Logistics in india

1. Logistics
Group A-02
Chirantan Banik 11P016
Sahil Modi 11P038
Susovan Ray 11P055
Syed Azharuddin 11P056
Vivek Pundlik 11P059
Vignesh S 11P060
Operations Strategy, Term VI
MDI Gurgaon

2. Agenda
Overview
Inter-relationship between transportation and logistics
Forms of Logistics Operations
Outsourcing of Logistics Activities
Indian Logistics Industry - Growth drivers
Issues in Current status of logistics infrastructure in India

3. Overview

4. Council of Logistics Management (1991) defined that
logistics is
‘part of the supply chain process that plans, implements, and
controls the efficient, effective forward and reverse flow and storage of
goods, services, and related information between the point of origin
and the point of consumption in order to meet customers’
requirements’
• Logistics:
– the entire process of materials and products moving into, through, and
out of firm
• Supply-chain management
– larger than logistics
– links logistics more directly with the user’s total communications network
and with the firm’s engineering staff
• Logistics is Customer-oriented operation management
Definitions

5. • 3 closely linked components:
Logistics services, Information
Systems and
Infrastructure/Resources
• Logistics services comprise physical
activities and non-physical
activities
• Information systems provide
essential data and consultation in
each step
• Infrastructure comprises human
resources, financial resources,
packaging materials, warehouses,
transport and communications
Components of Logistics System

6. Interrelation Between
Transportation and Logistics

7. • One-third to two-thirds of the expenses of enterprises’
logistics costs are spent on transportation
• National Council of Physical Distribution Management
(NCPDM), estimates the cost of transportation, on average,
accounted for 6.5% of market revenue and 44% of logistics
costs
• Components of logistics costs based on the estimation from
Air Transportation Association show that transportation
occupies 29.4% of logistics costs
• Transport affects the results of logistics activities and
influences production and sale
• Improvement of higher operation costs can get better effects,
therefore logistics manager must comprehend transport
operation thoroughly
Transport Costs and Goods Characters in Logistics

8. • It is more complex than carrying goods for the proprietors
• Needs high quality management
• With a well-handled transport system goods can be sent to
the right place at the right time in order to satisfy the
customer’s demands
• It brings efficacy and bridges the gap between producers and
consumers
• A good transport system brings benefits not only to service
quality but also to the company competitiveness
Role of Transportation in Service Quality

9. Forms of Logistics Operations

10. • It is a concept for handling production procedures in broad
sense
• It can be divided into three main activities: purchase,
manufacture and transport
• Information flow is an important system which links the whole
supply chain from supplier and manufacturer to consumer
• Unimpeded information flow could lead increase operation
accuracy and promote competitiveness
• Product flow proceeds through the production process
Supply Chain Management

11. • It has developed rapidly to provide industry competitiveness,
promoting customer service and resources recycling
• Two main reasons for rise of reverse logistics:
– Globalization of markets
– Policies for environment protection
• It could help improve the service levels of companies and
reduce the costs of producing processes
• More and more companies want to build their reverse
logistics systems, but limited by professional knowledge on
logistics management
• Thus third-party logistics service provides an option to small
to mid-size companies
Reverse Logistics

12. • It plays an important role in international freight
• It is cheap and has high carrying capacity, vital for transportation of
particular goods such as crude oil and grains
• It takes longer time and strongly affected by weather
Maritime Logistics
Operation of maritime industry is of three main types
Liner Shipping: The business is based on the same ships, routes, price and regular
voyages
Tramp Shipping: It has irregular transport prices, unsteady transport routes and
schedules. Usually delivers goods like dry bulk cargo and crude oil
Industry Shipping: Its main purpose is to ensure supply of raw materials. Hence, it
sometimes needs specialized containers, such as high-pressure containers for natural
gas

13. • It extends the delivery services for air and maritime from airports and seas
• Main transport modes are railway transport, road freight transport and
pipeline transport
Land Logistics
Railway transport
Advantages - High carrying capacity,
lower influence by weather conditions,
lower energy consumption
Disadvantages - High cost of essential
facilities, difficult and expensive
maintenance, lack of elasticity of urgent
demands, and time consumption in
organizing railway carriages
Road transport
Advantages - cheaper investment funds,
high accessibility, mobility and availability
Disadvantages - low capacity, lower
safety, and slow speed
Pipeline transport
Advantages - high
capacity, less effect by weather
conditions, cheaper operation fee, and
continuous conveyance
Disadvantages - expensive
infrastructures, harder supervision,
goods specialization, and regular
maintenance needs
To improve the land transport in
efficiency and reliability, a revolution of
transport policies and management is
required, e.g. pricing

14. • It provides the delivery with speed, lower risk of damage, security,
flexibility, accessibility and good frequency for regular destinations
• Its disadvantage is high delivery fee
• Research data show that the freight transport market keeps growing
• Future pattern of air freight logistics is cooperative with other transport
modes, to provide a service base on Just-In-Time, and door-to-door
Air Freight Logistics
Express Delivery
• It involves more frequent delivery of materials, at the right time and
at the right place in the production process
• The characteristics of express delivery are:
– door-to-door service
– Efficiency
– Traceability
– Just-In-Time (JIT)
– Growing various delivery demands

15. • It is the future trend of business
• It brings many benefits for both companies and consumers:
– It expands the market area from regional to global
– It uses electronic techniques instead of traditional paper works, which
promotes the industries’ efficiency and competitiveness
– It will impact on transport system due to the increased trips
– It might reduce the number of warehouses and the stock cost. Therefore the
prices could be lowered
• New concerns such as internet security, transport impacts and
door-to-door services should be addressed
• A healthy and successful e-commerce environment is
determined by the optimal logistics operation
E-Commerce

16. Outsourcing of Logistics Activities

17. • Efficiency in logistics activities indispensable to
effective business operations
• Globalization driving higher level of complexity in
logistics network
• Importance of distribution and transportation in
maintaining sustainable competitive advantage
• Companies seeking to concentrate on core activities
Need for Outsourcing

18. • Advantages of 3PL operators
– Greater expertise
– Flexibility for wide geography
– Lower operating costs
– Better quality of service
• Outsourcing to 3PL has followed two trends
– Increasing range of services outsourced
– Increasing volume of traffic outsourced
• Key challenge for 3PL operators – Overcoming client’s concerns
about relinquishing control
• Outsourcing of logistics is expected to increase
3PL – Third Party Logistics

19. • Assembles and manages resources, capabilities and
technologies of own organization with those of
complementary service providers
• “Best of breed” approach
• Creates unique and comprehensive logistics solutions
that cannot be achieved by any single provider
• Complete solution; Centralized point of contact
4PL – Third Party Logistics

20. Logistics in India

21. Growth Drivers
• Acceleration in industrial production and consumption
• Population growth; Expanding upper-middle and middle classes
• Expected growth: 15-20% per annum
• Heavy outsourcing by automobile/telecom etc. – Demand for focused Supply Chain services
• Change in tax system (VAT to GST) – Should create national market for many goods and
services
• Entry of MNCs in various sectors

22. Logistics infrastructure lags behind global peers
• Planned investment cannot support 2.5 fold expected increase in traffic by 2020
• Current freight infrastructure – Networks built before independence
Railways
- Over 80% of current network built before
independence
- 1951-2007: 10 fold growth in traffic; 1.4 fold
growth in track length
Roadways
- 200 fold traffic growth; 8 fold
increase in track length
- Highways – Only 15%; Two/Four
lanes – 0.5%
- Paved road density –
940km/1000sq.km; Japan – 21000
km, UK – 7050 km
- Highways are structurally
inadequate
Waterways
- Limited investments after independence
- Loss of key routes following partition
Challenges in Indian Logistics

23. Logistics flows are highly concentrated
• 7 corridors connect 15 high growth clusters
• These 7 corridors account for 50% of freight traffic
• These clusters are expected to account for 60% of GDP growth in next 10 years
Challenges in Indian Logistics

24. India’s freight traffic relies excessively on roads
• This is despite the fact that 2/3rds of freight travel being more suitable for rail and waterways
• 65% is bulk; 75% transported over distances more than 400km
• Roads are cheapest only for non-bulk and <400 km
• Over reliance on roads leads to increased costs, high energy consumption and adversely impacts environment
Reasons
Railways: Oversaturation of important networks, high tariffs, poor terminal quality, less flexibility of wagons, uncertain
transit times
Waterways: High turnaround times at ports, inadequate depths at ports, inadequate infrastructure for Coastal Shipping
- Rail/Waterways potentially cheaper than roads
Challenges in Indian Logistics

25. Inefficiencies leading to $45 billion each year
• India’s spend as percentage of GDP is 13%, higher than that
of US
• This is despite the fact that cost of labor is significantly
lesser in India
• Road transport is 30 per cent more expensive in India
• Rail and Waterways are 70 per cent more expensive in
India
• Transit times are higher owing to lower average speeds
- Causes: Waiting times at toll stations, freeze in truck traffic
during day, port turnaround times, low priority accorded to
freight trains, poor track infrastructure
• Poor transportation equipment is also a major problem
• 65% of inefficiencies are hidden
Challenges in Indian Logistics

26. • Change in modal mix
– Increase investment in railways by reallocating from roads
• Building the right networks to support modal mix change
• Building Rail DFCs, Expressways, Coastal corridors, last mile links
• Creating enablers to maximize efficiency – Logistics parks, standardized
containers, IT assets, human resource etc.
• Improve rail and road maintenance and existing equipment
• Formulating and implementing a national logistics policy
Way forward