Logistics Xpress Vol. 4

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Logistics Xpress is published quarterly. All

Editorial correspondence and papers for

publication should be addressed to the Chief

Editor, Logistikas Society, UPES, Energy

Acres, Bidholi, Dehradun. The submitted papers

will be reviewed by members of the editorial

board and external references. Views expressed

in the articles are those of respective authors.

Neither e-Logistics Xpress nor Logistikas

Society, UPES, Dehradun will accept any

responsibility for views expressed by the

author(s). All copyrights are reserved by

respective authors. Unless authorized, no part of

the material published in e-Logistics Xpress

may be reproduced or stored in retrieval system

or used for commercial and other purposes.

All rights reserved.

Copyright ©2012 by Logistikas Society.

Editorial/Subscription Address:

Chief Editor, Logistikas Society,

University Petroleum & Energy Studies, Energy

Acres, Bidholi

Dehradun-248 007

Email: [email protected]

Advisory Body:

Dr. S.J. Chopra (Chancellor)

Dr. Parag Diwan (Vice Chancellor)

Dr.G.C.Tewari (Pro-Vice Chancellor)

Utpal Ghosh, (Campus Director)

Dr. Anirban Sengupta(Director , CMES)

Retd. General (PVSM)

S.P.S. Narang (Asso. Dean, CMES)

Dr. Atul Razdan (Asst. Dean, CMES)

Rakesh Mehrotra

(Former MD, CONCOR)

Arun Sharma

(Group Manager-Supply Chain

Operations, Apollo Tyres)

J.V.B Sastry (Sr. VP Logistics, ACC)

Pradeep Dubey

(GM,SNOWMAN)

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Vivek Tripathi

(Manager-HR,Jindal Steel)

Prof. Janat Shah

(IIM-B)

Kanakendu Chatterjee

(Sr. Supply Chain Consultant)

Yuvraj Sharma

(Regional Director

North, UT Worldwide)

Ravinder Singh

(Dy. Manager-Mahindra Group)

Prof. K.V. Mohana Rao

(HOD- PSM & AVM)

Prof. T.S. Marwah,

(Industry Fellow-IB)

Mr. Loveraj Takru,

(Industry Fellow-LSCM)

Dr. Venkatasaiga Rao

(Industry Fellow-LSCM)

Capt. Y. Bhattacharya

(Industry Fellow-PSM)

Managing Editor:

Dr. K.K. Pandey, Asst. Professor, CMES

Chief Editor:

Dr. Neeraj Anand, HOD- LSCM, CMES

Publisher:

UPES, Dehradun

Administrative Support:

Brig. S.S. Dhillon

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EDITORIAL COMMITTEE:

Mr. Saurabh Tiwari (Lecturer)

Mr. Vimal Prasad Mathur ( Asstt professor, selection Grade)

Ms. Neha Grover, Doctoral Research Fellow

Cover Design

Pratham Walia

Design and Layout

Creative team

Core Committee

Gursharan Singh

Gurleen Singh

Kartikeya Sharma

Don Sebastian

Pratham Walia

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FROM THE EDITOR’S DESK

I feel elated in launching the current issue

VOLUME IV of our in house magazine

LOGISTICS XPRESS. We have

incorporated the current news and the best

practices that are followed in the logistics

world .

As expected, the Budget was a damp

squib, and the deficit that had shot up was

brought down a little. The stance of the

government is quite clear: all the talk about

intent to rein in fuel subsidies was negated

by just one sentence in the Fiscal Policy

Strategy Statement, "With respect to

rationalisation of petroleum subsidy,

government has already decontrolled the

pricing of petrol."

The fact that the petrol prices have

not changed in Delhi since November, even

as the crude basket price rises, speaks for

itself. To take another example, for all the

talk about encouraging foreign investment,

the turnaround in tax laws has stunned the

markets.

This issue includes a report on the

“Future of 4PL” which has been presented

by our students Sagar Relan , Gurleen

Singh, Gursharan Singh, Niharika Singh and

Nishi Jaiswal in logistics talent hunt 2012

conducted by T2P Consultants on March 25,

2012 in which our students has secured first

position , I congratulate them from the

bottom of my heart.

____________________________________

Dr. Neeraj Anand

(HOD - MBA LSCM)

[email protected]

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FUTURE OF 4PL IN INDIA FUTURE OF 4PL IN INDIA

by

Sagar Relan Gurleen Singh Gursharan Singh Niharika Singh Nishi Jaiswal

INDIAN ECONOMY FROM THE

WORLD‟S PROSPECTIVE

Many investors living today have never

really had to see tough financial times. It is

difficult to meet someone who was old

enough during the Great Depression to recall

how tough that was,especially on investors.

Although there have been recessions since

but none of the was so disturbing magnitude

as the current one.

During the recession India‟s industrial

production rose by 2.6 percent 2008-09

down from 8.5 percent in 2007-08 when the

rest of the world was going through a bad

phase.Manufacturing output also dropped by

1.4 percent year on year to Rs.1.5 trillion in

January-March 2009 after rising by just 0.9

percent in 2008.On the other hand the rise in

industrial production by 1.6 percent was

witnessed. India‟s combined fiscal deficit of

the centre and the states at close to 10

percent of GDP in 2008-09 is amongst the

highest in the world.

INDIAN ECONOMY – THE WAY

AHEAD

India‟s relatively less dependence on

merchandise exports, its smooth functioning

financial system and comfortable finanacial

reserves help In recovery from the

slowdown. The domestic demand has held

up relatively well ,there are signs that worst

might not be over yet. Forecasts by

organization for Economic Co-operation and

development (OECD) and Asian

Development Bank are pessimistic about the

growth. OECD projects a further slowdown

of 5.9 percent in 2009 as a whole. The ADB

also forecasts that growth will again slow

this year to 5 percent. Looking ahead ,Ce

ntre for Monitoring Indian Economy

will bounce back to 9 percent growth by

2011,when impact of poor export demand

would overcome.

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INDIA AS A GLOBAL

MANUFACTURING HUB

Demand for FMCG and Electronic products

in India is growing at a very high rate.

Multinational companies are showing

interest to set up their world class

manufacturing in India to cater to the needs

of domestic and export market as well. The

Indian automotive industry is one of the

major automobile manufacturing hub. Since

the deregulation and opening up of the

automotive industry, the industry has

witnessed tremendous changes and

experienced a great boost. Jewellery, gems

and IT industry are also seeing an upward

swing. Undoubtly India is well poised to

emerge as a global manufacturing hub.

RELATIONSHIP BETWEEN

ECONOMIC GROWTH AND

LOGISTICS

Export led growth has been a crucial

component of sustainable economic growth.

There are many enablers of export oriented

economic growth who also facilitate

economic environment,establishing export

oriented zones like SEZs. The most

important enabler is the improvement in

transportation infrastructure,

telecommunication and power which in turn

accelerates domestic demand.

LOGISTICS INDUSTRY OVERVIEW

AND ITS CONTRIBUTION IN

COUNTRY’S GDP

Globalization, consolidation, technology

advancement and outsourcing have led a

remarkable growth of the Indian economy

especially in automotive, pharmacy,

manufacturing, retail and FMCG sector.

Logistics spend in India is approximately

13% of the GDP out of Rs. 31297 billion

and is expected to be more than 5400 billion

by 2015, which is comparatively higher than

other developed countries.

India is among one of the world‟s leading

producer of horticulture products. To save

fruits and vegetable products from rotting up

before reaching in the market CONCOR

came forward with moving cold chain

logistics and is developing a cold supply

chain business in the global food market. It

has increased the share of processed food

from 6% to 20% in the country.

The air and marine transport sector has

contribution around 0.2 per cent of the

country‟s GDP, due to cost reduction and

improvement in organizational efficiency

the transport sector‟s contribution to the

GDP has been growing over the last couple

of years. Many Indian companies are

realizing the importance of supply chain

network due to which there is an uptrend in

the requirement of 3PL service provider. As

a result there is a prediction of growth in

3PL solution at a CAGR of 20 per cent in

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the next few years. The Civil Aviation

Ministry‟s proposal to frame a policy for the

development of airports exclusively for

cargo operations is encouraging. Under this

policy, for the movement of perishable

cargo at the airports a centre for perishable

cargo (CPC) would be established.

Key growth drivers in logistics sectors are:

Streamlining of indirect tax structure

Increased demand of 3PL services

Recognition of logistics management

as a strategic tool

Globalization of manufacturing

systems

Infusion of qualified work force

Investments in transportation

infrastructure

The Indian railways has realized the

necessity to improve the infrastructure

provide better service. This includes laying

of optic fiber along railway tracks, utilizing

land and airspace for other commercial

purposes. 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. It represent

thousands of small customs brokers and

clearing & forwarding agents, who cater to

local cargo requirements, the railways have

to essentially devise plans to divert this

traffic to the rail.

Transport sector‟s contribution to

India‟s GDP is estimated to be around 6.6%

in 2005-06, and road transport has a

dominant role in this contribution with a

share of 4.7% in India‟s GDP. India has the

second largest road network in the world.

The aggregate length of roads in India

increased from 0.4m km in 1950-51 to

3.34m km by the end of 2006.India‟s

logistics sector attracted huge investments

excepting 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 for the food park

have been key factors in the growth of

Indian logistics industry. The Indian

logistics industry is further expected to grow

at the rate of 15 to 20% annually.

The setting up special economic

zones (SEZs) has led to increased logistics

activities around them. Because of the

excellent port, rail, road connectivity

logistics parks have come up at locations

like Mumbai, Kolkata, Chennai and

Hyderabad 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 take benefit of

the opportunities. Increase in foreign trade is

expected to further growth in the demand for

logistics services.

Future outlook of the logistics

industry is bright as it depends on the

economy which is expected to grow

continuously. Logistics industry need keep

pace with the growth of the external as well

as domestic trade. Increased participation of

both public and private sector, technology

deployment, investments in infrastructure

and integration of logistic services is

required for development of logistics and

supply chain management.

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EVOLUTION OF LOGISTICS

INDUSTRY

As the needs of the clients are increasing

day by day as the organizations are now

more globalized so they are having big

operations for which they require enhanced

services.

For providing these services now the

logistics providers has used many new

techniques like consolidation, outsourcing

and also included technology in their

operations.

Now todays‟ customer is demanding a

“single point of contact” for all its services

and looking for “one stop logistics

shopping” because they are unable to have

co-ordination across their supply chain.

The models of logistics industry have

evolved over the changing needs the market

and vary based on scope of service

offerings, degree of collaboration, levels of

asset intensity and IT capabilities across the

supply chain.

The logistics model has been evolving from

a specialized function to fourth party

logistics and fifth party logistics companies.

In the "PL" terminology, it is important to

differentiate the 3PL from the:

1PL, which are the shipper or the consignee,

2PL, which are actual carriers such as YRC

Worldwide, UPS, FedEx, DHL, Ceva

Logistics

4PL, which are consulting firms such as

CPCS, SCMO, BMT, Deloitte, and

Accenture

3PL: AT A GLANCE

A third party logistics provider is a firm that

provides service to its customers of

outsourced logistics services for part, or all

of their supply chain management functions.

Third party logistics providers typically

specialize in integrated operation,

warehousing and transportation services that

can be scaled and customized to customers‟

need based on market conditions and the

demands and delivery service requirements

for their products and materials. Often, these

services go beyond logistics and included

value added services related to the

production or procurement of goods, i.e.,

services that integrate parts of the supply

chain. Then the provider is called THIRD

PARTY SUPPLY CHAIN

MANAGEMENT

PROVIDER .

CURRENT 3PL

MODEL

The old model of

customer

interaction was

for companies to

contact a 3pl and

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then they have to wait for a long and a long

process to follow, with lots of promises

made, and efforts to “understand the client‟s

business” and then for a contract to be

signed and for the logistics management to

move from the client to the 3pl . this was

simply moving the location of where the

work in freight coordination was being

done. The client‟s logistics function then

became simply managing the 3pl for those

parts of the business that the 3pl had

obtained. This is not at all that helpful.

PROBLEMS OF 3PL

Loss of control over the logistics

function

Distance from clients

Discontinuation of services

In INDIAN context the 3pl services are not

that much beneficiary as now firms are

demanding enhanced services for their

supply chain so they want a complete

solution for which.it can reduce their cost,

eliminate their wastage and enhanced their

productivity. So, what can be the better

solution for them, answer is a 4pl service

provider.

In to the service vacuum created by 3PLs,

the 4PLs has emerged. Using a 4PL, fourth

party logistics service provider, is different

than the traditional 3PL. much on 4PLs

discusses technology. Technology is not

only the point, but it is a part of the solution.

It is one element of success of process,

people and technology. 4PLs see the process

and what is required to make it succeed.

4Pl‟s combine process, technology and

process to manage. The 4PL is a business

process outsourcing, BPO, provider. This

lead logistics provider will bring value and a

reengineered approach to the customer‟s

need. A 4PL is neutral and will manage the

logistics process, regardless of what carriers,

forwarders or warehouses are used. The 4PL

can and will even manage 3PLs that a

customer uses.

AN IDEAL 4PL MODEL

4PLs should not recreate the wheel, but

should create platform that internal client

logistics departments can use to gain

visibility into their system. The 4PL then

focuses on data integration and web

development and allows multiple companies

to log into the same system. In this way the

platform begins to improve and the 4PL

keeps its cost down.

Following this approach, when a 4PL adds a

new client, its cost do not increase at the

same rate, because many of the feeds are

already built to major warehousing and

transportation and 3PL companies.

4PL SERVICE PROVIDERS

4PLs represent the next stage of

development in logistics service providers.

Consequently, while the traditional activities

of warehousing, inventory management and

transportation may be given out to one 3PL,

other processes like HRD, security and

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product development are done by other

3PLs. In effect, the activities done by a set

of internal departments are now being

carried out by a set of 3PLs. As a result the

companies now have to deal with a whole

set of 3PLs and each needs to be coordinated

with and linked via personnel and IT. The

number of transactions and the costs reduced

are thus offset to a great extent by the cost

and time of transacting with all these 3PLs.

Today more and more business

processes are being outsourced. In the West,

processes like bill payment, credit tracking,

invoice generation, HRD, transport and

warehousing are all being outsourced.

Outsourcing of these activities may indeed

add considerable value to the product, but on

the flip side, even in a developed economy

like the US, there are no 3PLs that offer

every process with equal competence or

reach.

The 4PL is an integrator that

assembles the capital, technology and

resources of its own organization and other

organizations to design, build and run

supply chains. The typical 4PL would

eliminate complexity, share benefits of scale

and capital and can drive innovation due to

its overall view. In other words, a 4PL

manages other 3PLs.

The primary role of the 4PL is the

management of complexity and time. Two

key distinctions make the concept of 4PL

unique and set it apart from other supply

chain outsourcing options available in the

market today are:

A 4Pl provide a comprehensive

supply chain Solution.

A 4PL adds value to the entire

supply chain by managing all the

activities of the supply chain.

From above to concepts we can found that

the 4PL outsourcing have evolved because

of the problems faced by the 3PL service

providers. In other words, 4PL is the

evolution of supply chain outsourcing. The

convergence of technology and the rapid

acceleration of e-capabilities have

heightened the need for an over-arching

integrator for supply of chain spanning

activities.

4PL IS A NON-ASSET BASED

LOGISTICS OPERATOR which has

chosen to become an outsourcing specialist -

assessing the entire supply chain and

contracting those best able to provide the

required services, all in order to reduce the

customer's investment in inventory.

4PL operators handle the client's entire

logistics function. It is not just about

reducing costs of warehousing and transport,

but rather about managing the logistics

functions and achieving optimization. 4PL

consultants are being used to analyze certain

areas and recommend solutions where

processes can be optimized.4PL service

providers now days become a long-term

partners, as they are directly involved in the

business processes and strategies.

The 4PL service provider manages and

coordinates the relationship between all the

different activities of the consumer. It must

be able to strategize and manage all the

different assets that are dedicated to a

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customer and, where possible, coordinate

break-bulk distribution by co-loading

different customers' products on the same

vehicle. This can be done when a 3PL

service provider has a great number of

customers, thus providing the critical mass

to allow break-bulk distribution.

The 4PL planning in such a scenario plays a

great role in reducing costs. In essence, the

4PL logistics provider is a supply chain

integrator and assembles and manages the

resources, capabilities and technology of its

own organization with those of

complimentary service providers to deliver a

comprehensive supply chain solution.

The 4PL will integrate the client's supply

chain activities and supporting technologies

across these "best of breed" service

providers with the capabilities of its own

organization.

BENEFITS OFFERED BY 4PL

SERVICE PROVIDERS:-

Only one vendor to manage = ease of

use & time savings.

Consolidated customized

management reports for all suppliers

used.

It can proactively monitor all the

shipments of companies - no matter

size, service or supplier.

Cost reduction.

Easy accounting with consolidated

billing.

OPERATIONAL ADVANTAGES OF

4PL

source:- www.hiplus.de

SERVICES OFFERED BY 4PL

SERVICE PROVIDERS

Zm1

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PROBLEMS FACED BY 4PL

INDUSTRY

Losing sight of original core-concept

of SCM due to loss of control.

Customer relationships should not be

is missed on basis of efficiency.

Strict functional organization

structure hinders integrated Supply

Chains.

Resistance to change – the biggest

obstacle to implementation of new

approaches

OPPORTUNITY

The 4PL will serve as a single point of

contact for customer, managing a

comprehensive set of supply chain and

logistics service that are executed by other

providers. Where 4PL scores better than the

current approaches to supply chain

outsourcing is a unique ability to deliver

value to client organizations across the

entire supply chain. With 4PL focusing on

the entire supply Chain dramatic customer

services improvements can be attained. This

will allow the client to invest in their core

competencies. As its an non asset owned

service provider it only works with

intellectual capital and computer. Therefore

this model provides the greatest benefits,

however it is complex and a great challenge.

Also about 75% of the fortune100

companies & about 45% fortune 500

companies have now gone in for 4PLs

SUGGESTION

India needs to work upon its Logistics

Infrastructure, in the 11th

five year plan calls

for increase n the investment made by Govt.

from 4.6% of the GDP it needs to be

somewhere between 7-8% considering the

opportunities available. Also Govt. needs to

rethink upon contribution via FDI in

infrastructure

Snapshot of Indian Logistics Infrastructure:

Rail: The freight traffic carried by Indian

railways during 2010-11 was 833MT & it

was lower by 2% than the set target of

that period.

Ports: Major ports handled 530 MT of

cargo in 2010-11 which was 7.9% lower

than the target set the period.

Aviation: the five major Airports in the

country (Delhi, Mumbai, Kolkatta,

Chennai & Bangalore) handled 53382MT

of cargo during 2010-11, which was 3.4%

lower than the target set the period.

The above data helps us understand that

Indian infrastructure has a long way to go &

in order to achieve reduction in National

Logistics cost, the Govt. needs to bring ion

reforms that would help the infrastructure

improve. With an improved infrastructure,

services like 4Pl can be highly effective as

it‟s the case in developed economies.

CONCLUSION:

The logistics industry in India will continue

to grow & be a focal point in strategy

formulation, operational excellence &

information technology to make maximum

value addition to its customer.

Firms can increase their market

competitiveness by reducing their overall

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logistics cost, which would further lower the

cost incurred to them. Here 4PL can make a

world of difference, USA whose firms have

adopted 4PL style of working has

successfully reduced its logistics cost by

9.5% by incorporating latest techniques

available. India has therefore got a huge

opportunity in reducing its Logistics cost by

studying & benefitting from the world

economy like adaptation of 4PL. But the

infrastructure condition needs to be

revolutionized, as Indian economy has

shown the potential to be the next big

logistics hub worldwide.

______________________________________________________________________________

REFERENCE :

-as-a-business-opportunity/1/16824.html

www.ship.gr/4pl/pr.htm

http://www.linkedin.com/answers/business-operations/supply-chain

management/OPS_SCH/313821-19822044

http://logistics.bafree.net/the-disadvantages-of-third-party-logistics-services-versus-logistics-

software/

http://www.lgcns.com/pr-center/news/view/94/lg-eds-systems-commences-4-party-logistics-

business-through-bpo-in-canada

-india.html

-logistics.in/3pland4pl.html

ARTICLES :

Science)

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USING LOGISTICS AND SUPPLY CHAIN TO BOOST INDIAN MARITIME

INDUSTRY Mohit Sharma

MBA(ET) IInd Sem

With a total coastline of over 7600

kilometers, India has a great potential in

international trade through coastal areas. As

per the report of Director General of

Shipping, Government of India (2011), there

are 13 major and over 187 non-major ports

only 7 per cent of the domestic cargo gets

transported through coastal shipping

compared to 15% in the US and 43% in EU

countries. 80% of this cargo comprises of

petroleum, oil and lubricants, thermal coal

and crude and the remaining being food

grains, cement, containerized cargo and

finished products. The number of ships

involved in coastal trade is around 700

vessels totally comprising of around 1

million gross registered tonnages (GRT).

As there are limited number of ports &

allied services due to which India lag behind

in trade even with the countries which are

geographically close to it. In the past, focus

of India was on the commodities in which it

has absolute advantage over others or

relatively greater comparative advantage

over other countries. Over the years the

commodities (and services) exported by

India were limited like Mica, Tea,

Handicrafts, Cash Crops etc. These factors

almost always caused Indian economy to

suffer negative Balance of Payments.

The Logistics & Maritime sector were (and

still are) not perfectly integrated because of

following reasons: -

1) Diversity

India is a diverse country in terms of

topography, crops grown, products,

communities, religions, languages, climatic

conditions. This caused a heterogeneous mix

of various aspects which are important in the

flow of goods and services from the

production point to the destination point. As

the nature of each of the factor involved is

uneven this makes the flow of goods and

services difficult affecting both the quantity

and at times quality of goods in transit. The

money, effort and time involved also

increases as logistic network has to adapt to

dynamic nature of Indian market and

system. Some product which require

absolute uniformity in the transportation,

distribution processes became virtually

extinct from the Indian system.

2) Indian Economy Before 1991

Prior to 1991 reforms in Indian economy

mainly followed a socialistic approach. This

approach requires a government to get

almost total control and restrict the role of

private players (domestic as well as foreign)

in the economy. Under this, government

decided what commodity or service is

needed by the people of the country and in

what quantity. The distribution, warehousing

& transportation were under control of

government. As India follows a federal

system of government the state governments

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were responsible for procuring important

material to their people.

It was a cumbersome task to set up a private

firm. One has to take permissions and

licenses from the government on different

levels. Even after setting up the firm

constant governmental intervention was

there. This monopolistic practice was also

termed as “License Raj”. It also delayed the

growth and infrastructural advantage India

was getting over other countries.

3) Transport and Warehousing

India lacks the sustained investment in

planned infrastructure like warehouses and

transport centers. A lot of surplus of various

products which can be exported is wasted

because of this. Inland waterways which

have great potential of linking many „land

locked‟ areas to the coastal areas but are not

fully exploited. In the same way there is

urgent need for domestic air cargo

processing space, in light of cargo capacity

enhancement at airports and arrival of wide

bodied jets capable of carrying substantial

cargo at economical costs. Modern agro

warehouses are also need of the hour.

Logistics centers can replace the existing

unorganized transport hubs at industrial

locations.

Increasing efficiency of Maritime Sector

with the help of Logistics

a. The process of corporatization of

ports has been undertaken both

nationally (Ennore Port) as well as

internationally (PSA Corporation).

The idea is to benefit from

accountability, to enforce best

operational practices, better

organizational efficiency, well-

researched business decisions and

financial prudence. More private

players should be encouraged by the

government. Development of minor

ports has been a painstakingly slow

process. Corporatisationof major

ports can enforce business decisions

of controlling some of these high

potential ports with better

management control and focus on

profitability

b. Government can also provide

separate railway lines, customized

inland waterways (according to the

requirements), and domestic air

cargo facilities and reduce its

intervention in the overall transport

network.

c. Organized retail must be promoted to

move the chain of goods effectively

and maintain a healthy level of

demand and supply.

d. Central Government and State

Government should also develop an

infrastructure with efficient

supporting, allied activities,

networks.

e. Apart from the usage of Special

Economic Zones & Towns of Export

Excellence in the integration of

logistics and maritime, nearby small

villages and regions can be

developed according to their

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expertise which can use the already

existing infrastructure of adjutant

SEZ and TEE.

f. Integration of companies which are

part of logistics process of transfer of

goods and are active in different

independent fields with government

as common link. This will create

economy of scale and reduce the

duplication of efforts.

g. As explained above, Integrated

Logistics Convergence is necessary.

Telecom sector has been the first

sector to witness convergence of

emerging technologies (to

facilitate customer utility) – between

landline, mobile and broadband

technologies. Similarly, convergence

or business integration is taking

place from shipping & ports to

maritime, logistics and supply chain

management (in that sequence) –

again driven by focus on facilitating

utility to the customer. Indian

regulators in telecom sector were

aware of the convergence issues and

were able to nimbly change the

regulations to attract large players,

generate competition and lower

tariffs. In maritime sector too, the

regulator should encourage

integrated players. It would also be

advisable to encourage local

shipping companies to get into

terminal business. SCI has already

expressed intent for bidding of the

fourth terminal at JNPT.Worldwide

many shipping companies are

becoming integrated logistics

operators.

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OIL SECURITY FOR INDIA & RELATED GEOPOLITICS Loveraaj Thakru

Industry fellow

Department of LSCM

CMES, UPES

The recent hike in Petrol prices by the

OMCs had once again provoked expected

reactions from across the political

spectrum.While the UPA allies were by and

large supportive,the opposition as is their

norm, was highly critical.The exception was

the UPA ally the TMC, which used the

opportunity to extract its pound of flesh.It

was heartening to see that at least some of

the political parties understood the economic

logic of the price increase.Once petrol prices

have been taken out of the APM umbrella

the OMCs have no option but to raise prices

to compensate for higher crude landed

price.Landed prices are impacted by either

International prices or depreciation of the

Rupee against the US Dollar.Given the

existing duty/tax structure on petrol,the

OMCs cannot be expected to make losses on

a decontrolled item.Lambasting the

Government shows complete ignorance of

Finance/Economics or rank political

opportunism or both.Now that prices have

been brought down, once again the political

furore will subside but the underlying

problem will stay intact.Which brings us to

the bad news – that petrol prices are not only

not going to come down but are actually

expected to keep rising in 2012.Gone are the

days of petrol under Rs.60 per ltr. in India.

Micro- economics dictates that when the

price of an item increases the demand is

likely to decrease.Agreed that demand for

petrol is relatively inelastic but is there an

option to allowing free pricing of

petrol?There are currently 3 petro products

of mass consumption under the APM:-

Diesel,Kerosene and LPG.The combined

subsidy on these is running at about Rs.350

crore per day which is Rs.1,30,000 crore per

annum.Taken alongwith the subsidy the

Government gives to the agricultural sector

on inputs such as seeds and fertilizer and the

subsidy on foodgrains for the PDS, is it

practically possible for the Government to

manage the financial jugglery to meet the

budget deficit?No wonder we already hear

statements that the deficit is likely to be in

excess of 5.5% and some estimates have it

as high as 6.5%.Blaming the Government

for high inflation and simultaneously

expecting higher subsidies and support

prices are clearly contradictory.

India imports about 75% of its requirement

of crude.Since crude oil prices are governed

by demand and supply in the International

market let us examine the likely trend.The

worldwide consumption of oil is about 92

million barrels per day and growing at about

2-3% per annum(1 barrel is about 158.9

litres,1ton of crude is equivalent to 7.33

barrels).China and India are responsible for

a good part of that growth.Indian

consumption has increased by almost 50%

in the last decade and with a projected GDP

LOGISTICS XPRESS

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growth rate of 8-10% the trend is likely to

be maintained.Chinese consumption has

almost doubled during the same

period.Given that our production has been

fairly constant the increased requirement

will have to be met by imports.China has

already surpassed the USA as the largest

importer of oil.While China has steadily

worked on tying up its crude oil import

requirements(since it imports about 250

million TPA of oil or 60% of its

consumption) and has aggressively locked

up supply sources in Africa,Central Asia and

the Middle East, we unfortunately lag far

behind.

As per the Hubbert Peak Oil theory global

oil production will hit a peak rate and then

keep declining as oil starts to run out.While

new technology,discoveries and

development of alternatives has so far

postponed the inevitable,it is a matter of

speculation that the peak will occur in the

next 40-50 years.As a nation we should be

concerned about our energy security in the

long term because we would like to keep up

the pace of development and therefore, what

should be our long term strategy?One of the

obvious answers is that we need to change

over to other forms of hydrocarbon fuels

such as Natural Gas.Other options are to

accelerate the development of non

conventional energy sources such as Solar or

Wind.Still another is the increased use of

Nuclear energy particularly for Power

generation (and there is enough controversy

on this).Unfortunately,there are

transportation applications where there is no

easy substitute for oil.

To be able to design an effective strategic

response,let us examine who is sitting on all

the oil resources.The table below gives the

proved reserves of oil for some of the major

players:

Country

Proved

Reserves(billion

Barrels)

Saudi Arabia 264

Venezula 211

Iran 137

Iraq 115

Kuwait 101

UAE 97

Russia 77

Libya 46

Kazakhstan 40

To put this in perspective the proved

reserves of USA,China and India are 30,15

and 9 Billion barrels respectively.This of

course does not mean that all of this is

extractable so the actual usable quantity is

likely to be lower.

In addition to the above the proved reserves

of Natural Gas are as below:

(1 Billion Cubic M = 0.9 Million Tons oil

equivalent)

Country Proved Reserves(Trillion Cubic M)

Russia 45

Iran 29

Qatar 25

Turkmenistan 8

Usa 7.5

UAE 6

Venezuela 5.5

Nigeria 5.2

Algeria 4.5

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Again ,to put it in perspective China and

India have proved reserves of 2.8 and 1.5

TCM respectively.Based on these

China,with a consumption of 450 Million

TPA of oil and a domestic production of

200 Million TPA, is going to run out of oil

much faster than India and has hence

aggressively pursued strategic tie ups to

ensure supply of oil.

If we look at the history of the world for the

last 50 years we begin to see a distinct

pattern.Nothing sums it up better than the

remark of the then US Energy secretary,Bill

Richardson,who said in 1998 “ This is

about America‟s energy security.It‟s also

about preventing strategic inroads by those

who don‟t share our values.We‟re trying to

move these newly independent countries

towards the West”.While this remark was

made in the context of Caspian Oil,this is

what the entire US policy has been about for

the last 50 years.They have always had a

substantial presence in Saudi Arabia,put the

Shah in power in Iran(unfortunately he,in

turn,was thrown out) and have only pursued

it more aggressively since.Iraq was widely

touted as having weapons of mass

destruction(which were never found,but then

public memory is short and who is going to

scold the policeman) and Libya‟s Gaddafi

was a terrorist and ran an oppressive

regime.The NATO partners were

accordingly thrown this problem to handle

and now that Libya is out of the way we see

increased rhetoric on how dangerous the

Iran nuclear program is and how it is a

major threat to the peace and security of the

world ( this time Israel is the front

man).Presidential elections in the US are

due in 2012 and the timing is just

right.Venezuela‟s Hugo Chavez has

traditionally been a thorn in the US flesh(

the Western press is a willing partner in this

build up) but he is reportedly unwell and

that problem may solve itself.In case we

haven‟t yet figured it out – it‟s about the oil

stupid.Is it any surprise that all the problem

states/dictators figure in the list of the oil

rich?A further area of interest to the US is

the oil in the Caspian Sea region but

unfortunately the way out logistically for

this oil was planned via a pipeline through

Afghanistan and Pakistan and these

countries have not yet been tamed inspite of

years of effort.Iran is once again the obvious

alternative way out for a pipeline to ship

Caspian oil.

In this scenario,what should be India‟s

strategy?Besides the obvious steps like

increased exploration in Rajasthan and

offshore( KG basin),let me stick my neck

out and suggest additional areas we need to

cover:

1. If the Iranian natural gas pipeline via

Pakistan is not feasible (and we don‟t

trust Pakistan enough to put our eggs

in that basket) why not consider

building a pipeline via the Arabian

Sea? This solution will be expensive

but once oil prices start to go up(

which I think they will in years to

come) the picture will change. In any

case we will save the gas transit

charges of approximately US $ 300

million per annum which we would

have paid Pakistan year after year.

Isn‟t it time India spent some of the

huge forex reserves it has ? The US

will not be happy with this step by

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India (considering sanctions imposed

on Iran) but then we are caught

between a rock and a hard place.

However in a situation where oil will

start to become more scarce and

expensive, energy security for 20 %

of the world‟s population has to take

precedence.The requisite technology

for such a pipeline will have to be

sourced.This will also enable us to

link up supplies of gas from Qatar in

the future.

2. Accelerate development of shale oil

extraction and processing

technology. We know that Arunachal

Pradesh has huge reserves of Shale

Oil and it was claimed by Mr. C.

Ratnam, former Chief of Oil India

Ld that the reserves were sufficient

to meet Indian total needs of Crude

Oil for a further 100 years. If we

combine this knowledge with the

fact of the rapidly depleting Chinese

reserves, we know exactly why

China is interested that in claiming

ownership of Arunachal Pradesh ?

Our answer must be two pronged,

first – undertake massive

development of that part of the

country, which is anyway necessary

given the abysmal lack of

infrastructure and second – put

enough security in place to ensure

against any misadventure by the

Chinese, given the poor state of our

border information systems as shown

during Kargil.

3. Adopt a realistic Natural Gas pricing

policy for domestic gas. As long as

we keep expecting RIL to supply gas

at $ 4.2 per mmBTU(million British

Thermal Units, 1 barrel of oil =5.41

mmBTU) the current deadlock will

continue and RIL will be reluctant to

invest in expanding the production

and distribution of gas. While the

price of Iranian gas was increased to

$ 8.3 per mmBTU ( based on a crude

oil price $ 60 per bbl) we continue to

rigidly stick to the $ 4.2 per mmBTU

price for domestic gas. Our

agreements with the E & P private

companies must be flexible. In this

connection the recent

recommendation of the Soumitra

Chaudhuri committee on gas pricing

to have a price $ 7.5 to $ 8.0 per

mmBTU is welcome. Flexible

pricing will also send the right

message to other companies wanting

to bid and take up E & P efforts. We

must recognize that as oil/gas

become scarce they will have to be

explored at greater depths under the

sea and that is expensive and risky

business. Anyway, RIL will probably

be happy with a price of even $6.00

per mmBTU .

4. Strengthen our tie ups in Africa, the

Middle East and the Caspian region.

This involves a massive diplomatic

and financial effort but we must

ensure some degree of security for

oil and gas supplies. Since Iran also

forms an important link in the route

to bring out oil and gas from Caspian

region, we must work diplomatically

to ensure that the same whitewash as

was done in the case of Libya ( a UN

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resolution which though limited in

scope was used a cover for a NATO

invasion) is not repeated in Iran.

5. Currently about 7 % to 8 % of the

world oil production is offshore. As

we move ahead this figure is likely

to increase because fresh land based

finds of any magnitude will be

unlikely( 80% of the earth‟s surface

is covered by water). Also offshore

finds and further E & P will be at

greater depths and is likely to be in

International waters. We need to

access the technology to work in

International waters at greater depths

to increase our chances of finding

fresh oil. In this context our recent

face off with the Chinese in the

South China Sea is relevant. We

must be prepared to stand up for our

rights while respecting the territorial

integrity of others.

6. Consider dismantling of APM for

diesel, kerosene and LPG. While this

would be political suicide for any

party, isn‟t it at least possible to

completely decontrol diesel prices ?

Worldwide diesel retail prices are

about 10 to 20 % cheaper than petrol.

If we make the diesel price about Rs.

60 per ltr (or Rs. 10 per ltr less than

petrol) it would certainly increase

transport costs dramatically but that

is exactly what is needed to disturb

our comfort zone and force us to

look for more cost effective and

efficient transport solutions and

thereby bring about a reduction in

fuel consumption.

As home to 20 % of the world

population having only 0.7 % of the

world oil reserves, we will continue

to be heavily dependent on oil

imports and therefore subject to

international price fluctuations.

International crude oil prices are not

only never likely to come to below $

70 per barrel but 2012 will only see

increases across the world and

average Indian import prices will

range above $ 120 per barrel

particularly if there any further

adventurism by the US. It is unfair to

expect the Government of India to

both reduce the duties & taxes and to

maintain petroleum sector subsidies.

The Government has to generate

revenue for development from

somewhere. Soon the issue is likely

to move away from pricing of oil &

gas to availability of oil & gas. Since

this sector has very high lead times

and risk factors, it is time we identify

the potential areas of growth and

start work on them. However

recognizing the critical nature of

powerful geopolitics involved in

terms of the interest of China ( more

immediate than ours) and the US

attempt to control all the known

resources we will have to play our

cards right. The time for action is

now !

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The Rise in Cost and Scarcity of Raw Materials: A Global Perspective Bh.Phanindra Kumar

MBA LSCM IInd Sem

Seeing the change in the living economy

day-to-day we have been experiencing very

fast and vast changes in the lives of each

individual. This article will further discuss

and brief you about the rising costs in the

next decade‟s time and the scarcity of raw

materials that arises due to this. All of this

leads to a dangerous existence ahead in the

global perspective.

The cost of raw material, including

fuel, is rising and expected to continue in

rise. Anticipated population growth in China

and India will put pressure on water and

food supplies. The climate is expected to

become even more volatile, and the weather

will likely have an increasing impact on the

performance of the supply chain, causing

crop failures and food shortages.

Meanwhile, political instability may cripple

supply lines and severely reduce the number

of source countries for raw materials.

Changes will effect all the Raw Materials:

To respond to the rising costs of raw

materials, the industry will need to make

certain changes affecting ingredients,

packaging, energy, labour and water.

Each category of raw material will offer

different opportunities and challenges for

the industry.

Ingredients:

With high ingredient prices,

companies will need to first protect their

contracts and seek vertical integration to

help guarantee supply. At the same time,

they will seek alternative ingredients or

develop product innovations that are less

dependent on that ingredient. Alternatively,

they may also try to influence consumption

behaviour

or suggest

substitute

products.

Packaging:

With oil and

timber price

impacting

the cost of

packaging,

companies

will need to reduce the amount of

packaging, or focus on reusable packaging

(for instance, the use of refillable

packaging). At the same time, incentive

schemes will encourage more responsible

packaging.

Energy:

Energy is a big part of the cost

structure for products, impacting the full

cycle from harvesting and production to

distribution, retailing and recycling. The

opportunities for energy reduction (through

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more efficient assets or asset sharing) as

well as alternative forms of energy will be

plentiful. Many developments are already

going on in this area and more are expected

in the next 10 years.

Labour: Labour scarcity is a very real

challenge even today and that is expected to

continue to be the case in the coming years.

Switching production locations may not be

as easy in the future due to higher transport

costs, and this may give new impetus to

automation. At the same time, companies

will need a complementary strategy focused

on making the jobs more attractive through

training and new incentives, as well as

through flexible work schedules.

Water: Fresh water scarcity is expected to

become a reality in many areas, and

technologies that improve reuse of water or

filtering and desalination will need to be

further developed.

Industry Actions and Initiatives:

For resolving the issue of raw

material costs and scarcity, the industry can

take actions in various places such as:

Collaborative lobbying of

government in areas such as

agricultural and water policy and

energy strategies for mere

availability to all.

Educating the farmers and other rural

areas such that they know the role of

certain crops for bio-fuel and the

influence that it will have on food

production

Consumer education focused on food

substitution and energy conservation.

Working together on shared

warehousing and shared logistics

solutions, as well as alternative

energy sources to reduce the

dependency on fossil fuel.

Research and development in

controversial areas such as cloud

seeding and nanotechnology.

Working together with co-operatives

to find better farming solutions.

Conclusion:

Every industry and company must

follow these initiatives and help create

consistent solutions that will enable to face

the challenges ahead. The above factors are

the main sources for the scarcity and

increase in cost of raw materials. Hence,

care must be taken in maintenance and

controlling the flow of these into and out of

an industry.

Food processing being the major

aspect of every nation, the farmers must be

educated with the current technology and

help them to coordinate with the suppliers

to have a fast, efficient and healthy supply

chain

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IT APPLICATION IN LOGISTICS

The advancement of IT sector with

technologies is at its faster rate.IT is playing

an important role in Logistics and supply

chain management also establishing a link

between logistics and Information

technology. Earlier logistics sector faced

many problems due to unorganized and they

neglected IT which became one of the

biggest obstacle in their progress. Logistics

companies have lately woken up to the

importance of technology in delivering

quality services to their customers. The

advancement in technologies have made

possible for faster end to end solutions with

the help of software. Earlier were the days

where geographical conditions was one of

the factor in logistics and supply chain

management but with latest technology

service providers are no longer facing

problem by geographical limitations and can

very well expand there business of supply

chain with no boundaries limitations.

Technology has helped them to operated

from anywhere with high visibility and

control. The integration of information

technology has resulted in benefits from

internet and integration of logistics functions

through intranets/extranets.

Integrating information technology has

enhanced supply chain as a ongoing

challenge. Earlier the records were not

updated as a real time but IT has helped this

out in order management , warehouse

management, transportation management

and accounting .There are various supply

chain application which include ERP-

enterprise research planning ,WMS-

warehouse management system which focus

on consistency, economies of scale and

efficiency. with IT in communication has

helped effective and faster exchange of info

from firm locations and between suppliers

.IT has also helped logistics through RFID

in there counting and security checks .also

helped in collaborative planning and

replenishment which made exchange of

supply chain event accurate with accuracy.

Today all activities associated with

international trade have come under the

ambit of information technology. Yet, many

service providers are still not fully aware of

the potential and actual benefits that can

accrue from it.

There are many ways in which information

technology will be helpful which includes

replacement of inventory with information,

making customers awareness, help in

planning and reduce variability in supply

chain, co-ordination of manufacturing,

marketing, and distribution through

enterprise research planning they help in

order processing and reduce lead time.

Communication systems eg-voice based

order picking. Transaction processing

systems with point of sale system can be

logistics applications. Management and

executive information system which involve

logistics information systems as a logistics

application. Another can be decision support

system with warehouse management

systems being a logistics-related

application.So IT has its own importance in

logistics also.

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REPORT ON INTDUSTRIAL TOUR Seshadri Kannan

MBA LSCM IInd Sem

ABSTRACT

This Report is framed in order to share my

learning and experiences during my

Industrial Tour as part of MBA LSCM

Batch 2013. As part of the tour we visited 2

Industries in New Delhi – CONCOR India

Ltd. (Dadri) and UFLEX Ltd. (Noida) and 3

Industries in Surat – L&T Heavy

Engineering, BPCL and GNB Port, all

located in Hazira.

The visit organized as part of our learning

curriculum, was undertaken from the 15th

Jan 2012 to 20th

Jan 2012. We were

accompanied by three faculty members –

Mr.Saurabh Tiwari, Mr. Jayanta

Mohapatra and Dr.Ratna Banerjee. The

purpose of the tour which was to get an

understanding of the operations involved in

these Industries along with the Business

processes relating to the Logistics and

Supply chain aspects, was accomplished. I

take this opportunity to thank our HOD Dr.

Neeraj Anand, the IR committee, our

coordinating faculties and the staff of the

industry for making this visit an excellent

learning experience for us.

UFLEX LIMITED

As we reached New Delhi on the 16th

Jan

2012, the class was split in 2 batches and the

first batch proceeded to UFLEX Ltd, Noida.

We were received by the staff on arrival and

we were taken to the Packaging and Films

division

UFLEX AT A GLANCE

After Pioneering the growth of the flexible

packaging industry in India, UFLEX has

gained an unchallenged identity. Since its

inception in the year 1983 it has turned into

a multi-billion company that values quality

and customer satisfaction amongst other

priorities. With consumers spread across the

world, UFLEX enjoys a global reach.

Headquartered in Noida (National Capital

Region, New Delhi) it has state of the art

manufacturing facilities in India & Dubai. It

has also established offices in UAE, Europe

and North America and enjoys a formidable

market presence in more than 85 countries.

UFLEX facility enjoys ISO 9001 and ISO

14001 certifications and has FDA and BGA

approvals for their products. It is also a part

of the D&B Global Database and winner of

various prestigious national and

international awards like the top exporter of

BOPET and BOPP films, and the Worldstar

award for packaging excellence. FPA,

AIMCAL and the DUPONT Awards in

2004-2005 are the latest in this series.

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Being a multi faceted organization it has

integrated its operations from manufacture

of Polyester chips, Films (BOPET, BOPP

and CPP - both in plain and metalized form),

Coated Film, Laminates, Pouches,

Holographic films Gravure cylinders, Inks

and adhesives to all types of packaging &

printing machines, offering total flexible

packaging solution.

UFLEX has always been committed to the

industry by providing technical know-how

and being the trend-setter in the flexible

packaging industry. Being on the edge of

innovation, UFLEX endeavors to be the first

to come up with advanced products that

cater to the changing demands of the

packaging industry.

As part of the UFLEX Group, it has over

twenty years of experience in polymer

technology. Setting milestones of success

and innovation, UFLEX is widely known for

manufacturing and supplying products,

delivering apt services around the world.

FILMS DIVISION

UFLEX manufactures in-house Polyester

chips, BOPET / BOPP / COATED /

METALLISED / CPP Films, Packaging

machines, converting equipment, inks,

adhesives, Flexible Laminates and Pouches

and have emerged as a “one stop shop”

committed to providing customers with

competitive advantage, placing top priority

to “customer success”.

The Film Division of UFLEX Limited, is

one of the largest manufacturer, supplier and

exporter of a variety of Plastic Films in the

world.

Most of the products we use every day are

packaged at UFLEX. Some of them include

OLAY, FRITO LAY (Lays), PERFETTI

VAN MELLE (ALPENLIEBE),

CADBURY, TIDE and many more.

UFLEX uses WPP- Weaving Polyproylene

and BOPP-Bio-organic poly propylene for

Packaging. The Films manufactured are

plastic film products one of them being

Modified Extension coated film. Various

packaging technologies like Laminate tubes,

cosmetics tubes, plastic/metal caps and

closures are used. Every line that is printed

on the package is based on customer

requirements. Based on Customer

requirements, UFLEX also uses 2 or 3 Level

packaging, the stages of packaging being

1. Manufacturing the films

2. Engraving information on the

cylinder

3. Printing

4. Lamination

5. Slitting

6. Pouching

7. Packaging

A Supply Chain manager at UFLEX is

responsible for the demand forecasting of

orders, matching supply & demand to name

a few. To name the technology used,

UFLEX uses ERP and ORACLE for its

supply chain operations.

UFLEX participates actively in being

environmental friendly by recycling the

wasted film and turning it into seeds, which

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are then flattened such that they can be

reused as films again.

L&T HEAVY ENGINEERING

We proceeded to Surat and our first stop was

L&T HEAVY ENGINEERING, Hazira. The

Management at L&T gave us a warm

welcome and was enthusiastic in giving us a

presentation. We were lucky enough that the

presentation was presided by the Top

Management of L&T including the Vice

President, Mr.Venkataramanan, who was

kind enough to join a few of us over at Tea

later and shared his insights into managing

an organization as big as L&T.

The Presentation, helped us understand the

Logistical challenges they have faced in

transporting the heavy products to the

customers be it Boilers to other Industries or

heavy equipments to the Indian army or

drillers to the Oil and gas industry.

To quote how the tedious process is carried

out, L&T first involves in Route planning.

Then a Route Survey is carried out to study

the feasibility of transporting the product.

Then the vehicle is selected, after being

tested for load and other parameters.

They have faced challenges where in they

have come across weak bridges or narrow

roads en-route for which they have even

gone to the extent of building ancillary

structures to successfully transport the

product to its customers.

ABOUT L&T

Larsen & Toubro Limited (L&T) is a

technology, engineering, construction and

manufacturing company. It is one of the

largest and most respected companies in

India's private sector.

More than seven decades of a strong,

customer-focused approach and the

continuous quest for world-class quality

have enabled it to attain and sustain

leadership in all its major lines of business.

L&T has an international presence, with a

global spread of offices. A thrust on

international business has seen overseas

earnings grow significantly. It continues to

grow its overseas manufacturing footprint,

with facilities in China and the Gulf region.

The company's businesses are supported by

a wide marketing and distribution network,

and have established a reputation for strong

customer support.

L&T believes that progress must be

achieved in harmony with the environment.

A commitment to community welfare and

environmental protection are an integral part

of the corporate vision.

INDEPENDENT COMPANIES:

o Hydrocarbon

o Heavy Engineering

o L&T Construction

o Power

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o Electrical & Automation

o Machinery & Industrial

Products

o Information Technology

o Financial Services

o Shipbuilding

o Railway Projects

HEAVY ENGINEERING DIVISION

In engineering and construction, L&T's

technology capabilities include a strategic

mix of in-house strengths and the expertise

of its joint venture partners. Engineering

Centres at Mumbai, Vadodara and Delhi

carry out process design and simulation,

analysis of computational fluid dynamics,

mechanical design, failure analysis and

trouble shooting.

L&T has set up an engineering and project

management centre in Abu Dhabi, to

undertake oil and gas related projects as well

as engineering and consultancy services.

An engineering centre in Sharjah is an

extended arm in the Gulf. This is

supplemented through collaborations with

key partners: L&T-Valdel for engineering

services in the upstream hydrocarbon sector,

L&T-Chiyoda for the mid and down stream

sectors, and L&T Sargent & Lundy for the

power sector.

Some terms:

Outfitting – The vessel manufactured by

L&T is launched into the sea, unfinished.

Then the outfitting operation, which is

fitting electrical equipments and other

equipments for the completion of the

construction of the ship, is performed.

Pulveriser - A Pulveriser crushes coal and

breaks it into fine dust. This coal is then

used in boilers

Being such a large company, L&T faces

numerous challenges logistically while

transporting their products. For instance

when L&T transported the world‟s biggest

FCC regenerator – a 132o tonne behemoth

for a mega refinery in China and the massive

2400 tonne gas injection platform for the oil

fields of Abu Dhabi they had to face

challenges involving ODC constraints,

selecting the appropriate mode of

transportation, road constraints, vehicle

selection and clearance from government

authorities.

L&T implemented JQI|| (Juran on Quality

Improvement) for improving energy

consumption. The implications of

implementing the same have resulted in

substantial savings and improvements in

many areas of its operation.

L&T also supplies aerospace equipment for

ISRO, nuclear equipments for the

Government of India and warships to Indian

Navy to name a few.

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Performance Analysis of Logistic and Supply Chain Sector during

Recession Dr T.Joji.Rao

Ms Chandni Chaurasia

Logistics and Supply chain sector or Third

party logistics (3PL) companies are

becoming an important part of today‟s

supply chain. These companies offer

services that can allow businesses to

outsource part of all of their supply chain

management function. Many 3PL companies

offer a wide range of services including;

inbound freight, freight consolidation,

warehousing, distribution, order fulfillment

and outbound freight. The growth of 3PL

companies has been driven by the need for

businesses to become leaner, reducing assets

and allowing focus on core business

processes.

Logistics is a business concept which was

evolved in the 1950s because with the

increasing complexity of supplying

businesses with materials and shipping out

products in an increasingly globalized

supply chain, which lead to a call for

specialists called supply chain logisticians.

Business logistics can be defined as "having

the right item in the right quantity at the

right time at the right place for the right

price in the right condition to the right

customer", and is the discipline of process

and incorporates all business sectors. The

objective of logistics work is to manage the

fulfillment of project life cycles, supply

chains and consequential efficiencies.

Without a sound and efficient logistics

system in the world it cannot have a healthy

economy. The Logistics sector of India

should not only be hassle free but it should

be able to meet new challenges posed by the

technology and any other external and

internal factors. In business, logistics may

have either internal focus (inbound

logistics), or external focus (outbound

logistics) covering the flow and storage of

materials from point of origin to point of

consumption. The main functions of a

qualified logistics professional include

inventory management , purchasing,

transportation, warehousing , consultation

and the organizing and planning of these

activities. A Logistics Professional

combines an expert knowledge of each of

these functions to coordinate resources in an

organization. There are two fundamentally

different forms of logistics: one optimizes a

LOGISTICS XPRESS

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steady flow of material through a network

of transport links and storage nodes; the

other coordinates a sequence of resources to

carry out some project.

SNo. Logistics and Supply

Chain Company

Revenue (in Million $)

1 Exel PLC Ltd 13335

2 Kuehne & Nagel Ltd 10700

3 Schenker Ltd 10700

4 DHL Global Forwarding Ltd 9500

5

UPS Supply Chain Solutions

Ltd 7700

6 Panalpina Ltd 6320

7 CH Robinson Ltd 5689

8 TNT Ltd 4270

9 Expeditors Ltd 3902

10 Schneider Logistics Ltd 3852

11 TNT Ltd 3560

12 Penske Ltd 3171

13 Eagle Global Logistics Ltd 3096

14 Nippon Express Ltd 3000

15 Agility Logistics Ltd 3000

16 Bax Global Ltd 2899

17 UTi Worldwide Ltd 2785

18 Ryder Ltd 2181

19 Caterpillar Logistics Ltd 2100

20 Kintetsu Ltd 2025

21 Menlo 1340

22 APL Logistics Ltd 1290

23 Maersk Logistics Ltd 800

24 SembCorp Logistics Ltd 713

25 Fedex Trade Networks Ltd 672

Top 25 Global Logistic Companies for year 2009

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It is a recognized fact that logistics sector is

growing in the world as a whole, especially

in India. This is due to the increasing pace of

business with just in time (JIT) philosophy,

customer service, timely delivery of

products at right time in the right quantity in

the right place in the right condition to the

right customer. Therefore, as the logistics

and supply chain sector is growing day by

day and according to the supply chain

market reports this sector will boom in the

near future. The sector is leading with the

top companies, as according to the Global

Logistics and Supply Chain Strategies

magazine the ranking of world‟s largest

Logistics companies in terms of total

revenue for 2009 is provided in the below

table.

Logistics sector is playing a big role in

shaping the modern civilization. Third-party

logistics or 3PL or Logistics companies is

growing around the world as more and more

corporations prefer to outsource their

logistics operations to the 3PL or logistics

service providers. For the period 2005 to

2009, the overall growth of logistics sector

may be represented in terms of revenue as in

Chart 1.

Chart 1: Overall Growth of Logistics

Sector (2005-2009)

This represents that the Logistics and supply

chain sector is continuously growing from

2005 to 2008 and in the year 2008 it shows

the highest growth of 26% but falls in 2009

with the drop of 4 % due to the global

recession. The study of broad decision

making variables namely revenue, cash and

cash equivalent, current assets, current

liabilities, investing income, change in

investments, operating expenses, operating

profit, net profit, dividend paid and retained

earnings for the period 2005-2009 may be

represented as in the figure as below. This

graph also shows the highest growth of the

sector in the year 2008.

10%

19%23%

26%22%

0%

5%

10%

15%

20%

25%

30%

2005 2006 2007 2008 2009

Growth of Logistics sector in terms of

Revenue from 2005 to 2009

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The analysis of the above shows that though

the logistic sector has been impacted by the

global recession in terms of output, revenue

and profitability whether it is in terms of

operating or net profit but it has been able to

successfully maintain the desired levels of

liquidity. Though the recession has

compelled the logistic companies to increase

the reserves for contingencies but at the

same time they have been successful in

ensuring a consistent dividend payout.

Though the companies of logistics sector

have shown a consistent growth year by year

but it is of utmost importance for the

companies to identify the concern areas over

the segments and devise methodology to

optimize the operational output by proper

utilization of management techniques,

expertise and manpower.

-10000000

0

10000000

20000000

30000000

40000000

50000000

60000000

Logistics sector growth from 2005 to 2009

2005

2006

2007

2008

2009

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CAMPUS BUZZ

NAVRITI 2012

Department of Civil Engineering and

Environmental Sciences organized Navriti

2012 on the 24th

of February this year. There

were a lot of events organized on the day

which included both technical and fun filled

games. Students from various branches and

streams in the college, as well as students

from other colleges took active participation

in the event.

The most notable event of the day was the

Inter Collegiate Poster Presentation

competition. Some of the add ons of the day

included games like X-factor, Balance,

Volley Balloon and Blind Alley.

“The Shrinking Ganga Glaciers” and “The

Urban Transport Crisis” were posters that

caught the attention of many.

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MANAGEMENT

DEVELOPMENT PROGRAM

Demystifying Supply Chain

Management

Centre for Management Development

(CMD) organized a two day residential

Management Development Program (MDP)

on “Demystifying Supply Chain

Management”. University of Petroleum and

Energy Studies is the academic partner of

CMD for its support activities. The program

was coordinated by Dr Neeraj Anand, Head-

Logistics & Supply Chain Management

Department, College of Management and

Economic Studies (CMES), UPES. The

MDP was inaugurated by Dr Parag Diwan,

Vice Chancellor, UPES.

Professionals from industry and academia

shared their expertise on various

contemporary issues in Logistics and Supply

Chain Management. Participants from

various industries like automobile, pharma,

oil and gas, steel and Directorate of

Industries, Uttarakhand attended the

program.

The sessions started by an overview of

Supply Chain Management by Mr Abhik

Saha who is the Director of Supply Chain at

Benetton India Pvt. Ltd. This was followed

by two interactive sessions by Dr Etinder

Pal Singh a Professor at Apeejay School of

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Management on “Outcome Driven Supply

Chain Management” and “Supply Chain

Strategy: efficiency vis-à-vis

Responsiveness”. The speaker focused on

the multiple perspectives of supply chain

management, outcomes that determine the

supply chain performance, risks involved

and achieving a trade-off between different

variables in the chain.

The third industry expert Mr Harish Sharma,

from Dabur India Limited, Chandigarh

discussed the use of CRM in customer

retention and maintaining customer lifetime

value. The next session by Mr Dabashish

Sanyalo,GM-Supply Chain, Ranbaxy Ind

Ltd provided an insight about SCM

Challenges and innovations of the future.

This session was followed by a session

taken by Prof Loveraj Thakru, Industry

Fellow, Department of Logistics & Supply

Chain Management, CMES, UPES focusing

on “Upstream Supply Chain strategy for

Indian Oil & Gas Industry”. Prof Thakru

discussed the supply chain of Oil & Gas

industry and gave an insight to participants

on world scenario of oil and gas industry

and way ahead for formulating upstream

supply chain strategy for Indian Oil & Gas

companies.

Mr Ravi Inder Singh from Mahindra

Industries Limited discussed about the role

of Vendor Managed Inventory in Supplier

Chain Management and Dr Rameshwar

Dubey, Secretary, Asian Council of

Logistics Management discussed supply

chain management cost reduction strategies.

With a powerful blend of academia and

corporate partners working together to

achieve excellence in business education,

the Management Development Program

proved to be a grand success and was very

much appreciated by the participants. Mr. K.

B. Lal, Director – Finance was the chief

guest for valedictory ceremony. The

program was supported by Prof.

G.C.Tewari, Emirates PVC, Dr. Neeraj

Rawat, Assistant Director – CMD, members

of Industry Relations and regional office,

Mumbai. KRK Associates, publisher of

Supply Chain India & Auto Logistics India

was associated as Media Partner for the

MDP.

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LOGISTICS AFFAIRS

Livingston International Inc. completes acquisition of part of Global

Trade

business of J.P. Morgan By Jeff Berman,

Group News Editor

April 03, 2012

North American customs broker Livingston

International said this week it has completed

its acquisition of the customs and trade

compliance services of Global Trade

business (also known as the former Vastera

business) of JP Morgan Chase Bank, N.A.

Toronto-based Livingston said in January

that it entered into an agreement to acquire

this part of JP Morgan‟s Global Trade

business. Financial terms of the deal were

not disclosed.

Livingston provides customs brokerage and

customs compliance services for many of

the major importers and exporters in the

pharmaceutical and medical devices

industry, as well as manufacturers of

telecommunications equipment;

semiconductors and other electronics; motor

vehicles and automotive parts; and

agricultural, construction and mining

equipment, according to its corporate Web

site. It also offers customs and international

trade consulting services and international

freight forwarding across North America

and around throughout the world. In a letter

to customers in January, Peter Luit,

president and CEO of Livingston., said this

deal greatly expands Livingston‟s

international trade expertise and service

offerings within the United States and

Canada, and extends this crucial and

growing part of Livingston‟s business to

Mexico, Europe and Asia.

Based in Dulles, Va., Global Trade provides

shippers with various global trade

management services, focusing on the

information flows related to cross-border

components of importing and exporting

goods. Its various services and software

offerings are comprised of restricted party

screening and boycott/embargo screening,

landed cost calculation, shipment

documentation, event management, export

compliance, import compliance, and trade

agreement optimization, among others. The

company was founded in 1991.

“What made this [deal] attractive was that

we developed a strategic plan for our overall

business and have been expanding our

business in the U.S. significantly,” Luit told

LM in an interview. “We were looking for

ways to expand it and grow faster.”

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Luit also pointed out that Livingston has

made a number of M&A acquisitions in the

last year, which Livingston is excited about,

adding that this one is different from the

others. The reason for this is that Global

Trade‟s customs and compliance services is

very focused on large, multinational, U.S.-

headquartered companies. And he added that

Global Trade and Livingston had some

clients in common.

Livingston has offices in border crossings

and large cities and prior to this deal had

about 100 offices in Canada and the U.S.

and that Global Trade has about 20 offices.

“Global Trade has offices in Mexico which

we did not, as well as offices in several

countries in Europe, which we did not, as

well as small offices in the Far East,” said

Luit.

“We are expanding our footprint in these

regions.

In terms of customer benefits as a result of

this deal, Luit said that they will see much

quicker and more responsive to regulatory

changes, changes in trading patterns, as well

more quickly adapting to changes in

business patterns and supply chain changes

more quickly than either Livingston or

Global Trade‟s customs and compliance

services would be able to on its own.

Luit said a combination of 500 full time

employees and contractors from Global

Trade‟s customs and compliance services

will be joining Livingston now that the deal

is complete.

When asked what the competitive

advantages of bringing Global Trade‟s

customs and compliance services into the

fold are for Livingston, Luit explained how

Livingston has a very unique market

positioning.

“If you compare us to [the competition], I

would say we have the broadest and the

deepest service offering of anybody,

certainly in the North American market and

Europe as well,” he said.

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Logistics Managers may be in short supply before long

Experts said the brand perception of the industry needs re-invigorating

and it is also seen as one of the most poorly paid and least diverse to

work in Patrick Burnson,

Executive Editor

March 31, 2012

A new report has warned the global

transportation and logistics industry (T&L)

is in urgent need of a radical transformation

by 2030 if it is to stay competitive. In

Winning the Talent Race, Volume 5 of

PwC‟s Transportation & Logistics 2030

series, experts said the brand perception of

the industry needs re-invigorating and it is

also seen as one of the most poorly paid and

least diverse to work in.

PwC created 15 theses which were

presented to a panel of 94 senior executives

from 24 countries working in business,

government and the scientific arena. Over

the course of eight weeks they studied the

hypothesis and were asked to assess the

probability of each one on a scale of 0-100

percent. “These findings are hugely

significant for the T&L sector showing us

what must be done before the industry falls

into a critical state,” said PwC‟s global T&L

leader, Klaus-Dieter Ruske. Poor image,

poor pay and poor prospects are all

perceptions that currently choke the

industry. The reality is that there are

rewarding, multinational opportunities out

there that need tapping into.”

Panelists also predicted pay would continue

to be low in the majority of jobs in

comparison to other industries. In the UK

for example, the average salary of someone

in finance could be £51,620 but in T&L it‟s

£28,022 – 46 percent less. In the U.S., a

worker in the electricity/energy sector could

earn $65,150 on average, but in T&L this

would drop to $43,400.

Klaus-Dieter Ruske came to some of the

same conclusions drawn by scholars and

executive recruiters participating in our

annual Salary Survey:

“T&L companies need to take a critical

view of their remuneration systems,” he

said. “They should benchmark their salaries

against their peers and other industries and

recognize salary alone isn‟t the only way to

compensate employees.”

REFERENCE

http://www.logisticsmgmt.com/article/logistics_managers_may_be_in_short_supply_before_long/

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TNT Express-UPS deal to come: sources

(Reuters) - United Parcel Service (UPS.N)

and TNT Express (TNTE.AS) are unlikely

to announce a deal on Friday when they

need to update the market about the status of

their merger talks, but a deal could come

soon after that, sources close to the talks

said. The companies need more time to

hammer out final details, but they are getting

closer to an agreement and will say on

Friday that they remain in discussions, the

sources said.

"I don't think it will take several more

weeks", one of the sources said.UPS had

four weeks after it approached Dutch-based

TNT Express to clarify its intentions under

Dutch takeover law."Lots of concessions

were made on the social front", said a

second source, who is close to UPS."TNT

performance is a big issue", the same source

added.Dutch unions sent a letter to TNT

Express's board after consulting employees

on their concerns regarding an acquisition

by UPS. Job protection, employment

contracts and the location of the future

company were among the main concerns,

said Marc van Kerkhoff, who represents

TNT Express employees. Price discussions

were put on hold after the Dutch parcel-

delivery firm rejected a 4.9 billion-euro

($6.38 billion) proposal from UPS last

month, and have yet to resume, the first and

the second source said.UPS is confident that

its bid for TNT Express will not meet

significant anti-trust hurdles and would be

approved by the European watchdog in

phase 1, the second source said. Some

shareholders are still hoping for an improved

offer, but UPS is seen as unlikely to improve

by much its last offer of 9 euros a share,

given TNT's poor results and the absence of

a counter bidder. Both parties have ruled out

a potential counter bid from FedEx Corp

(FDX.N) at this point, the sources said.

TNT Express has since reported weaker than

expected fourth-quarter results and given a

bleak economic outlook.TNT Express

declined to comment. UPS representatives

could not be reached for comment.

($1=0.7677 euros)

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ANKIT LOGISUPPLY CROSS-WORD - II

Phanindra Kumar. Bh, MBA LSCM Sem-II

This cross-word is of profound importance to us students of MBA Logistics and Supply chain

Management as we present it in memorium of our beloved friend, Late Ankit Bisht who passed

away recently in an unfortunate road accident.

LOGISTICS XPRESS

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Across:

5. A wedge,made of hard rubber or steel,firmly

placed under the wheel of a trailer, truck, to

stop it from rolling.

7. A method of selecting and sequencing picking

lists to minimize the waiting time of the

delivered material.

9. merges the four distinctive competencies of

cost, quality, dependability, and flexibility.

10. Pallets used in air transportation.

11. A railcar with a flat platform and sides

three to five feet high, used for top loading

long, heavy items.

Down:

1. A term Toyota adopted to capture the

idea of horizontal transfer of information

and knowledge across an organization.

8. light assembly of components of parts

into units.

2. A Japanese term for straighten,focuses on

the need for an orderly workplace.

3. Labor management companies that

provide equipment and hire workers to

transfer containers and cargo between

ships and docks.

4. A technique in which a ERP system

traces demand for a product by date,

quantity, and warehouse location.

6. A business process diagram which

provides a way of indicating which

department or individual is responsible

for a given process or activity.

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ANKIT LOGISUPPLY HUNT-I: Phanindra Kumar. Bh, MBA LSCM Sem-II.

K L X K U V P J T D I S S D G J

B E V Q C I F U O B E Y A W F I

D M P B J W H A R F A G E C N D

C J J N E P K N P V D Y N Q M O

H N C U E L E C A B O T A G E K

J E B I L R D N L B J I B K W A

O K I I X C T U I Q P L U E T M

T U C J Q Q A R E X E Z R I A P

T R B J U H B K E G I E P R N I

S A I I K N O H A G P E Q E L H

H C G C Q Y K L P P O N E T N T

W P A U A U U A O A E E Z S N N

D B Q K C A I H I D B R J U L H

K B O S H H O T B N K R Y D C U

V P C S U C I H Y B G Q Q P N M

L U A T U K A G I L I T Y N V W

WORD LIST:

Agility

Backhaul

Cabotage

Haulage

Heijunka

Hopper

Jidoka

Keiretsu

KepnerTregoe

Nixie

Obeya

PokaYoke

Taguchi

Ubiquity

Wharfage

LOGISTICS XPRESS

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LOGISTOONS

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