Examination of Logistics Sector in India and Logistics Management Practices of Safexpress, a Third Party Logistics Service Provider.
Council of Supply Chain Management Professionals (CSCMP) defines Logistics Management as part of SCM that plans, implements and controls the efficient and effective forward and reverse flows and storage of goods, services and related information between the point of origin and the point of consumption in order to meet the customers’ requirements. The logistics industry in India is evolving rapidly and is expected to play an increasing role in driving growth of the Indian economy. The logistics industry of India was estimated to be around US$ 160 billion in 2018. With the implementation of GST, the sector is witnessing rapid growth and is estimated to reach US$ 215 billion by year 2020.
The broad goal of the project is to study in detail the logistics sector in India and in-depth understanding of logistics management from the perspective of a logistics service provider. This shall cover the principles, methods, tools and techniques utilised and best practices in logistics employed by the 3 PL service provider for seamless flow and efficient storage of goods in a supply chain.
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In House Project on Safexpress Private Limited.pptx
1. EXAMINATION OF LOGISTICS SECTOR IN INDIA &
LOGISTICS MANAGEMENT PRACTICES OF
SAFEXPRESS, ATHIRD-PARTY LOGISTICS
PRESENTED BY –
DISHA MISHRA
IN-HOUSE PROJECT REPORT
For the Proposed Summer Internship Project
TOPIC:
FACULTY MENTOR –
DR. KESHAV KUMAR SHARMA
2. OVERVIEW OF IN-HOUSE
SIP
This is an In-house SIP project and the project outline was
provided by our faculty mentor Dr. Keshav Kumar Sharma.
Research Objectives - To study in detail the logistics sector in
India and in-depth understanding of logistics management
from the perspective of a logistics service provider.
Research Methodologies – Extensive secondary research done
with articles, web documents, reports, etc.
PART 1 1.1 to
1.4
Logistics Sector
PART 2 2.1 to
2.3
Safexpress – 3PL
Service Provider
PART 3 2.4 Structured
Questionnaire
Survey
3. WEEK 1 -
ABOUT
LOGISTICS
SECTOR IN
INDIA
Activity 1.1 1. Understand and examine the role of supply chain management
and logistics in any business organization
2. Understand the present status of the logistics sector in India
3. Examine World Bank's Logistics Performance Index (LPI), India’s
Ranking; Compare the logistics sector in India vs developed
countries
4. Discuss and examine the Government policies and initiatives for
logistics sector in India including FDI policies of Government of
India
KPMG report - Skill gaps in the Indian Logistics Sector: A white paper
Ministry of commerce & industry website
Make In India
IBEF
Minister of External Affairs
World Bank – International Scorecard
Major
Sources
PART 1
4. What is Supply Chain
Management and
Logistics? The logistics expense of India is standing at 14% of
its’ GDP.
In 2019 the estimated value of the logistics sector
was $160 Billion.
The 3PL share in the overall logistics in India is less
than 10%.
In the revised union budget of 2020-21 on February
1, allocating Rs. 1.7 lakh crores to the logistics
sector.
The management of the flow
of goods and services, involving
the movement and storage
of raw materials and finished
goods as well as end to end
order fulfillment from point of
origin to point of consumption,
is SCM.
Logistics is the process of
planning and executing the
efficient transportation and
storage of goods from the point
of origin to the point of
consumption.
Present Status
5. Six-key dimensions
of LPI & India’s score
• India’s rank is 44th in the world.
• In 2016 India was at 35th rank, but saw a drop of 9 ranks in
2018.
Clearance process efficiency:
2.96
The quality of infrastructure
involved in the transportation
process: 2.91
Effortless preparation
competitive price shipments:
3.12
The service quality and
efficiency of the logistics: 3.13
Traceable and trackable freight
ability: 3.32
Frequency of timely delivery to
the destinations: 3.5
Overall LPI score of India: 3.18
World bank logistics performance index (LPI) of
India v/s Other nations
Comparison with BRIC Nations
6. GOVERNMENT
INITIATIVES
Government gave the infrastructure status to the logistics
sector.
Goods and Services Tax (GST)
National Logistics Policy
Foreign trade policy 2015-20 – Merchandise export from India
scheme (MEIS) and Service export from India scheme (SEIS), etc.
Multi-Modal Logistics Parks Policy (MMLPs)/ logistics parks
Logistics Data Bank Project (India-Japan bilateral cooperation)
Logistics Portal
7. WEEK 2:
WAREHOUSING
SECTOR
Activity 1.2 1. Examine in detail Warehousing sector in India; Study will
include the following:
a. Types of Warehouses
b. Basic components and layout of warehouse
c. Different types of storage equipment- Features,
Applications, advantage and disadvantages
d. Different types of material moving equipment- Features,
Applications, advantage and disadvantages
e. Cold Chain warehousing
f. Logistics parks
Major Sources Ministry of Agriculture & Farmers welfare website
KPMG on MMLPs
Cyzerg warehousing technology website
Ncsu.edu website – storage equipment
Douglas equipment company – Material handling
equipment
8. Indian
Warehousing
Market
5 types of warehouses:
• Private warehouses
• Public warehouses
• Bonded warehouses
• Co-operative warehouses
• Distribution centers
There are many more types of warehouses on structural basis:
• Retail Warehouses
• Cold-storage
• Cross-dock warehouses
• Fulfilment centers
• Hazardous material warehouses
Warehouse is a scientifically
designed building where
goods (ware), perishable &
non-perishable, are stored.
15% – 30% of the total
logistics cost accounts for
warehousing.
80% warehousing market in
India is approximately at 739
million square feet.
The worth of warehousing
sector in India in 2018 was
INR 561 Billion
Types of
warehouses
10. Cold Chain
Warehousing
• Series of actions performed to keep the
product within a specified temperature
• Products include – Agricultural, Frozen food,
seafood, chemicals, medicines, etc.
• Logistics park are focused area for carrying
out logistics operations in one place
• Logistics park offers:
◦ Strategically selected locations with good rail,
road, water and air connectivity
◦ Many trucks with parking space
◦ Space for clients of different business
backgrounds
◦ Integrated park management
◦ Warehouses and cold storage facilities
◦ Emergency services
◦ Office space
◦ Public facilities like banks, insurance, etc.
Logistics Park
11. WEEK 3 –
LOGISTICS
TRANSPORTATION
Activity 1.3 1. Examine in detail Logistics
Transportation in India; Study
will include the following:
a. Different Modes of
transportation: Railways, Road,
Air, Shipping, Inland waterways
Major Sources NITI Aayog
IBEF
OGD platform India
12. Air
Freight
Rail
Freight
Road
Freight
Sea
Freight
5.8 million km of network
59% of the total freight movement
2,77,000 heavy lorries and light lorries. Annually they
transport 3000 MMT.
Road freight industry of India is valued at Rs. 1.42 trillion.
Transportation through roadways costs an average of 65% of
the total freight
Connected through more than 1,23,236 kms of rail network
Carry over 3 MT of cargo daily
Lesser track connectivity, hence affects ‘last-mile delivery’.
35% of the total freight movement in India
Number of wagons hasn’t increased much since 1951.
Less rail connectivity in the bordering countries.
The Indian air freight contributes almost US $30
billion to GDP
Cost of transportation is high – 4-5 times of road
freight & 12-16 times of rail freight.
Major cargo airlines – Safexpress, Blue Dart, QuikJet,
VRL group, etc.
India ranks 5th, carrying thousands of metric tons in
freight volume.
Coastline of India is 7,517 km
Total navigable inland waterways of India in 20,000 km.
6% of total freight movement in India
Turnaround time of cargo ships considering all major
ports are 65.12 hours
Till January, 2020, the total freight transported through
waterways is 585.72 MT.
TRANSPORTATION
16. ABOUT
Safexpress offers its’ services in the following
industries
◦ Apparels and lifestyle
◦ Automotive
◦ Books and Periodicals
◦ E-commerce and B2C
◦ Engineering
◦ FMCG and Consumer Electronics
◦ Healthcare
◦ Hi-Tech
◦ Institutional
Safexpress private
limited is a third-party
logistics provider.
Started in 1997 with the
mission to revolutionize
logistics and Supply
Chain industry, it stands
today as the
‘Knowledge leader’ and
‘Market leader’ of the
industry.
SERVICES OFFERED
SOURCE: Safexpress website
18. Companies Revenue (In
Million)
Employees Fleet Pin-codes
served
Delivery
centers
Fulfillment
centers
Safexpress Pvt.
Ltd.
$359.3 2400 7000 30,338 586 16 million sq. ft.
Delex Cargo
India Pvt. Ltd.
$69.3 1026 330 6500 54 1.59 million sq.
ft.
Xpressbees
logistics Pvt.
Ltd.
$28.5 5000 20,000 feet on
road
9000+ 100+ 1 million sq. ft.
Delhivery Pvt.
Ltd.
$243.6 40,000 14,000+ 18,000+ 2500+ 4 million sq. ft.
Ecom Express
Pvt. Ltd.
$144.5 23,500 150 long haul
runs, 480 short
haul runs
25,000 2500 5 lacs sq. ft.
Gati Ltd. $74.6 1104 5000+ 19,000+ 16 5 million sq. ft.
COMPETITIVE ANALYSIS
SOURCES – Companies websites
19. WAREHOUSES
OF SAFEXPRESS
Safexpress has built 51 warehouses across India
covering over 16 million sq. ft. of area.
The docking areas are almost 60-80 feet of
concrete. The cross-docks are designed such that
minimal time is wasted on loading and unloading.
The buildings are also column-less to provide
maximum space for the inventory.
They use a ‘Virtual Private Network’ to connect all
the hubs and distribution centers.
SOURCE: Safexpress Website
20. The network of
Safexpress across
India
Green points are the existing logistics park of
Safexpress.
Red points are the upcoming logistics park of
Safexpress.
SOURCE: Safexpress website
21. Network design of Safexpress
Safexpress uses trucks and cargo planes to deliver the goods to desired
places. They have 7000 GPS enabled trucks.
Safexpress deliver goods to all the pin-codes in India (30,338),
through 586 delivery gateways and 1131 planned destinations.
They are able to do this through the ‘Hub & Spoke’ model of network
22. Emergence of Safextension, which they extended further to reach every last
mile of the nation
1600+ routes pass 76 hubs which allows them to deliver 100 million+
packages annually
Over 1,100 planned destinations in 37 states and UT
The air network is backed by 54 air hubs and other cargo partners
SOURCE: Safexpress Website
23. SOFTWARE USED BY SAFEXPRESS
VMware AirWatch Oracle
Provides with Enterprise Mobility Management
(EMM) solutions
Cloud ERP application
Centralizes and integrates the configurations,
management and security of all the devices
Oracle cloud management applications has helped
them to identify minute and major problems
Mobile control management (MCM), Mobile device
management (MDM), Mobile application
management (MAM), identity management
Helped to reduce the deliver-to-collection cycle by
five day
Eliminated or reduced the paperwork
SOURCE: VMware AirWatch & Oracle Enterprise
24. TECHNOLOGY
OF
SAFEXPRESS
2009 – Invested in bespoke ERP system (resource planning software
enables a company to integrate or centralize all the information)
2017 –
Introduced, ‘Cisco Meraki’, a cloud controlled, routing, SD WAN and
security system, helps in increasing network speed.
Created an in-house application called ‘HOG-HUB on the GO’ – to
facilitate fast loading & unloading.
Created an app called ‘Green App’, enabled them to use no paper
and digitize everything
Created a roadmap of 5 pillars, CAMSS (Cloud, Analytics, Mobile,
Social & Security)
25. Ratios 2015-16 2016-17 2017-18
Operative
revenue
growth
4.87 11.34 14.34
Return on
Equity (ROE)
8.36 7.33 6.90
Debt-to-
Equity ratio
0.01 0.02 0.03
Interest
coverage
ratio
2.83 1.01 0.33
Asset
turnover
ratio
1.35 1.38 1.44
Ratio analysis and suggestions
o The ICR is at 0.33. The firm should try to
decrease their operating cost or try to pay-off
some amount of debts
o Earnings per share (EPS) of Safexpress is
fluctuating, to stabilize the EPS and increase it
the firm can lower the cost which will increase
the profit margin.
o Asset turnover should be above 1. To increase
the A-TR, firm can increase their sales and
improve efficiency.
SOURCE: Instafinancials.com
26. ANALYSIS OF STRUCTURED
QUESTIONNAIRE BASED RESEARCH
• Research Objective – To explore different criteria that influences
decision making of an individual or a company who wants to avail a
logistics service from a 3PL service provider.
• Research methodology – The questionnaire is descriptive in nature and
the psychometric scale used is Likert scale.
• Questionnaire size – 19
• Sample size – 34 respondents
• Google form link –
https://docs.google.com/forms/d/1eRzZ4NAmgEXJc7RLP1yRye81mCkzEVInYZkWy9W2siY/edit?ts=5ef
20600
PART 3
27. Designing the questionnaire
• The article referred – “Selection and Ranking Criteria for a Third-Party Logistics
(3PL) Service Provider’s Index in South Africa” by ‘C. KARRAPPAN and M.
SISHANGE’ at the University of Johannesburg.
• Selection Criteria – The above article highlighted that the criteria of price,
financial stability, delivery, punctuality, quality and performance, etc. are key in
selecting any 3PL service provider.
• Link of the article –
https://ujcontent.uj.ac.za/vital/access/manager/Repository/uj:22802?site_name=GlobalView&ex
act=sm_title%3A%22Database+for+comparative+information+for+third+party+logistics+service+p
roviders+in+South+Africa%22
31. KEY INSIGHTS GENERATED
In each section, two criteria have been identified that has the majority rating given by the
respondents. Those are:
Section 1 Range & level of services provided – 61.8%
Technical Capabilities – 58.8%
Section 2 Service delivery of 3PL provider – 79.4%
Quality of services – 82.4%
Section 3 Logistics Infrastructure – 50%
Flexibility in delivery – 52.9%
Section 4 Geographical Coverage – 55.9%
Risk Management – 50%
32. COVID-19 impact on Supply
Chain
China is unable to deliver vital components to
other companies. 50%+ companies has
reported delayed delivery of components.
China contributes between 17-20%, affecting
the world economy very badly.
Pharmaceutical industry in India might suffer
the most.
Half of the ingredients used in this industry is
imported from China and India is one of the
major exporters of generic medicines.
Distribution system affected – Panic buying of
the customers has created a “bullwhip affect”
across the Supply Chain.
Recommendations
India should move freight more through
railways and build railway line for increased
last mile connectivity.
The cost for moving per container should be
reduced so that the overall cost of the sea
freight movement would decrease.
De-risking supply chain – procurement of
products to avoid shortages.
Promoting digitalization – Machine learning;
AI; self adjusting stock location; autonomous
devices (AGVs, drones); etc.