LOGISTICS IN INDIA

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  • LOGISTICS IN INDIA

    1. 1. SUB-GROUP – IV TECHNOLOGY & HR NEXTGEN APPROACH TO LOGISTICS Planning Commission WORKING GROUP ON LOGISTICS
    2. 2. <ul><li>Functional Description </li></ul><ul><li>Structure of the Industry </li></ul><ul><li>Trends </li></ul><ul><li>Business Strategies </li></ul>Comprehensive Overview We Cannot Direct The Wind But We Can Adjust The Sails
    3. 3. The Value Chain MARGIN MARGIN Support Activities Primary Activities Firm Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales Service
    4. 4. Generic Model of Supply Chain MANUFACTURE RM PARTS ASSEMBLIES PROCESS/ASSEMBLE LOGISTICS SERVICES SPARES FINISHED GOODS CUSTOMER/ USER DISTRIBUTOR
    5. 5. Many Business – Not One Domestic - Import – Export - Transit Performing Carriers - Freight Forwarder - CHA - 3PL Doccumentation & Information Modes: Air Sea Road Rail Multimodal Courier Post Ports Warehouses Distribution
    6. 6. Convergence 3PL <ul><li>CHA </li></ul><ul><li>IATA </li></ul><ul><li>MTO </li></ul><ul><li>GROUPAGE </li></ul><ul><li>NVOCC </li></ul><ul><li>Courier </li></ul><ul><li>Carriers </li></ul><ul><li>Air </li></ul><ul><li>Road </li></ul><ul><li>Ocean </li></ul><ul><li>Rail </li></ul><ul><li>Post </li></ul>Port – CFS - Warehouse – Terminal INFRASTRUCTURE Technology
    7. 7. Market Place <ul><li>CARRIERS: ORGANISED - UNORGANISED </li></ul><ul><li>INTERMEDIARIES: ORGANISED -UNORGANISED </li></ul><ul><li>DOMESTIC - INTERNATIONAL </li></ul><ul><li>MULTINATIONAL - NATIONAL </li></ul><ul><li>INFRASTRUCTURE </li></ul><ul><ul><li>STATUTOTY BODIES </li></ul></ul><ul><ul><li>CUSTOMERS: DOMESTIC - INTERNATIONAL </li></ul></ul>
    8. 8. CHANGING RELATIONSHIP MATRIX 3PL 4PL BUYER SELLER Custodians Carriers Customs Statutory Authorities Principal Changing Relations Changing TERMS DOOR TO DOOR One Stop Shop <ul><li>Quicker delivery </li></ul><ul><li>Lower cost </li></ul><ul><li>Quality of service </li></ul><ul><li>Range </li></ul><ul><li>Flexibility </li></ul><ul><li>Visibility </li></ul>
    9. 9. Logistics Industry GOAL 2010 “ The Future arrived when we weren’t looking, so we’re still dealing with issues, ideas and programs that don’t fit the world’s new realities.” - Peter Drucker Comedian Hero Super Star Extra
    10. 10. Logistics Objectives Smooth Movement Online Information Right Place Right Documentation Good Condition Right Price Right Time Right Tariff
    11. 11. Taking Logistics Industry To The Next Level Problem Is Always Multifaceted <ul><li>Global Best Practices </li></ul><ul><li>Resource Optimisation </li></ul><ul><li>Reliable Statistics </li></ul><ul><li>Technology including IT </li></ul><ul><li>Enabling Legislations </li></ul><ul><li>Friendly Tax Regime </li></ul><ul><li>Human Resourses </li></ul><ul><li>Infrasctuure </li></ul><ul><li>Competitive Mindset </li></ul>
    12. 12. Government – Trade Partnership <ul><li>Trust the Compliant - Maintain Integrity </li></ul><ul><ul><li>Increased Linkages and Inter-dependency </li></ul></ul><ul><ul><li>Interest in Facilitation Is Bilateral </li></ul></ul><ul><ul><li>Facilitation - Minimal Control - Minimum Legislation </li></ul></ul><ul><li>Think Exponential – Not Incremental </li></ul><ul><li>Think Revolutionary Rather Than Review </li></ul><ul><li>Reduce by 50% </li></ul><ul><ul><li>Transaction Costs </li></ul></ul><ul><ul><li>Reduce Transit Time </li></ul></ul><ul><li>Build Visibility </li></ul><ul><li>Infrastructure Ahead of Requirement by 10 Years </li></ul>
    13. 13. Developing Global Mindset Value Chain - Supply Chain - LOGISTICS <ul><li>Priceberg </li></ul><ul><li>Strategic Global Vision </li></ul><ul><li>New Paradigm </li></ul><ul><li>Boiling Frog Syndrome </li></ul><ul><li>VISION 2016 </li></ul><ul><ul><li>Redefine </li></ul></ul><ul><ul><li>Re-Engineer </li></ul></ul><ul><ul><li>Training - Education </li></ul></ul><ul><ul><li>Specialisation - High End Skill - Standards </li></ul></ul><ul><ul><li>Inclusive Participation of ALL </li></ul></ul>
    14. 14. INFORMATION MANAGEMENT <ul><li>Service Approach </li></ul><ul><ul><li>Information Management </li></ul></ul><ul><ul><li>Knowledge Worker </li></ul></ul><ul><li>Focal Point Of Information Network </li></ul>Intermediaries must evolve to add value or perish Only A Few Businesses Can Succeed By Having The Lowest Price. Growth & Survival Strategy Should Include Customer Service & Quality.
    15. 15. Community System OVERSEAS STAKEHOLDER FINANCIAL INSTITUTIONS TRANSPORT INTERMEDIARIES REGULATORY BODIES PORTS WAREHOUSES FREIGHT STATIONS CARRIERS INTERNATIONAL DOMESTIC CONSIGNER CONSIGNEE CENTRAL HUB & GATEWAYS
    16. 16. CASE FOR Community System <ul><li>TRADITIONAL PAPER TRADE </li></ul><ul><li>27 PARTICIPANTS/TRANSACTION </li></ul><ul><li>40 DOCUMENTS/TRANSACTION </li></ul><ul><li>30 DATA ITEMS REPEATED 20 TIMES </li></ul><ul><li>70 % DATA RE-KEYED </li></ul><ul><li>Logistics & Transaction Cost Amount to 7% - 15% OF VALUE OF GOODS </li></ul>- UN/ECE-FIATA Everyone has Proprietary Networks Even Digital Signatures are Different Little or No Interfacing
    17. 17. EXPERTISE IN SOFT TECHINAL SKILLS <ul><li>RATES </li></ul><ul><li>ROUTES </li></ul><ul><li>TARRIFS </li></ul><ul><li>RULES </li></ul><ul><li>PROCEDURES </li></ul><ul><li>REGULATIONS </li></ul><ul><li>INSURANCE </li></ul><ul><li>TRACKING </li></ul><ul><li>STORAGE </li></ul><ul><li>SAFETY </li></ul><ul><li>SECURITY </li></ul><ul><li>ENVIRONMENT </li></ul>
    18. 18. Cross Functional Integration Demanding Global Customer - Emerging Service Perspective SAFETY - SECURITY - ENVIRONMENT Information Management Risk Management Finance and Payment Physical Logistics Statutory Compliance
    19. 19. Forces Driving The Industry Competition Competition Intensity Disintermediation Convergence Customer Bargaining Power Supplier Bargaining Power New Entrants Multinational Amongst Existing 3PL
    20. 20. Customer Expectations <ul><li>Competition with Arms Breaking Barrier </li></ul><ul><li>Change from ‘Need Based’ to ‘Expectation Based’ Service Providers </li></ul><ul><li>Customers now wants contracts signed with blood </li></ul>
    21. 21. Growth Curves Liberalisation Simplification Globalisation Growth Disintermediation Attrition Undifferentiated Competition Redefine Reengineer Convergence
    22. 22. <ul><li>Formal Education </li></ul><ul><li>Specialised Industry Training </li></ul><ul><li>Flexibility, Versatility & Cross Functional Abilities </li></ul><ul><li>Ability To Respond To Change </li></ul><ul><li>Responsible For Results & Actions </li></ul><ul><li>Customer Relations </li></ul><ul><li>Efficiency & Effectivity </li></ul><ul><li>Communication Skills </li></ul><ul><li>Computer Literacy </li></ul>STAFF & TRAINING
    23. 23. <ul><li>RIGHT AT THE FIRST TIME </li></ul><ul><li>HIGH PRODUCTIVITY </li></ul><ul><li>UNDERSTANDING </li></ul><ul><li>INNOVATION </li></ul><ul><li>OPEN MIND </li></ul><ul><li>TIME BOUND </li></ul><ul><li>CONTINUOUS UPGRADATION </li></ul>Staff Training Issues
    24. 24. KEY RESULTS <ul><li>Speed </li></ul><ul><li>Correctness </li></ul><ul><li>Solutions </li></ul><ul><li>Reliability </li></ul><ul><li>Consistency </li></ul><ul><li>Single Price </li></ul><ul><li>Proactive </li></ul><ul><li>Post Clearance </li></ul>
    25. 25. Shantanu Bhadkamkar: Planning Commission IT & HR 06/04/09 Demanding customers <ul><li>Customers have global access </li></ul><ul><li>The choice is increasing </li></ul><ul><li>Product life cycles are shortening </li></ul><ul><li>Relationships are profit motivated </li></ul><ul><li>Quality and service are at their historic high </li></ul><ul><li>Costs are gravitating to their global low </li></ul><ul><li>Business is riskier with low tolerance </li></ul><ul><li>So everyone in supply chain is more demanding </li></ul>
    26. 26. Shantanu Bhadkamkar: Planning Commission IT & HR 06/04/09 Primary services <ul><li>Transport and handling – 3PL </li></ul><ul><ul><li>Long haul </li></ul></ul><ul><ul><li>Local delivery </li></ul></ul><ul><ul><li>Storage </li></ul></ul><ul><ul><li>Handling </li></ul></ul><ul><li>Customs – 3P </li></ul><ul><li>Risk-cover – 3P </li></ul><ul><li>Inspection – 3P </li></ul><ul><li>Coordination – 4PL </li></ul>
    27. 27. Shantanu Bhadkamkar: Planning Commission IT & HR 06/04/09 Costs to customer <ul><li>Price of service </li></ul><ul><li>Cost of co-ordination </li></ul><ul><li>Consequential cost of time </li></ul><ul><li>Risk of delay and bad service </li></ul><ul><li>Loss of business </li></ul>
    28. 28. Priceberg? PRICE OVERHEADS or CONSEQUENCES
    29. 29. Agenda <ul><li>Business Environment </li></ul><ul><li>What to Change ? </li></ul><ul><ul><li>Symptoms or Root Cause… </li></ul></ul><ul><ul><li>Key Conflicts </li></ul></ul><ul><ul><li>Goal of the organization </li></ul></ul><ul><li>What to Change to? </li></ul><ul><ul><li>Top CEO Issues & HR Alignment </li></ul></ul><ul><li>How to cause the change? </li></ul><ul><ul><li>Roadmap </li></ul></ul><ul><ul><li>Strategic Gap </li></ul></ul><ul><ul><li>Vision & Values </li></ul></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>Performance Measurement </li></ul></ul><ul><li>Summary </li></ul>
    30. 30. Organisation Reality People Vs Processes Attracting and Retaining Talent Monotonous Jobs Demotivated staff No fair reward or reprisal system Obsolescence of skill and knowledge Lack of Decision Making structures No formal organisation structure Specific roles and responsibilities not defined Second line does not exist Our costs are increasing every year Sense of ownership does not exist
    31. 31. Top CEO Issues <ul><li>Customer Loyalty/Retention </li></ul><ul><li>Engaging Employees in Company Vision/Values </li></ul><ul><li>Competing for talent </li></ul><ul><li>Shortage of Key Skills </li></ul><ul><li>Reducing Costs </li></ul><ul><li>Increasing Flexibility/Speed </li></ul><ul><li>Industry Consolidation </li></ul><ul><li>What to Change To? </li></ul>
    32. 32. Strategic Gap GAP S Desired State Current State
    33. 33. Vision and Values <ul><li>Employees MUST feel a part of the Cause </li></ul><ul><li>Vision may be to be a 500 crore company in 5 years </li></ul><ul><li>Employee Thoughts: But what role do I play in all of this? </li></ul><ul><li>Vision Once identified must be communicated to employees in the language they understand </li></ul><ul><li>How do they fit into the entire picture? </li></ul>
    34. 34. Training <ul><li>Technical and Skills Oriented </li></ul><ul><li>Attitude and Behaviour Oriented </li></ul>
    35. 35. Training <ul><li>Technical & Skills </li></ul><ul><ul><li>Freight Forwarding </li></ul></ul><ul><ul><li>Air & Sea Import/Export </li></ul></ul><ul><ul><li>Warehousing and Distribution </li></ul></ul><ul><ul><li>Customs Clearance </li></ul></ul><ul><ul><li>Billing </li></ul></ul><ul><li>Soft </li></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>Negotiations </li></ul></ul><ul><ul><li>Employee Motivation </li></ul></ul><ul><ul><li>Assertiveness </li></ul></ul><ul><ul><li>Time Management </li></ul></ul><ul><ul><li>Personal Effectiveness </li></ul></ul><ul><ul><li>Managing Diversity </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><ul><li>Supply Chain & Logistics </li></ul></ul><ul><ul><li>Customer Service </li></ul></ul><ul><ul><li>Key Account Management </li></ul></ul><ul><ul><li>… </li></ul></ul>
    36. 36. Performance Measurement <ul><li>“ Tell me how you will measure me and I will tell you how I will behave” </li></ul>People behave the way they are measured !!!
    37. 37. Implications <ul><li>Those will be best equipped to face future challenges, who are flexible to change </li></ul><ul><li>Human Resources and Training: Focus on your most important resource – “People” </li></ul><ul><li>Attract and retain the right people </li></ul><ul><li>Empower them to perform for the future </li></ul>
    38. 38. Summary <ul><li>Changing industry dynamics </li></ul><ul><ul><li>Moving towards single window model handing the entire supply chain logistics of the client </li></ul></ul><ul><ul><li>Shape Up or Ship Out </li></ul></ul><ul><li>What is the goal of my organisation? </li></ul><ul><li>Evaporation of Key Conflicts </li></ul><ul><li>Blueprint for future </li></ul><ul><ul><li>Shared Vision & Operational Strategy </li></ul></ul><ul><ul><li>Organisation Structure, Roles & Responsibilities </li></ul></ul><ul><ul><li>Adequate Skill Set – Hiring & Training, Succession & Career Planning </li></ul></ul><ul><ul><li>Performance Measurement – “ People Behave The Way They Are Measured” </li></ul></ul>
    39. 39. Industry Analysis <ul><li>Shantanu Bhadkamkar </li></ul><ul><ul><li>Structural Analysis of the Industry & Strategies </li></ul></ul><ul><ul><li>Convergence, Disintermediation & Other Competitive Forces </li></ul></ul><ul><ul><li>Reengineer, don’t repair </li></ul></ul><ul><li>J. Krishnan </li></ul><ul><ul><li>Evolution of CHA </li></ul></ul><ul><ul><li>Correlated Regulatory Regimes to Evolution </li></ul></ul><ul><ul><li>Evolution to Yield </li></ul></ul><ul><li>X. Britto </li></ul><ul><ul><li>Innovative – Fountain Pen </li></ul></ul><ul><ul><li>If you have one hour to cut a tree, use half an hour to grind the axe </li></ul></ul><ul><ul><li>Polished Rice Costs Money </li></ul></ul>
    40. 40. NextGen Logistics Trends <ul><li>DTD - DDP/DDU – Delivered Terms </li></ul><ul><li>Increased Interplant Movement & Vendor Managed Inventory </li></ul><ul><li>Visibility </li></ul><ul><li>Change from ‘Need Based’ to ‘Expectation Based’ Service Providers </li></ul><ul><li>Full Supply Chain Integration - Value Chain included </li></ul><ul><li>Higher Customer Interface </li></ul><ul><li>Simultaneous Online Processing & Information Flow </li></ul><ul><li>Servicing at Both the Ends, including intermediate </li></ul><ul><li>Proactive </li></ul><ul><li>Post Delivery Services </li></ul>Proliferation of Successful Strategies
    41. 41. Influencing Factors <ul><li>Technologies </li></ul><ul><ul><li>Information Management </li></ul></ul><ul><ul><li>Full Integration with Customer’s ERP </li></ul></ul><ul><ul><li>Middle Ware </li></ul></ul><ul><ul><li>RFID, Bar Coding … </li></ul></ul><ul><li>Security </li></ul><ul><ul><li>Domestic </li></ul></ul><ul><ul><li>International </li></ul></ul><ul><ul><li>Storage, Carriage, Personnel </li></ul></ul><ul><li>Environmental Issues </li></ul><ul><li>Implications of Fuel Costs Rise, particularly Fossil Fuels - Peak Oil </li></ul>Proliferation of Successful Strategies
    42. 42. Value Added Services <ul><li>Integration - Systems including IT </li></ul><ul><li>Purchase Order Management </li></ul><ul><li>Intermediate Storage & Distribution </li></ul><ul><li>Vendor Managed Inventories : More Movement Inter-Plant, More Overseas Manufacturing </li></ul><ul><li>Reverse Logistics </li></ul><ul><li>Inspection </li></ul>
    43. 43. Industry Characteristics Fragmented Matured -Declining -Emerging Undifferentiated Low Entry & Exit Barriers
    44. 44. <ul><li>Pricing, Costing, Forecasting, Feed Back- MIS, Response Management </li></ul><ul><li>Concept Selling & Enhanced Role Of Marketing </li></ul><ul><li>Ability To Handle New Unexpected Situations & Dealing With Uncertainty </li></ul><ul><li>Global Alliances & Strategic Networking </li></ul><ul><li>Better Management Of Finances </li></ul><ul><li>Cannibalisation Of Own Products </li></ul><ul><li>Strategic Global Vision </li></ul>EMERGING INDUSTRY ISSUES
    45. 45. KEY RESULTS <ul><li>Speed </li></ul><ul><li>Correctness </li></ul><ul><li>Solutions </li></ul><ul><li>Reliability </li></ul><ul><li>Flexibility </li></ul><ul><li>Consistency </li></ul><ul><li>Single Price </li></ul><ul><li>Proactive </li></ul><ul><li>Post Delivery Services </li></ul><ul><ul><li>Restructuring of Mind </li></ul></ul><ul><ul><li>Get Related to Customer more professionally </li></ul></ul>
    46. 46. Reengineering For Nextgen Logistics <ul><li>Redefine </li></ul><ul><li>Reengineer </li></ul><ul><li>Relook </li></ul><ul><ul><li>Modify </li></ul></ul><ul><ul><li>Repair </li></ul></ul><ul><ul><li>Tamper </li></ul></ul>

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