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Asset management in india
1. Asset Management in India
A Study in Supply
Chain, Logistics, Transportation & Fleet
Management
Kunal Ashar
29-November-2011
2. Definitions
• Asset management refers to any system whereby things that are of value
to an entity or group are monitored and maintained. It is a systematic
process of operating, maintaining and upgrading assets cost-effectively.
• Logistics is the management of the flow of goods between the point of
origin and the point of destination in order to meet the requirements of
customers or corporations. Logistics involves the integration of
information, transportation, inventory, warehousing, material handling,
and packaging, and often security.
• A supply chain is a system of organizations, people, technology, activities,
information and resources involved in moving a product or service from
supplier to customer. Supply chain activities transform natural resources,
raw materials and components into a finished product that is delivered to
the end customer.
• The management of transportation operations of all types, including
tracking and managing every aspect of vehicle maintenance, fuel costing,
routing and mapping, warehousing, communications, EDI
implementations, traveler and cargo handling, carrier selection and
management, accounting.
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3. Market Sizes
• Annual logistics cost in India - 14% of GDP
• USD 140 billion per year
• 99% is accounted for by the unorganized
sector
• USD 1.5 billion, is contributed by the
organized sector
• Target to bring down costs to 9% - USD 50
billion (worldwide standard)
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5. Industries Needing Solutions
• Cold Storage Chain Management
• Pharmaceuticals Logistics
• Waste Collection & Transport
• Food & Beverages Supply Chain
• FMCG Retail Distribution
• Shipping & Ports
• Logistics and Posts
• Infrastructure and Construction
• College Bus Fleet Monitoring
• Private Transport Management
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6. Areas of Interest
• Supply Chain Security
• Product Safety and Quality Transportation
Asset
Management
• Roadside Assistance
• Fuel Pilferage
• Mobile Workforce Management
• Transport cost savings
• Transport Asset optimization
• Stolen Vehicle Recovery
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7. Problems in the Industry
Fuel Theft
Deviation
speeding
Too Slow
Dynamic
Material
Routing
Missed
Engine
Route
Idling
Over-
Stops
Stops
Theft
Extra
ETA
Industry
Cold Storage
Pharmaceuticals
Waste Collection
Food & Beverage
FMCG & Retail
Shipping & Ports
Posts & Logistics
Construction
College Bus
Private Transport
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8. TAM Challenges
Pain Areas Consequences
Unauthorized stoppage Less number of trips, lower revenue
Unauthorized route diversion Material and fuel theft, lower profits
Cluttering of vehicles at loading, Over speeding to make up time, resulting
unloading & weighing points in accidents, higher costs
Waiting at loading, unloading & weighing
Fuel theft/ excess consumption of fuel
points
En route traffic jams/ contingencies Less number of trips, lower revenue
Vehicle movement at slow speed Under-utilization of vehicles
Engine Idling during stoppage Unplanned delays
Waiting at loading, unloading & weighing Unnecessary fuel consumption due to
points engine idling
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9. TAM Solutions
Features Benefits
Live online, 24x7 tracking Tracking of number of trips made in
particular time
Analysis of each location data/record
Calculation of expected time of arrival
Replay of trip to analyze causes of delays
and departure of vehicles
Driver performance analysis Lowered insurance costs
Stoppage analysis
Theft protection of material
Route deviation analysis
Vehicle event analysis Avoidance of misuse of vehicle
Over & Under speed reporting Increased utilization, better profits
Custom geo-zone creation Instant alerts on arrival & departure
Trip summary analysis Reduced operational cost
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10. Total Cost Concept
• The total cost concept recognizes that an optimum cost in one area or
function may not lead to an optimum total system cost
• Total cost analysis requires the management of supply chain trade-offs
• A vehicle on Indian roads loses 24-48 hours in complying with paperwork
and formalities at different check posts en route to a destination
• Logistical activity areas that drive total logistics costs:
– Customer service level costs
– Inventory carrying costs
– Lot quantity costs
– Order processing and information costs
– Warehousing costs
– Transportation costs
– Delay, bribes and taxes costs
• WHAT COSTS CAN WE HELP REDUCE?
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11. Technologies
• RFID (passive tags, long range readers)
• GPS Devices and Server
• GIS Server & Database
• ERP Integration
• Workflow Management
• SMS and Email
• IBM Tivoli
• Mobile applications
• Open Source Solutions
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13. Costs
Item Unit Cost (INR)
Vehicle Tracker with fuel & ignition sensors 1 8500
Cloud Hosting1 300 vehicles for 1 month 7500
Maintenance2 All vehicles, 3 visits/year 3600
Communication (GPRS)3 1 vehicle for 1 month 100
Communication (SMS alerts)4 1 vehicle, 30 alerts/month 12
TOTAL RECURRING COST Per month per vehicle 337
1. Without ETA servers
2. Remote vehicles, countrywide travel, 48 hours of travel + 12 hours of servicing @Rs. 1200 per visit
3. 10 MB/month
4. 8p per SMS, failover to 13p per SMS on delayed delivery, 75p per SMS on direct SMS from device
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14. Pricing Models
Full
Full One- One-Time Amortized
Amortized
Time Fee Device Fee Device Fee
Fee
Both device +
Device fee +
Device + subscription
Device cost interest
Subscription amortized
paid upfront charged across
bundled across 36
36 months
months
Monthly Additional
Only AMC subscription monthly Single monthly
charged fee for subscription fee
services fee
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16. Bibliography
• Logistics Industry in India; Opportunities & Challenges,
PriceWaterhouseCoopers Report 2010
• Logistics Industry: Global and Indian Perspectives, Subrata Mitra,
Associate Professor of Operations Management, Indian Institute of
Management Calcutta, 2009
• The Logistics Sector in India: Overview and Challenges, Pankaj
Chandra, Nimit Jain, Indian Institute of Management Ahmedabad,
2007
• Logistics, Freight & Customs Issues In India, Rajeev K Chopra,
Advisor - (Strategic Management Logistics) at Worlds Window
Group, 2009
• Transforming the nation’s logistics infrastructure, McKinsey Report
on India, 2010
• Developing supply chain excellence: Optimizing inbound &
outbound logistics, Deloitte, Logistics and Supply Chain Excellence
Conference of India, 2010
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