industry in the growth of Indian economy has been very significant. Major ports in India together have handled around 500 million tonnes of cargo in the past two years and this figure is growing significantly. The Indian railways has realized the necessity to improve the infrastructure provide better service. The plan to develop Logistics Parks or hubs has the potential to streamline and optimize the supply chain and reduce the costs. Currently around 80% of the goods in India move by road, the railways has to essentially devise plans to divert this traffic to the rail. India‘s logistics sector attracted huge investments, leaving behind some of the major sectors including aviation, metals, and consumer durables. The growths in the retail and manufacturing industry, commodity markets and development of SEZs have been key factors in the growth of
  20. 20. Indian logistics industry. Recent studies have indicated that the Indian logistics industry is expected to grow annually at the rate of 15 to 20%. A number of infrastructural projects involving warehouse and logistics parks are being undertaken are expected to be operational in the next 2-3 years. The setting up special economic zones (SEZs) has led to increased logistics activities around them. Several logistics parks have come up at locations like Mumbai, Kolkata, Chennai and Hyderabad because of their excellent port, rail, and road connectivity and are witnessing significant investment in infrastructure. Many of the large logistics players are in the process of setting up warehouses, container freight stations (CFS), inland container depots(ICD), logistics parks, distribution centers and other facilities to leverage the abundant opportunities. Increase in foreign trade is expected to further accelerate the demand for logistics services. The future of the Industry is very bright and is sure to witness exponential growth in the coming years. The increased participation of both public and private sector is crucial for developing logistics and improving supply chain management. Not only do the logistics companies need to create efficient business to thrive in the logistics sector, but they also need to explore ways for investing energy, costs and time to grow a strong logistics system. Logistics Industry Structure Indian logistics market Road Freight Express logistics Container Logistics Inland Container Depot(ICD) and Container Freight Station Container Haulage Multimodal Transport Operator(MTO) Liquid Logistics
  21. 21. Industry Snapshot The Indian Logistics Industry is estimated at US$ 125 billion in 2010 Generated employment for 45 million people The industry is expected to grow annually at the rate of 15- 20 per cent, reaching revenues of approximately $ 385bn by 2015. Highly Unorganized with organized sector responsible only for 6% Market share of organised logistics players is also expected to double to approximately 12 per cent by 2015 The size of the 3PL industry is estimated to be~US$1.5 bn in FY11 (1% of logistics cost). The share of 3PL services is expected to increase from 6% in FY06 to 13% in FY11, at a CAGR of 25% Logistics costs are 10-20% of GDP Indian Infrastructure is rated 54th among the 59 countries -- Road : 56/59, Rail: 25/59, Seaport: 51/59, Airport: 40/59 Elements of Logistics cost • Transportation 35% • Inventories 25% • Losses 14% • Packaging 11% • Handling and Warehousing 9%
  22. 22. Key Opportunities
  23. 23. Indian Logistics : Key Challenges 1. Geographical Coverage Insufficient : Insufficient distribution channels/infrastructure bottlenecks restrict the scope to reach consumers of products nationwide. 2. Over-burdened ports India has a long coastline. However, the country‘s port system isn‘t utilized properly. 70% of the seaborne trade is managed by 2-3 of its 12 major ports. Remaining 185 minor ports in the country are largely underutilized 3. Warehousing investment is low The infrastructure including roads, airports and seaports are preliminary the main target areas of investment. However, warehousing, a facilitator for the agricultural sector, has attracted lower investment that reduced its pace of growth in comparison to rising farm output 4. Technology Usage Technology usage is still very low in India, which restricts the scope of increasing efficiency and productivity 5. Cost/Quality of Service According to industry analysts, logistics costs in India are among the world‘s highest and outside of the metros and a few cities, the delivery time is very uncertain “Overburdened physical infrastructure is a major bottleneck currently faced by the Indian Logistics and Transportation players”
  24. 24. Marketing mix in Logistics: Marketing logistics involve planning, delivering, and controlling the flow of physical goods to a market as well as the material and information necessary to meet customer demands. The demands of the customer must be met at a profit that increases revenue for the orginization. Maintaining an organization‘s competitive edge means understanding and implementing an effective marketing logistics strategy regarding product, price, place and promotion. These four functions of marketing logistics help the organization to reach the target customers and deliver the products or services PRODUCT Each customer can have individualized needs so the logistical services provided may vary from customer to customer. Regardless of these differences, the customers expects 100 percent conformance and assured reliability at all times with every transaction. The goals of this aspect of marketing logistics include filling the order, on-time delivery, precise invoicing and zero damage. PROMOTION Logistics industry to take people in favour through Word of mouth publicity, reliability showing through long years of establishment and other services. Corporation participated in various Exhibitions, Krishi Expos, Trade Fairs, etc., and prominent fairs. PRICE An organization bases pricing decisions on both internal and external factors. Marketing logistics must recognize price drivers. The profile of the customer, the product and the type of order are factors that drive the price. Discounts for quantities and the related logistical cost structure can impact the price the customer will ultimately pay for the product or service. Additional factors driving price include the shipping costs based on the size, weight and distance the organization will ship the item.
  25. 25. PLACE The function of place in marketing logistics allows the organization to simplify the transactions between a logistics provider and the customer. The organization must execute logistics in such a way that the customer is not aware of the complexities involved in the logistics process. Also the location of the factory, warehouse and customer can greatly impact the marketing logistics process by increasing or reducing costs. For example, locating a factory in Bihar might reduce the labor costs associated with a product. However, at the same time locating the factory in Bihar might increase the shipping costs and negate any cost savings. Competition Analysis: The companies are selected on the basis of Earning per Share of top companies in logistics industry. This is listed in BSE, NSE Index in India. List of selected companies for study Container Corporation of India All cargo Logistics Aqua Logistics Aegis Logistics Arshiya International The period of the study is five years that is 2008 to 2012 because of understand the growth of the industry to find out competitive position in market. Tools and Techniques: These are the most popular tools of industry analysis. They focus on earnings, growth and value of the companies in the market. SWOT BCG matrix Financial ratio
  26. 26. Container Corporation of India Limited Company Highlights 1. Concor is a public sector undertaking (PSU) with the government holding 63% 2. It has been the undisputed market leader in the Container Rail Segment with the largest network – 60 container terminals and around 220 rakes operating per year 3. The company also provides multi-modal logistics support to both the domestic and Exim trade and targets to become an one-stop logistics solution going ahead and enjoys operational support from Indian Railways Allcargo Logistics Limited Company Highlights 1. Allcargo Logistics Ltd is a leading multinational company providing integrated logistics solutions 2. The company currently operates out of 140 offices in 65 countries and gets supported by an even larger network of franchisee offices across the world 3. Allcargo Logistics Ltd. acquired two Hong Kong based companies engaged in Non Vessel Owning Common Carrier (NVOCC) business in China and other parts of the eastern region in 2010 4. One of world‘s leading private equity firms has acquired a 14.99% stake in Allcargo Logistics Ltd Aegis Logistics Limited Company Highlights 1. Aegis Logistics Limited provides total supply chain management services to the Indian petroleum and chemical industry by storing, moving and distributing petroleum and chemical products to the end user 2. It owns and operates a 20,000 MT fully refrigerated LPG import terminal which was commissioned in 1997
  27. 27. 3. Aegis has taken a pioneering role in the development of an extensive retail network of Auto LPG stations in India under the brand name Aegis Auto gas. Currently the network is spread over eight states Arshiya International Limited Company Highlights 1. Arshiya International Ltd. Is an integrated supply chain and logistics infrastructure solutions provider headquartered in Mumbai 2. The company has multinational operations in the logistics and supply chain management space and is currently involved in the phased investment of approximately USD 1.6 billion towards creating and pioneering logistics infrastructure within India 3. Arshiya has been accorded the status of ―Star Export House‖ in accordance with the provisions of the Foreign Trade Policy Aqua logistics limited Company Highlights 1. Aqua Logistics Limited is India‘s foremost global logistics and supply chain partner, delivering excellence across industries, through an integration of empowered people, processes and technology. 2. The Company is a full-scope 3 PL (third-party logistics service provider),delivering end- to-end solutions in the logistics and supply chain domain to customers 3. Past four years they retain so many reserves and surplus. In the FY2011 they retain 139% in profit. Now the company reserve increased up to 1625% in past financial five years Central Warehousing Corporation Company Highlights 1. Highest ever Turnover of Rs. 1218.65 crore, an increase of Rs. 189.10 crore (18.37%) over the previous year.
  28. 28. 2. Import and Export Warehousing facilities at its 36 Container Freight Stations in ports and inland stations. 3. Scientific Storage Facilities for more than 200 commodities including hygroscopic and perishable items through network of 465 warehouses in India with its 5,200 trained personnel. BCG Matrix for Logistics Industry in India
  29. 29. 1. Stars The stars though generate funds but need to be constantly invested into because their prospectus of becoming cash cows depends on the pre-requisite of them being the market leader. Container Corporation of India, Arshiya International comes this position in which the company take following strategic decision Market Development The Allcrgo Logistics Company can develop new product to capture market share in the industry. Currently company hold high in growth due to earn more profit over the five years Market penetration CONCORE can penetrate in to develop rail road to connect new cities, implement developed technologies Arshiya International can improve their warehousing facilities to speed up the delivery time 2. Question marks Since they are the new entrants or strugglers in the market for major share where the market is changing at a high pace, efforts are being made to make sure that the gain on their market share. Arshiya International comes under this position Product development To develop wide range of product in order to catch the new market in India also in aboard To improve the 3PL segment it leads to increase the market growth
  30. 30. 3. Cash cows Since the cows needed to be milked now and then, and efforts are to be made to ensure that they maintain the largest share in the market the following strategies are being adopted by Aegis Logistics Ltd Product development CONCORE can develop their market into air cargo, to cover new market to increase its operation in order to maintain this position in this industry CONCORE can develop market in pipe line logistics segment The company can come in to cargo handling segment, warehousing, container etc The company may enter in to 3PL in segment Concentric diversification The COCORE Company may add extra value to its existing product like new pipe line between new markets. Focus to India market segment like road segment, airways. Central warehousing corporation occurs between stars and cash cows as a market leader in warehousing sector.CWC is bonded with FDI & Food ministry of India. It demands a development in warehousing techniques, Currently company hold high in growth due to earn more profit over the five years. 4. Dogs They are run on breakeven point and in the eyes of an accountant they are not even viable. But can be important for synergies Aegis Logistics and Aqua Logistics comes under dog criteria in which the company deal with single segment so the company can diversify their business into various segment it increase their value in the market. Divestments The company can come in to cargo handling segment, warehousing, container etc The company may enter in to 3PL in segment The company can improve their operation by way of increase the market segment
  31. 31. SWOT ANALYSIS OF INDIAN LOGISTICS INDUSTRY Strength 1. Logistics industry contribute 10-13 % in GDP in India 2. Ranked at 46th position in world in 2012 3. Vital role in import and export business 4. Cheap labour available in India 5. Improve infrastructure like development of new roads, rail road, ports 6. 100% in FDI in India 7. Quality and reliability 8. Direct delivery capability 9. Currently industry use latest technology Weakness 1. Poor performance in infrastructure facilities in India 2. Lack of experienced people while taking strategic decisions 3. Poor physical facilities like road, port, rail road, IT etc 4. State and central government policies over its industry like import restriction over certain products and export for certain scare products 5. Competitors from international players like DHL, UPS, TNT, FEDEX, Blue Dart etc 6. Indian logistics company adopt inadequate technology compare to foreign competitors Opportunities Growth and future of 3PL Market in India CRISIL Research has estimated the 3PL market in India at Rs 47-50 billion in 2008-09, which is expected to grow at a CAGR of 27% to Rs162-165 billion by 2013-14.3PL penetration has been the highest in sectors such as cars and organized retail. The segment is also gaining importance in other sectors such as IT hardware and FMCG. The share of 3PL in the overall logistics market is expected to increase from around 1.5 - 2.0% in 2008-09 to around3.5 – 4% by 2013-14.
  32. 32. The benefits would accrue in the form of: 1. Reduction in warehousing space requirement 2. Improvement in efficiency due to better inventory management 3. Reduction in transportation cost due to higher capacity utilization The segment is also gaining importance in other sectors such as Power, Infrastructure, IT hardware and FMCG. Threats Key Challenges faced by the Indian Logistics Sector 1. Logistics has historically been a high-cost, low-margin business. 2. Economies of scale are absent in the Indian logistics industry. Even the organized sector that contributes slightly more than 1% of the logistics cost, is highly fragmented. 3. Indian freight forwarders face stiff competition from multi-national freight forwarders for international freight movement. MNCs, because of their size and operations in many countries, are able to offer low freight rates and extend credit for long periods. Indian freight forwarders, on the other hand, because of their smaller size and lack of access to cheap capital, are not able to match the same. 4. Poor physical and communications infrastructure is another deterrent to attracting investments in the logistics sector. Road transportation accounts for more than 60% of inland transportation of goods, and highways that constitute 1.4% of the total road network, carry 40% of the freight movement by roadways. Slow movement of cargo due to bad road conditions, multiple check posts and documentation requirements, congestion at seaports due to inadequate infrastructure, bureaucracy, red-tapism and delay in government clearances, coupled with unreliable power supply and slow banking transactions, make it difficult for exporters to meet the deadlines for their international customers. 5. There is lack of skilled and knowledgeable manpower in the logistics sector. Management graduates do not consider logistics as a prime job. To improve the status of the industry, service providers have to move beyond the level of brokers and truckers to attract and retain talent.
  33. 33. FINANCIAL ANALYSIS HIGHLIGHTS OF PERFORMANCE DURING 2011-12 Highest ever Turnover of Rs. 1218.65 crore, an increase of Rs. 189.10 crore (18.37%) over the previous year. Gross Sale increased from Rs. 999.16 crore to Rs. 1152.03 crore –growth of 15.30%. A record profit Before Tax (PBT) of Rs. 159.12 crore inspite of provisions of Rs.100.13 crore towards employees pension scheme – otherwise the profit before tax would have been Rs. 259.25 crore Dividend at par with the previous year @ 40% proposed to be paid on the paid-up capital amounting to Rs. 31.60 crore (including corporate dividend tax). Additional storage capacity of 2.09 lakh MT created with a capital outlay of Rs. 111.22 crore for storage of FCI and other depositors. Overall capacity utilization (occupancy) increased from 88% to 91%. All time high record Utilization of 52.16 lakh MT capacity for storage of foodgrains as against 48.72 lakh MT utilized during 2010-11 Highest ever capacity utilization by foodgrains-57% up from 54% during 2010-11 Handled 11.55 lakh TEUs inspite of euro zone crisis and a weak Rupee. Highest ever revenue of Rs.16.81 crore from Pest Control Services. A revenue of Rs. 50.85 crore form CRT operations- inspite of overall decline in IMPEX trade and stiff competition.
  34. 34. PERFORMANCE HIGHLIGHTS – Consistent Growth During Last 5 Years
  35. 35. CAPITAL STRUCTURE The authorized and paid up capital of the Corporation remained unchanged at Rs. 100 crore and Rs. 68.02 crore respectively. The shareholding pattern also remained unchanged with the shareholders being the Government of India, the State Bank of India, 35 other scheduled banks, 401 cooperative societies, 7 insurance companies and 6 recognized associations/ companies dealing in agricultural produce. FINANCIAL PERFORMANCE The central warehousing corporation (CWC) achieved yet another record turnover of Rs. 1219 crore during 2011-12 as against Rs. 1030 crore achieved during the preceding year registering a growth of 18.35%. This could be possible due to addition of constructed storage capacity by 2.09 lakh MT and increase in overall capacity utilization (occupancy) to 91% as against 88% achieved during previous year. Keeping in view the national priority for safe preservation of foodgrains procured for Central Pool utilization of capacity for storage of foodgrains was given adequate attention which increased from 54% during 2010-11 to 57% in 2011-12. CWC handled 11.55% lakh TEUs during 2011- 12. CWC also achieved highest ever Gross Margin of Rs. 305 crore as against Rs. 237 crore during 2010-11, registering a growth of 29%. Complimenting the CWC, inspite of the economic slowdown and increase in establishment cost due to provisioning of Rs.100 crore for introduction of Pension Scheme for the employees with effect from 1.1.2007, CWC achieved a profit Before Tax (PBT) of Rs.159.12 crore and has declared dividend at the rate of 40% second time in the row. The Minister said that it is significant that during the current financial year, CWC has plans to construct storage capacity of about 2.50 lakh MT with a financial outlay of Rs. 125 crore in 12 states mainly for storage of foodgrains.
  36. 36. Despite the adverse Impex scenario because of economic slowdown and the consequent decline in the number of containers handled in the cfss/icds, the turnover of Corporation increased from Rs.1029.55 crore during 2010-11 to Rs.1218.65 crore during 2011-12. However, the profit before tax (PBT) declined to Rs.159.12 crore as compared to Rs.203.73 crore last year and the profit after tax (PAT) declined to Rs.100.46 crore as against Rs.136.17 crore during 2010-11 due to provisioning of Rs.100.13 crore for contribution towards employees pension fund with effect from 01.01.2007. All segments of operations, excepting Container Rail Transport (CRT) operations, such as warehousing, marketing facilitation, pest control services, etc. recorded growth. As a result, the operating income increased from Rs.975.89 crore To Rs. 1152.03 crore during the year under report, registering a growth of 18.05%. Performance at a Glance Turnover has increased over five years from Rs. 77623 lakh in 2007-08 to Rs. 121865 lakh in 2011-12 FY Net worth of the company also increased gradually due to increased capitalization of the the warehousing. Net worth increased Rs. 130408 lakh from Rs. 108024 lakh in 2007-08. PHYSICAL PERFORMANCE
  37. 37. Capacity and Utilization As on the 31st March, 2012, Corporation operated 468 warehouses with a total storage capacity of 100.85 lakh MT. This included 66 Custom Bonded warehouses, 36 CFSs/ICDs and 4 Air Cargo Complexes with storage capacity of 4.24 lakh MT, 15.68 lakh MT and 7361 MT respectively. During the year, 2.09 lakh MT capacity (covered godowns and open storage capacity) was added while some 2.99 lakh MT of hired godowns/management warehouses specifically hired for storage of various commodities and 0.72 lakh MT of open capacity were rehired consequent upon release of the stocks or termination of the management contract. During the year under report, the average capacity utilization further improved from 88% achieved during 2010-11 to 91% which is an all time high.
  38. 38. Central railside Warehouse company ltd. The fully owned subsidiary the Central Railside Warehouse Company Ltd. (CRWC) which was operating 16 Railside Warehousing Complexes (RWCs) with a total storage capacity of 2,87,217 MT at the beginning of the year, added one more RWC at Dankuni (Kolkata), with a total capacity of 13,750 MT during the year. In Rs.lakh: The total operational storage capacity increased to 3,00,967MT with 17 operational RWCs as on 31.3.2012. Further, construction of part capacity of 7000 MT out of total capacity of 12,500 MT at Mysore has been completed. CRWC is also in dialogue with the Ministry of Railways for setting up of RWCs at Jogeshwari (Mumbai), Malda (West Bengal) and Whitefield Bangalore (Phase-III). . Operation of ICDs/CFSs/Air Cargo Complexes Despite economic slowdown due to euro zone crisis and weak rupee, Corporation handled 11.55 lakh TEUs during the year under report at its 36 Container Freight Stations (CFSs)/Inland Clearance Depots (ICDs) as against 12.32 lakh TEUs handled during 2010- 11. Corporation also operated four Air Cargo Complexes at Delhi, Goa, Virugambakkam and Amritsar during the year.
  39. 39. BALANCE SHEET AS AT 31ST MARCH, 2012 (GENERAL FUND) PARTICULARS Current Year Rs Previous Year Rs. CAPITAL & LIABILITIES Share Capital 680,210,000 680,210,000 Reserve Fund Under Section 30 (1) 12,710,203,564 12,059,103,564 Reserve for Bad & Doubtful Debts 862,646,018 695,153,982 Capital Reserve 45,954 45,954 Self Indemnification Reserve Fund 132,664,948 121,012,206 Reserve for Benevolent Fund 180,673,329 170,901,388 Reserve for CSR Fund 3,820,970 0 Capital Grant from Govt. of India 50,300,000 0 Deferred Tax Liability 1,791,174,012 1,505,094,588 Outstanding Liabilities 2,577,981,187 2,279,985,378 Provision for Pay & Allowances 4,649,764,388 3,499,241,583 Provision for Taxes 1,471,322,688 1,832,948,361 Provision for Dividend (inclusive of dividend tax) 316,003,970 317,053,594 Unclaimed Dividend 709,242 552,042 Profit & Loss Appropriation Account (Balance as per accounts annexed) 49,674 60,570 TOTAL 25,427,569,944 23,161,363,210 PROPERTY & ASSETS Fixed Assets 10,703,509,867 9,798,703,989 Investments (at Cost) 1,100,059,373 1,092,559,373 Income accrued on Investments 20,686,701 26,248,881 Self Indemnification Reserve Fund Investment 121,012,206 115,175,183 Benevolent Reserve Fund Investment 154,846,388 146,445,174 Deferred Tax Assets 1,442,903,920 1,023,458,517
  40. 40. Current Assets 2,828,939,636 2,793,472,410 Loans and Advances 4,269,533,995 4,323,883,448 Cash and Bank Balances 4,436,466,227 3,425,323,066 Unamortised Expenditure 349,611,631 416,093,169 Significant Accounting Policies Notes forming part of Accounts TOTAL 25,427,569,944 23,161,363,210 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31ST MARCH, 2012 (GENERAL FUND) PARTICULARS Current Year Rs Previous Year Rs. EXPENDITURE Warehousing Licence Fee 8,829,078 4,452,066 Consumption of Chemicals,Covers and Dunnage 154,571,102 131,137,951 Pay & Allowances (with provisions) 5,077,032,797 3,620,580,059 Travelling Allowances etc., 41,416,204 35,097,324 Wages 86,990,943 77,445,836 Repairs & Maintenance 242,347,917 202,972,092 Rent, Rates & Taxes 459,723,561 429,888,154 Insurance 126,047,598 101,027,778 Printing & Stationery 20,238,248 20,338,698 Miscellaneous Expenditure 820,814,666 710,287,689 Container Rail Transport (CRT) Operation Expenses 462,394,963 459,624,600 Marketing Facilitation Expenses 2,487,961,282 2,040,144,533 Bank Charges 3,445,216 3,412,344 Interest (Expense) 63375903 22,446,112 Directors' Remuneration (Fees,Travelling Allowances 1,201,467 721,997
  41. 41. etc.) Auditors' Fee and Expenses 4,567,564 3,999,874 Loss on Sale of Assets/Assets written off 6,463 3,384,267 Bad Debts Written Off 4,881 256,255 Depreciation 252,023,949 250,728,699 Impairment Loss 19,647 146,777 Reserve for Bad & Doubtful Debts 210,827,397 150,897,533 Provision for Wealth Tax 357,213 326,266 10,524,198,059 8,269,316,904 Profit for the year 1,662,273,101 2,026,166,839 TOTAL 12,186,471,160 10,295,483,743 Profit for the year 1,662,273,101 2,026,166,839 Less : Prior Period Adjustments (Net) 71,062,752 (11126282) Profit Before Tax 1,591,210,349 2,037,293,121 Less: Provision for Taxes 586,637,512 675,558,119 PROFIT AFTER TAX CARRIED DOWN 1,004,572,837 1,361,735,002 INCOME Warehousing Charges 6,773,902,179 5,663,599,572 Marketing Facilitation Income 3,345,535,753 2,805,254,424 Income from Container Rail Transport (CRT) Operation 508,544,076 515,495,587 Income from CFSs/ICDs under Strategic Alliance 595,244,821 528,384,499 Income from Pest Control Services 168,147,652 159,261,620 Interest (income) 494,514,164 347,245,812 Dividend Income 99,152,648 70,290,866 Miscellaneous Receipts 133,821,618 128,048,220 Excess Liability, Provision and Depreciation Written Back 66,385,449 70,855,535 Profit on Sale of Assets 1,222,800 7,047,608
  42. 42. Significant Accounting Policies Notes forming part of Accounts TOTAL 12,186,471,160 10,295,483,743 APPROPRIATION TO Reserve Fund Under Section 30(1) 651,100,000 1,017,600,000 Self Indemnification Reserve 11,652,742 7,792,477 Proposed Dividend 271,895,760 271,895,200 Tax on Distributed Profits 44,108,290 45,158,394 Benevolent Fund 25,826,941 23,796,137 Deferred Tax adjustment / Income Tax Provision (for earlier years) & Reversal /adjustment of MAT Credit Receivable - 165,865,571 Balance Carried to Balance Sheet 49,674 60,570 TOTAL 1,004,633,407 1,532,168,349 Balance sheet for Container Corporation of India: Particulars Mar '12 Mar '11 Mar '10 (Rs cr.) Sources Of Funds Total Share Capital 129.98 129.98 129.98 Equity Share Capital 129.98 129.98 129.98 Share Application Money 0 0 0 Preference Share Capital 0 0 0 Reserves 5,476.45 4,847.83 4,206.42 Revaluation Reserves 0 0 0 Networth 5,606.43 4,977.81 4,336.40
  43. 43. Secured Loans 0 0 0 Unsecured Loans 0 0 0 Total Debt 0 0 0 Total Liabilities 5,606.43 4,977.81 4,336.40 Mar '12 Mar '11 Mar '10 12 mths 12 mths 12 mths Application Of Funds Gross Block 3,472.61 3,266.11 2,965.48 Less: Accum. Depreciation 1,078.86 959.13 825 Net Block 2,393.75 2,306.98 2,140.48 Capital Work in Progress 115.12 339.18 222.44 Investments 293.1 243.96 240.54 Inventories 8.17 6.26 6.99 Sundry Debtors 19.59 17.27 17.64 Cash and Bank Balance 2,761.50 56.34 49.44 Total Current Assets 2,789.26 79.87 74.07 Loans and Advances 906.35 561.77 571.56 Fixed Deposits 0 2,239.34 1,940.07 Total CA, Loans & Advances 3,695.61 2,880.98 2,585.70 Deffered Credit 0 0 0 Current Liabilities 714.37 639.22 707.79 Provisions 176.78 154.07 144.97 Total CL & Provisions 891.15 793.29 852.76 Net Current Assets 2,804.46 2,087.69 1,732.94 Miscellaneous Expenses 0 0 0 Total Assets 5,606.43 4,977.81 4,336.40 Contingent Liabilities 1,746.47 1,440.38 1,308.84 Book Value (Rs) 431.32 382.96 333.61
  44. 44. Profit and Loss Statement: Mar '12 Mar '11 Mar '10 12 mths 12 mths 12 mths Income Sales Turnover 4,060.95 3,828.12 3,705.68 Excise Duty 0 0 0 Net Sales 4,060.95 3,828.12 3,705.68 Other Income 316.54 173.45 164.07 Stock Adjustments 0 0 0 Total Income 4,377.49 4,001.57 3,869.75 Expenditure Raw Materials 5.04 2.67 2.29 Power & Fuel Cost 28.05 14.03 14.99 Employee Cost 99.91 86.9 83.61 Other Manufacturing Expenses 78.86 2,598.32 2,506.32 Selling and Admin Expenses 0 75.43 94.7 Miscellaneous Expenses 2,825.36 48.08 41.8 Preoperative Exp Capitalised 0 0 0 Total Expenses 3,037.22 2,825.43 2,743.71 Mar '12 Mar '11 Mar '10 12 mths 12 mths 12 mths Operating Profit 1,023.73 1,002.69 961.97 PBDIT 1,340.27 1,176.14 1,126.04 Interest 0 0.3 0.09 PBDT 1,340.27 1,175.84 1,125.95 Depreciation 158.49 145.23 135.1
  45. 45. Other Written Off 0 0 0 Profit Before Tax 1,181.78 1,030.61 990.85 Extra-ordinary items -52.16 25.11 15.76 PBT (Post Extra-ord Items) 1,129.62 1,055.72 1,006.61 Tax 251.74 179.77 219.92 Reported Net Profit 877.88 875.95 786.69 Total Value Addition 3,032.18 2,822.76 2,741.42 Preference Dividend 0 0 0 Equity Dividend 249.26 201.48 181.98 Corporate Dividend Tax 0 33.06 30.52 Per share data (annualized) Shares in issue (lakhs) 1,299.83 1,299.83 1,299.83 Earnings Per Share (Rs) 67.54 67.39 60.52 Equity Dividend (%) 165 155 140 Book Value (Rs) 431.32 382.96 333.61 Cash flow Statement: Cash Flow ------------------- in Rs. Cr. --------- Mar '12 Mar '11 Mar '10 Net Profit Before Tax 1181.78 1058.27 1006.59 Net Cash From Operating Activities 736.16 808.33 634.92 Net Cash (used in)/from -36.18 -267.22 -198.21 Investing Activities Net Cash (used in)/from Financing Activities -234.16 -234.94 -212.92 Net (decrease)/increase In Cash and Cash Equivalents 465.82 306.17 223.79 Opening Cash & Cash Equivalents 2295.68 1989.51 1765.72 Closing Cash & Cash Equivalents 2761.5 2295.68 1989.51
  46. 46. Comparative Financial Ratio Analysis of Central warehousing corporation (CWC) with Container Corporation of India(CONCOR): FINANCIAL RATIOS Central warehousing Corporation CONCOR 2012 2011 2010 2012 2011 2010 Liquidity Ratio Current Ratio 2.08 2.65 2.98 4.15 3.63 3.03 Quick Ratio 2.04 2.61 2.94 4.14 3.61 3.01 Profitability Ratios Adjusted Cash Margin(%) 24.15 21.11 24.95 26.5 24.9 23.41 Net Profit Margin(%) 16.28 16.79 18.5 20.05 21.88 20.32 Activity Ratios Investments Turnover Ratio 97.81 -- -- 497.06 611.52 530.14 Asset Turnover Ratio -- 0.66 0.64 0.77 0.82 0.92 Financial Leverage Ratios Total Debt to Assets Ratio -- -- -- -- -- -- Long-Term Debt to Assets Ratio -- -- -- -- -- -- Total Debt to Equity Ratio -- -- -- -- -- --
  47. 47. Analysis: Liquidity ratio: Current Ratio provides a margin of safety to the creditors. In a sound business, a current ratio of 2:1 is considered an ideal one. For CONCOR the current ratio explains that the constant relation between current assets and current liability but in the FY10 increased to 3.03:1 it indicate well liquidly position. Later in FY12 the level of inventories would be increased it stood at 4.15:1 is an ideal one. But CWC current ratio continuously decrease over four years but ratio cloud be remain same position that is safe liquidity. The company spent more resource for expands its operation over the upcoming years. Profitability ratios Profitability ratios show a company's overall efficiency and performance. The net profit margin is the ratio of net income (net profit) to sales, and indicates how much of each Rupees of sales is left over after all expenses. Having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. As CONCOR has higher ratio ,with a constant increment, whereas CWC profitability slightly down. Activity Ratios: Activity ratios are used to measure the relative efficiency of a firm based on its use of its assets, leverage or other such balance sheet items. These ratios are important in determining whether a company's management is doing a good enough job of generating revenues, cash, etc. from its resources. CONCOR activity ratio is decreased over the years because of completion in market and new government rules. But for CWC is constant over the year due to high capacity utilization of the warehouses.
  49. 49. LOGISTICS MANAGEMENT - INTRODUCTION Logistics is the management of the flow of resources between the point of origin and the point of consumption in order to meet some requirements, for example, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, equipment, liquids, and staff, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is a common motivation 1. Seven R’s of logistics: a. Getting the right product, b. to the right customer, c. in the right quantity, d. in the right condition, e. at the right place, f. at the right time, g. with the right cost. Warehouse A warehouse is a large building where goods are stored, and where they may be catalogued, shipped, or received, depending upon the type. Though in the past, many warehouses, often located in industrial areas sometimes next to major shipping ports, were teeming with workers, the modern warehouse may be either completely or totally automated depending upon how advanced the company is. Sometimes a manufacturing facility also has an attached warehouse, where their manufactured goods are stored until shipped. It is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers'
  50. 50. requirements rather to the customers‘ delight. A professional working in the field of logistics management is called a logistician. Logistics, as a business concept, evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials, and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and services where they are needed or when they are desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible. Origin and Definition of Logistics: The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration"). Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‗Logistikas‘ who were responsible for financial management and distribution of supplies. The Oxford English dictionary defines logistics as: ―The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.‖ The American Council of Logistics Management defines logistics as―the process of planning, implementing and controlling the efficient and effective flow, and storage of goods, services and
  51. 51. related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.‖ Objective of Logistics Management: The primary objective of logistics management is to effectively and efficiently move the supply chain so as to extend the desired level of customer service at the least cost. Thus, logistics management starts with ascertaining customers‘ needs till their fulfilment through product supplies. However, there are some definite objectives to be achieved through a proper logistics system. These can be described as follows: 1. Improving customer service: An important objective of all marketing efforts, including the physical distribution activities, is to improve the customer service. An efficient management of physical distribution can help in improving the level of customer service by developing an effective system of warehousing, quick and economic transportation, and maintaining optimum level of inventory. 2. Rapid Response: Rapid response is concerned with a firm's ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory. 3. Reduce total distribution costs: The cost of physical distribution consists of various elements such as transportation, warehousing and inventory maintenance, and any reduction in the cost of one element may result in an increase in the cost of the other elements. Thus, the objective of the firm should be to reduce the total cost of distribution and not just the cost incurred on any one element.
  52. 52. 4. Generating additional sales: A firm can attract additional customers by offering better services at lowest prices. For example, by decentralizing its warehousing operations or by using economic and efficient modes of transportation, a firm can achieve larger market share. Also by avoiding the out-of-stock situation, the loss of loyal customers can be arrested. 5. Creating time and place utilities: The products are physically moved from the place of their origin to the place where they are required for consumption; they do not serve any purpose to the users. Similarly, the products have to be made available at the time they are needed for consumption. 6. Price stabilization: It can be achieved by regulating the flow of the products to the market through a judicious use of available transport facilities and compatible warehouse operations. By stocking the raw material during the period of excess supply and made available during the periods of short supply, the prices can be stabilized. 7. Quality improvement: The long-term objective of the logistical system is to seek continuous quality improvement. Total quality management (TQM) has become a major commitment throughout all facets of industry. If a product becomes defective or if service promises are not kept, little, if any, value is added by the logistics. Logistical costs, once expended, cannot be reversed. 8. Movement consolidation: Consolidation one of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product, size of shipment, and distance. Many Logistical systems
  53. 53. that feature premium service depend on high-speed, small shipment transportation. Premium transportation is typically high-cost. To reduce transportation cost. It is desirable to achieve movement consolidation. Logistics Management Function Logistics is the process of movement of goods across the supply chain of the company. This process is consist of various functions, which have to be properly managed to bring effectiveness efficiency in the supply chain of organization. The major logistical function are shown in figure 1. Order processing: The starting point of physical distribution activities is the processing of customers‘ orders. In order to provide quicker customer service, the orders received from customers should be processed within the least possible time. Order processing includes receiving the order, recording the order, filling the order, and assembling all such orders for transportation, etc. the company and the customers benefit when these steps are carried out quickly and accurately. The error committed at this stage at times can prove to be very costly. Order processing activity consist of the following  Order checking in any deviations in agreed or negotiation terms Logistics Functions Order Processing Inventory Manage - ment Ware - housing Transpor- tation Material Handling & Storage Packaging Information Flow
  54. 54.  Prices , payment and delivery terms  Checking the availability in of the material stocks  Production and material scheduling for storage  Acknowledge the order, indicating deviation 2. Warehousing: Warehousing refers to the storing and assorting products in order to create time utility. The basic purpose of the warehousing activity is to arrange placement of goods, provide storage facility to store them, consolidate them with other similar products, divide them into smaller quantities and build up assortment of products. Generally, larger the number of warehouses a firm has the lesser would be the time taken in serving customers at different locations, but greater would be the cost of warehousing. Thus, the firm has to strike a balance between the cost of warehousing and the level of customer service. Major decision in warehousing is as follow:  Location of warehousing facility  Number of warehousing  Size of warehouse  Design of the building  Ownership of the warehouse 3. Inventory Management: Linked to warehousing decisions are the inventory decisions which hold the key to success of physical distribution especially where the inventory costs may be as high 15 as 30-40 per cent (e.g., steel and automobiles). No wonder, therefore, that the new concept of Just-in-Time- Inventory decision is increasingly becoming popular with a number of companies. The decision regarding level of inventory involves estimate of demand for the product. A correct estimate of
  55. 55. the demand helps to hold proper inventory level and control the inventory costs. This is not only helps the firm in terms of the cost of inventory and supply to customers in time but also to maintain production at a consistent level. The major factors determining the inventory levels are: The firm‘s policy regarding the customer service level, Degree of accuracy of the sales forecasts, Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs to the factory and get the products in the market. The cost inventory consists of holding cost (such as cost of warehousing, tied up capital and obsolescence) and replenishment cost (including the manufacturing cost). 4. Transportation: Transportation seeks to move goods from points of production and sale to points of consumption in the quantities required at times needed and at a reasonable cost. The transportation system adds time and place utilities to the goods handled and thus, increases their economic value. To achieve these goals, transportation facilities must be adequate, regular, dependable and equitable in terms of costs and benefits of the facilities and service provided. 5. Information: The physical distribution managers continuously need up-to-date information about inventory, transportation and warehousing. For example, in respect on inventory, information about present stock position at each location, future commitment and replenishment capabilities are constantly required. Similarly, before choosing a 16 carrier, information about the availability of various modes of transport, their costs, services and suitability for a particular product is needed. About warehousing, information with respect to space utilization, work schedules, unit load performance, etc., is required. In order to receive all the information stated above, an efficient management information system would be of immense use in controlling costs, improving services and determining the overall effectiveness of distribution. Of course, it is difficult to correctly assess the cost of physical
  56. 56. distribution operations. But if correct information is available it can be analyzed systematically and a great deal of saving can be ensured. 6. Facilities: The Facilities logistics element is composed of a variety of planning activities, all of which are directed toward ensuring that all required permanent or semipermanent operating and support facilities (for instance, training, field and depot maintenance, storage, operational, and testing) are available concurrently with system fielding. Planning must be comprehensive and include the need for new construction as well as modifications to existing facilities. Facility construction can take from 5 to 7 years from concept formulation to user occupancy. It also includes studies to define and establish impacts on life cycle cost, funding requirements, facility locations and improvements, space requirements, environmental impacts, duration or frequency of use, safety and health standards requirements, and security restrictions. Also included are any utility requirements, for both fixed and mobile facilities, with emphasis on limiting requirements of scarce or unique resources. Warehouse Market Analysis In recent times, the Indian warehousing segment in India has evolved significantly, resulting in a gradual metamorphosis from the traditional concept of godowns to modern formats. Further, interest and traction in the potential advantages that free-trade warehousing zones (FTWZs) offer has increased. The demand for warehousing services in India was estimated at approximately INR245–270 billion in 2011–1246. The market consists of industrial and agricultural warehousing, with both segments expected to witness a significant evolution in their shares (by value) over the next five years. The share of the industrial segment, which includes both bulk and non-bulk commodities, is expected to increase from about 86 percent in 2010–11 to around 90 percent in 2015–16.47
  57. 57. This is likely to be at the cost of a corresponding decrease in the share of agricultural warehousing. In contrast to the industrial warehousing segment, which is highly fragmented, the agricultural warehousing segment is dominated to the extent of two-thirds by government entities. These include the Food Corporation of India, the Central Warehousing Corporation and all State Warehousing Corporations. This trend is likely to vary relatively less in the next few years. Emergence of modern warehousing formats The demand for industrial warehousing space is estimated to have grown from around 391 million sq. ft. in 2010 to 476 million sq. ft. in 2013, at a CAGR of 6.8 percent.
  58. 58. Among the analyzed sectors, the highest growth is expected from engineering goods, and IT, electronics and telecommunications sectors, estimated to grow at CAGRs of about 8.6 and 8.2 percent, respectively, during 2010–13. The other analyzed sectors are estimated to witness growth in the range of 5.7 to 7.1 percent48. The share of modern warehousing is anticipated to grow from 15 percent (62 million sq. ft.) in 2010 to 30 percent (178 million sq. ft.) by 201548. This sharp growth is expected to be driven by rising domestic and EXIM freight volumes, increased outsourcing to 3PL players, strengthened investment in infrastructure, organized retail and the impending implementation of Goods and Services Tax (GST).
  59. 59. PROCESS OF IMPORT AND EXPORT IN INDIA The process of IMPORTING 1. Identify a product to import. 2. Registration for license. 3. Obtain IMPEX no. or RBI code. 4. Investigate the costs of importation, e.g., customs duty, shipping, warehousing. 5. Identify and verify potential suppliers. 6. Pay for and evaluate product samples. 7. Discuss and agree on shipping and payment terms. Ensure that proper documents will be available. 8. Select shipping agent. 9. Place trial order. If the order is large, hire an inspection company. 10. Make payments. 11. Track progress of your goods through delivery to you. The process for EXPORTING: 1. Registration 2. Generation of Shipping Bills 3. Processing of Shipping Bill 4. Quota Allocation 5. Arrival of Goods at Docks 6. System Appraisal of Shipping Bills 7. Customs Examination of Export Cargo 8. Stuffing / Loading of Goods in Containers 9. Drawal of Samples 10. Amendments 11. Export of Goods under Claim for Drawback
  60. 60. Functions of Central warehousing corporation Operational aspects: ICD PPG is managing LCL and FCL containers for export and import operations. The operation for both export and import are defined in brief here under: Steps of processing of bill of entry from submission to finalization/out of charge (IMPORT) 1. Filing of smtp (simple mail transfer protocol) by shipping lines at port of landing. 2. Transfer of container to ICDs (CWC) by RAIL. 3. Shifting of container to icd ppg(CWC). 4. Documents preparation, filing of bill of entry. 5. Documents verified by CUSTOMS by examination. 6. Bill of entry assessment and approved by D.C (CWC). 7. Generation of challan after clearance from D.C on system. 8. Payment of duty by importer in bank through challan order. 9. Obtain out of charge order. 10. Obtain shipping line/console delivery order after due check. 11. Generation of payment sheet. 12. Obtain the issue slip number by verification of all documents and online checking by manager (import/export). 13. Issue GATE PASS by CWC. 14. Physical movement of container out of CWC. Steps of processing of shipping bills/container movement (EXPORT) 1. Filing of declaration at CUSTOMS centre, on EDI (Electronic data interchange) system online. 2. Generation of shipping bill and allotment of shipping bill no. through EDI system. 3. Handling charges are paid by exporter to the CWC before arrival of goods. 4. CCIN generated by system
  61. 61. 5. Carting of goods on presentation of documents to SHED, Documents: a. Shipping bill. b. Invoice. An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. c. Packaging list. 6. Physical arrival of goods at the station. 7. Carting of goods into SHED in the specifies area allotted. 8. Allotment of gate pass-CWC. 9. Goods enter the warehouse verification by SHED inspector attended by CUSTOMS. 10. SHED superintendent marks the document for examine. 11. Allotment of let export order (LTO) by system (CUSTOMS) for stuffing. 12. Shipping line prepare stuffing plan based on customs approval. 13. Stuffing of goods into the nominated container under Customs supervision (SHED Inspector). 14. Customs allow movement of loaded container after line seal and CUSTOM‘s TAG. 15. Movement of container by H&T agent of CWC to RAIL head t movement. 16. Shifting of container from ICD to exit port by RAIL. Marketing Aspect a) Corporation participated in various Exhibitions, Krishi Expos, Trade Fairs, etc., prominent among those being : i) Haritholsavam-2011, Cochin -- 3rd - 7th Sept., 2011 ii) National Exhibition, Kolkata -- 7th - 11th Sept., 2011 iii) Krishi Utsav,2011 Kota -- 14th - 16th Sept., 2011 iv) India International Food & Agri Expo-2011, Cochin -26th- 28th Nov.,2011 v) India Maritime Week, New Delhi -- 19th - 21st Jan., 2012 b) Doordarshan (National Channel) also covered the activities of CWC through their programme "Krishi Darshan" and phone-in-programme on six occasions during the year.
  62. 62. MIS And Record Management: Corporation is maintaining all the record as per ISO procedures. The following reports are maintained for smooth functioning of CWC-ICD PPG: 1. Reports related to export: a. Daily carting sheet b. Shifting report c. Stuffing report d. Genral space utilization report 2. Report related to import a. Tally sheet b. Stuffing sheet c. De-stuffing sheet 3. Other report a. PDA statement b. Cash statement c. Daily transaction report d. Business/economy report ICD patparganj uses and local area network system for handling the data in ICD warehouse .the server is client based ,the software in build using oracle 10G. ICD PPG store backup for security purposes. Backup is stored twice a day manually. ICD PPG is still lack in technological issue of warehouse management system. As ICD is not using RFID technology for tracking containers, Management team is working to solve the limitations issues regarding RFID technology.
  63. 63. WAREHOUSE MANAGEMENT SYSTEM: THE ROLE OF THE WAREHOUSE IN THE LOGISTICS SYSTEM: 1. The warehouse is where the supply chain holds or stores goods. 2. Functions of warehousing include i. Transportation consolidation ii. Product mixing iii. Docking iv. Service v. Protection against contingencies FACTORS INFLUENCING EFFECTIVE USE OF WAREHOUSES: 1. Cube utilization and accessibility 2. Stock location 3. Order picking and assembly 4. Physical Control & Security WAREHOUSE ACTIVITIES: 1. Receive goods 2. Identify the goods 3. Dispatch goods to storage 4. Hold goods 5. Pick goods 6. Marshal shipment 7. Dispatch shipment 8. Operate an information system PRINCIPLES OF WAREHOUSE LAYOUT DESIGN: 1. Use one-story facilities
  64. 64. 2. Move goods in a straight line 3. Use efficient materials-handling equipment 4. Use an effective storage plan 5. Minimize aisle space 6. Use maximum height of the building WAREHOUSE PROCESS:
  65. 65. CONCLUSION & RECOMMENDATIONS CONCLUSION: Indian Logistics industry is continuously improving its performance in the global logistics industry by improvement of customs, trade-related infrastructure, inland transit, logistics services, information systems, and port efficiency help to provide trade goods and services on time and at low cost. The World Bank's 2007th Global Logistics Report ranks India 39 amongst 150 countries in terms of logistics performance during the year as well as its future potential. Indian Logistics industry has low performance than developed countries like USA, UK and Singapore in global logistics sectors due inefficiency in logistics services and highest among the low-income group countries. India spend in Logistics activities equivalent to 13 % of its GDP is higher than that of developed countries. The key reason is the relatively high level of inefficiency in the system with lower average trucking speeds, higher turnaround time at ports and high cost of administrative delays. This can be solves by a Warehouse Management System with an integrated RFID-based technology that will improve the entire inventory handling process by providing an automated, systematic and accurate warehouse management cycle that is error-free, efficient and updated real-time. SUGGESTIONS & RECOMMODATIONS: 1. Installation of Warehouse Management System in CWC-ICD (ppg). 2. Integrated RFID-based technology that will improve the entire inventory handling process. Warehouse Management System can: • Scan & verify deliveries as they are received-right on the dock • Execute real-time inventory transactions, with full bin/serial/lot support • Manage the picking process from a single screen - without the need to print pick tickets • Verify Goods as they are packed & shipped, automatically generating bills of lading • Automate the Billing Selection process
  66. 66. • Support a wide range of wireless radio frequency data collection devices to enable accurate, efficient tracking of any product Warehouse Management System (WMS) helps distributors, retailers, exporters/importers, and 3PL companies run more productive, efficient, and profitable warehouse operations. It helps strengthening customer relationships, reduce operating expenses and increase warehouse and distribution efficiencies. WMS is an intelligent investment that will bring instant accuracy in warehouse operations and yield long-term financial benefits. Proposed Solution: The proposed solution is to create a Warehouse Management System with an integrated RFID-based technology that will improve the entire inventory handling process by providing an automated, systematic and accurate warehouse management cycle that is error-free, efficient and updated real-time. The warehouse performs four basic functions: 1. receiving of goods and other materials from a source, 2. inspection, storage, cross-docking and protection of goods, 3. retrieval of goods according to customer requirements, 4. preparation of goods for shipping and transportation. To illustrate, pallets, cases, cartons and all other storage items in the warehouse will be RFID tagged, plotting them in the system back-end. These tags are recognized by readers installed in all the shelves, transporting equipments, and ingress and egress points in the warehouse. As a result, all movements of goods within the warehouse are tracked and accounted, use of space, equipment and labor is maximized, and retrieval of goods as needed becomes systematic- all these contributing to increased customer service, productivity level, and warehouse utilization. • RFID is 15-20 times faster than manual and barcode processes for inventorying IT assets • Some companies experience a 95% reduction in time using RFID • The #1 RFID application being deployed is IT asset tracking
  67. 67. Tangible Benefits This project can provide the company with tangible benefits that can quickly and dramatically improve warehouse operations and increase material management efficiencies without adding headcount. By implementing an RFID-based WMS, the company will achieve a number of significant benefits. That includes the following: • Reduced warehouse labor costs • Reduced clerical labor costs • Reduced overtime costs • Reduced of physical inventories • Lower shipping/freight costs • Lower costs to rectify errors • Reduced equipment costs Intangible Benefits: • Increase in organizational transparency and responsibility. • Accurate and faster access to data for timely decisions. • A wider reach in terms of vendors, thus producing more competitive bids. • Improvement in customer response time. • Significant decrease in time and effort needed in data entry. • More controls thereby lowering the risk of inappropriate utilization of resources Major Obstacles: The following are the challenges that are highly likely to be experienced related to creating and implementing this system:
  68. 68. • The transition from a manual to an automated system will require extensive preparation specifically on the operations-side. Flows and processes should be thoroughly examined to ensure that the implementation of this wireless technology does not hamper operations, supply-chain and warehouse management in place. • Alignment of the RFID WMS with the primary business software must be rolled-out. • Procurement of equipment such as RF/barcodes scanners, portable as well as heavy duty printers, and the appropriate type of labels must be done after careful selection from various options, taking into consideration the adaptability of existing systems and software. RISK FOR IMPLEMENTATION: Although the implementation of an RFID WMS will greatly benefit key areas, there are still risks associated with the system. Primarily, if the RFID tags fail, the system will not be able to track the movements of goods inside the warehouse. Moreover, the following issues are considered risks: DEAD AREAS AND ORIENTATION PROBLEMS: RFID works similar to the way a cell phone or wireless network does. Like these technologies, there may be certain areas that have weaker signals or interference. PROXIMITY ISSUES: RFID tags cannot be read well when placed on metal or liquid objects or when these objects are between the reader and the tag HIGH COST: Because this technology is still new, the components and tags are expensive compared to barcodes. UNREAD TAGS: When reading multiple tags at the same time, it is possible that some tags will not be read and there is no sure method of determining this when the objects are not in sight. VULNERABLE TO DAMAGE: Water, static discharge or high-powered magnetic surges (such as lightning strike) may damage the tags.
  69. 69. KEY LEARNINGS AND FINDINGS While preparing this corporate internship project report I have understand many things about the Indian Banking Industry and learned about the followings: 1. Functions of logistics especially in warehouse management in an organization. 2. Significance of warehouse in import and export operations. 3. Activities and tasks performed by logistics sector organisation. FINDINGS: 1. The logistics performance index shows the performance of country in the global logistics industry, customs, trade-related infrastructure, inland transit, logistics services, information systems, and port efficiency are all critical to whether countries can trade goods and services on time and at low cost. Here India LPI score is 3.07 and secure 39th position in the global logistics industry. As the share of Indian Logistics Industry is more than the Mexico and less than the USA, UK and Singapore witness that Indian Logistics industry is one of the growth drivers for Indian economy. 2. In the global logistics sector India at the top position among the all the low income group countries, that show that Indian Logistics sectors perform better among all the low income countries or developing countries. 3. Logistics cost contribution of India in GDP is 13 % which shows the high logistics cost of the Indian Logistics industry and also higher than the developed countries. Due to the poor infrastructure and other logistics service is not better than the developed countries like USA and Japan.
  70. 70. REFERENCES • • • • • • • • • guide-267/ • • • • Industry • • • pdf • •