The Indian Automotive Industry is characterized by strong competition between increasingly quality conscious manufactures. Competitive pressures and globalization are reshaping the business and the continuing over capacity in the domestic market is driving consolidation and strategic alliances in the industry. The emergence of e-commerce is creating new opportunities and challenges with OEMs beginning to us web based technology to procure components and sell their products. It is also very clearly emerging that Logistics that and Supply Chain Management is playing a critical role in providing a cutting edge over competition. This is further reinforced through the fact that the ISO standards applicable to the Automotive sector cover “Handling Storage, Packing and Delivery” as part of the APQP (advanced Product Quality Planning process).

The Automobile Industry has a unique manufacturing profile, which at time involves multitiered supply chains with components and sub assemblies moving from state-to State before the final product is made available in various parts of the country. In this process, the product gathers a whole lot of Central and State Taxes, which get embedded, into the product cost. With introduction of VAT the cascading tax embedded in the product would be relieved and a simple rate on value addition will be collected .Express Companies have to understand the statutory implication and work on Supply Chain designs through Simulation modules as part of the Consultancy Services.

The Express Segment has many players vying for their share of the pie in the Automotive Sector. The Winners Will obviously be the ones who understand the segment and offer customized solutions. Supply Chains are getting redefined with Auto majors demanding the OEM supplies in plastic bins rather than the conventional corrugated boxes. We have to respond to this reality and offer economies of scale by the most toned down absolute freight by adopting the Conventional carriage pack profile to get optimal capacity utilization. At the other end 3PL activities in line with statutory requirements would have to be provided for plastic bins to be delivered on the assembly line after break bulk operations. A leading Logistics Company is delivering clutch plates to an Automotive major in the Western Region in Trolleys at the assembly line after carriage in seven ply corrugated boxes from the South based OEM supplier!

For the future, it is clear that the Smart Supply Chains will assume a growing role in the continuing attempt to strip time and cost from the entire vehicle manufacturing process, from ordering the individual parts for assembly to delivery of the finished product to the final customer. It is therefore a foregone conclusion that only those Express Service providers who have a wide network and dedicated Automotive 3PL Centers will be able to live up to the challenge. “Distribution” and “3PL Management” have to co-exist with a common service provider or else both do not exist!                                                                                                                

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

India has been transformed by the implementation of sweeping economic reforms and is bidding to become one of the world’s top economies by the year 2020. It is a story that began in 1991 when ironically an economic crisis became the catalyst for change and opportunity. The Indian automotive Sector has benefited immensely from these measures and India has emerged as a priority market for the Automotive and Auto component sector. We believe that the pivotal role of logistics in the Automotive Sector has been reinforced and those who are able to implement the most effective and efficient procedures in Supply Chain Management will have the competitive edge”.

Pawan Jain (Chairman-Safexpress Pvt. Ltd.)

NEW DELHI: In a major initiative, Safexpress on Wednesday entered into an alliance with Panalpina and Miebach to form one of country’s largest logistics and supply chain consortium.

The alliances would pit Safexpress, which was till now operating only in the domestic market, directly against the global majors like DHL, Blue Dart, AFL etc.

The alliance would give Safexpress access to the Panalpina Group’s 320 strong branches in 74 countries, while the latter would be able to provide its international clients access to the over 400 strong national network of the former.

The consortium is in the form of a memorandum of understanding between the three companies without any equity cross holding.

The alliance is targeting the pharmaceuticals, information technology, automobile, fashion, retail and manufacturing sector to provide supply chain management services backed with the technical advisory expertise of Miebach Consulting Group. The alliance is particularly keen on helping the European and American Macs wanting to outsource from or import into India for their manufacturing unit located here.

Commenting on this tie-up in a joint press conference, Mr. Markus A Muecke, CEO, Panalpina World Transport India said, “This is win-win situation all three of us. Our core competency is international air and sea freight, while Safex is very strong in the domestic market and Miebach is the leading logistics consultant. The alliance combines the core competency of three of us”.

Echoing the sentiment, Mr Pawan Jain, managing director, Safexpress private Ltd, said, “It fills the missing link in our business-international connectivity. For no financial out go, we now have access to one of the largest global network”.

Responding to queries Mr Muecke said that the alliance would be expanded to include full truck loading operations, container freight operations and domestic air parcel services. However, Mr. Muecke refused to comment on the financial potential of the alliance.

NEW DELHI, Jan. 23

PANALPINA World Transport India Pvt Ltd, provider of forwarding and logistics services, has entered into a strategic alliance with the logistic company, Safexpress and the SCM consultants, Miebach consulting group in India, to form a cargo network logistics and supply chain consortium.

The alliance links the global network of Panalpina World Transport spanning six continents with the large network base of Safexpress in India.

The alliance will offer third and fourth party logistics and supply chain management services backed by the technical advisory expertise of Miebach consulting group.

The Chief Executive Officer for Panalpina World Transport India, Mr. Markus A. Muecke, said the three companies would continue to remain as three different entities. "We are all private limited companies and none of us will be picking up any equity in the other company,'' 

IT IS PROVERBIAL to say, "Necessity is the mother of Invention". This proverb had its relevance in the yesteryears. The decades that went by upheld the conviction of this proverb, demonstrated through countless inventions and mass manufacturing. The world has changed very fast and today it would be more appropriate to say that "If necessity was the mother of Invention, then Ideas are the parents of Innovation". Yes, we belong to a new economic order which propels us to think beyond the explicit and implicit needs of society and customers, to churn out new thought processes which are introduced as products and services much before they are thought of by the market. Lets look at these apparently crazy but revolutionary ideas. Can you imagine a petrol station where the primary reasons to halt is for the tyre pressure and not the fuel? Sounds funny, but I can well imagine roaring success for such a business, where customers would be willing to pay a bit extra for the correct tyre pressure with some value added information on tyre care. Can you think of a business that has a product life cycle, which ends with the end of humanity itself? I can, and the idea is linked to a mutating database, which commences with birth and records the date of death as the last entry. What happens between these two extremes is pure marketing magic. Yes 'maxi marketing', and the cycle goes on and on. Victor Hugo, amongst the many quotes to his credit, said "There is one thing stronger than all the armies in the world, and that is an idea whose time has come". The present scenario could not have been riper for the true application of the wisdom behind this statement. Customer orientation is touching new heights and the commercial fraternity is gearing up to face the new challenges. The driver of these new challenges is Ideas. Ideas that will decide the victor and the vanquished. One such idea that cannot be challenged is linked to the role of logistics in marketing. This idea needs to be mastered for corporate success. Logistics is like a fully mature crop awaiting the harvest but unfortunately, many corporate do not realize the potential of Supply Chain Management and if they do, the compensation is not commensurate with the services offered. Taking a cue from an advertisement doing the rounds in leading dailies, the Express Segment pricing expectation is looked upon by customers as "Maximum Reduced Price" and not "Maximum Retail Price" . In the Express Segment the service providers are very few and they need corporate support, with the correct mindset looking upon logistics as an investment and not an expense. Ironically, the reverse is true today. Most service seekers try to crunch the budgets, little realizing that it is tantamount to ripping open the tummy of the golden goose to take out all the golden eggs in one go. There is an immediate and imperative need for change. A paradigm shift, a sea change, that is able to identify and shortlist genuine service providers with value added services. A holistic service provider goes beyond mere operational matters. Can you imagine that a leading logistics company, motivated by fair compensation, went beyond supply chain matters to provide advice to a top brand in white goods on their organisational structure for the best synergies in logistics management! We finally reach the Logical point to answer the Million Dollar Question and that is linked to the point of realignment between the customer and Express Segment players to create the so called cliched "Win-Win" situation. The first thing that creates an aberration in my mind is the perceptible "Win-Win" driven by the customer view point which in fact is the classical Mouse Trap for a "Lose-Lose". The customer wants the best service at the lowest price, which may well be below the operating cost of a good service provider. Therefore, he is bound to initiate a "Win-Lose" re1ationship which results in a “Lose-Lose” arrangement. This is natural as the Customer initially wins with the called lower price of Services leading to the scenario where both lose out as the Service provider cannot sustain the service levels operating below its own cost. The outcome is even more dangerous as what was meant to be a "Win-Win" situation does not work. The only way to make it work is to aim for a "Win-Win-Win". In this combination the first is the Service provider, the second is the customer and the third is the customer's customer. Such combinations have the potential energy and power reflected in the statement of Archimedes when he said "Give me a lever long enough and I will move the world!"

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

When production floor stops yielding huge gains and when competition forces squeezed margins, CEOs have to desperately search new areas where they can save costs. Thankfully, logistics is emerging as one such area which can not only ensure timely delivery but can also directly affect the inventory holding. Speaking to Critical Link on how do go about creating value through outsourced logistics, Pawan Jain, the affable managing director of Safexpress Pvt. Ltd., India's top logistics company also reveals his personal secrets of achieving 100 percent growth rate consistently. One of his secrets is attending to the customer at all times. No wonder, his first customer is still with him. 

IN CONVERSATION WITH KAUSHIK DEY  

Q To begin with Mr. Jain, how would you characterise the slowdown?

Mr. Pawan Jain: To my mind, it has a cyclic effect. At any given moment in time, in any  economy of the world, the cycles are there. Take consumer electronics. Just because of the September 11 incident, this sector has gone further down. But it’s all largely sentimental. India is a large country. We have our own heavy consumption for all our consumer goods.

Q What do you think the net impact has been until now and, more importantly, what is it likely to be in the future?

Jain: I think the current trend will continue till 2003. To my mind, it is not going to change. It may stabilise after March 31, 2003. But for the coming one year, at least, it is likely to remain the same. I think things will improve maybe around  April 1,2003.

I can see the past. I can see the economics all over the world. I can see the trends in the past, with the economic slowdowns that had taken place earlier. This period, three years time, is the normal timeframe one thinks of in such cases and we will definitely be out it by then.

Q Has the slowdown really affected the domestic logistics sector?

Jain: I t is rather the contrary. In any slowdown area, people (companies and the government) are looking at better efficiencies because of the drop in their cost production. When they look at efficiency, they’re thinking of supply chain. Better supply chain. Better logistics operations. People are calling us and we are the frontrunners for consulting in these areas and I think they are benefiting from our kind of service industry.

Q According to research, there are about more than 100 cr worth of inventory lying unutilised because logistics support hasn’t been available for it. That means there’s huge potential for logistics.

Jain: In a country like India, logistics is a bitter subject nowadays. Whatever has happened has happened. But hardly anything has happened in the logistics and supply chain areas and we have large inventories all over India and that is the primary cause of the cost going up in India in recent times. We are spending 14 percent of our GDP in the industrial area on logistics. In the west, the total expenditure in this area is half –7.57 percent. Just imagine if we could remove this seven percent GDP wastage from the system. Our product offerings would definitely be very much better and SCM can achieve this kind of objective.

Q Is this lost on companies? What is stopping companies in India from doing this?

Jain: Mainly the mindset. To date, most CEOs never considered logistics and supply chain a prime area or an area that concerned them. This was just a small area, to be looked after by some social manager or dispatch manager sitting in an office somewhere. But things are changing now. Corporates are realising  that supply chain and logistics is also an area that concerns the CEOs. People are taking note of companies that have taken this area seriously and how this has benefited them.

Q Infrastructure problems are often touted be major ones. Are these really so?

Jain: Yes. And this is the case all over the world, when economics are changing. Logistics is definitely affected but then a country cannot change over night. We are changing. We are definitely, for instance, cutting down transit time from one point to another. And then again, total logistics is not only about infrastructure. Although that comprises most of our logistics support, logistics is also contemplative. It can think. The scientific management of those area –that is what logistics is all about. Better infrastructure can definitely support this area this idea and, as I said, things are changing.

Q How is the implementation of VAT likely to affect the logistics industry?

Jain: VAT is potentially a very good idea. All over the world, every country is essential working on the VAT system. But one thing needs to be remembered. The system of doing business in proprietary areas is very different.

Theses 25 states are like 25 different countries. CO-ordination between them is very very important. In the absence of the proper Linkages and streamlining of the application of VAT in the various states, it will be very difficult to run. But I think the time is right. There’s been a lot of change. I think the states are ready and this could be the first step towards liberalisation.

Q There is a lot of talk of integrating supply chain and logistics. Seldom have the objectives really been met. How necessary is integration really and how can it be made to deliver on its promises?

Jain: This is a partnership area. Customers and clients, whether they are factories or corporates, have to consider outsourcing activities from responsible service partners and the service partner has to think as a partnership type of medium. Whether you are in production or in marketing , right to the end we will be your partner. Partners can think ahead for you and he knows you abilities, liabilities and problems and can keep them in mind as he gets things delivered. Thus the outsourcing provider or the outside service provider becomes an integral part of the company and the corporate house. The mindset is shifting towards this trend now. Coming to SAFEXPRESS, even as logistics service providers seem to be complaining about dwindling business, it has been a boon time for us. We are making good progress. Growth has been 100 percent every year.

Q What would you say is the secret of you success?

Jain: Nothing is secret. Everything is in the open. We believe in transparency. There is no agenda behind this, it’s just that our mindset is different. My people are young. The average age of my company 29 years. They’re young MBAs from different business schools all over the region, recruited from different cross-sections of society. The put in their brains, they put in their own time and things are going right. They are resilient and can take things in their stride. I think its partly training and partly mindset.

If you can understand the requirements of the customer and can think in terms of what he needs, you are bound to succeed. Take a basic example. We are open 365 days a year. That generates basic customer delight.

Q How do you constantly keep your customers delighted?

Jain: Basically by predicting our customers’ requirements before they knew what they would be needing in the future . We anticipate their requirements long before they anticipate them themselves. Then, of course, there’s the basic good service. A sense of belonging and partnership I think, has been our greatest contribution and our greatest USP. Also retaining customers. Our first customer is still with us.

Q What advice do you for CEOs today?

Jain: Just one thing. CEOs of manufacturing companies everywhere spend time manufacturing, getting machinery from all over the world, monitoring the quality management of their products, even selecting dealers. They spend very little time on the supply chain and logistics division. If they could put more of their energy into this area, they could get better profits and maintain better bottomlines.

Q  How do you see the future of the industry?

Jain: The industry, as a whole, is definitely moving ahead, I think we’re going to see a lot of sophisticated systems’ application. India already has her own tracking system. Tonnage will be there, naturally. But I think everything will be the time definite door-to-door kind of operation. I believe that, when time-definite services become available, customers will have no reason to patronise non-time definite environments. This sector also has a lot of potential. It is already a Rs 1,00,000 crore industry in India alone. All we need to do to realise potential fully is convert the existing system into a more sophisticated one.

For us though, the important thing is not becoming number one but staying number one and keeping a huge gap between number one and number two. We wanted to become number one and we’ve reached number one. Now the important thing is to stay here and concentrate on widening the gap.

Long back happened to reed a book titled   Sense and Nonsense  in Psychology, which , incidentally ,became the inspirational thought process for this month’s column. The title of this column may sound ludicrous, if not ridiculous, but we shall discover the truth in the dichotomy of this statement.

It is said, a picture is wroth a thousand words. While there is merit in this statement, it would not be inappropriate to say that at times the power of words can create such an impression that it cannot be conveyed through pictures. I know that you disagree and I respect your disagreement on the premise that we have to agree to disagree. Yes, to understand the positives of disagreements we must appreciate the fact that disagreements merely convey an inverse polarity of thoughts and not arguments. For objectivity and learning, disagreements are more important than instant agreements. A true learning organisation should be driven by disagreements and not instant agreements. This leads us to examine how a typical discussion or meeting takes place.

In most organisations the beginning point for all meetings is identification of a ‘think-tank’. A tank that has a mine of experiences that is intended to lead the meeting towards objective conclusions and draw an action plan for the future. In most cases the group that comprises the so-called think-tank itself is incorrect.

Argument is meant to reveal the truth and not create it. - Edward De Bono  

Incorrect in the sense that the group has possibly been formed with obligatory compulsions driven by rank considerations or worse still, at times by favouritism. The beginning point itself has gone wrong as this create sub-groups, which are meant to face the debate process and this will positively get reflected in the deliberations through undercurrents. Anyway since we have formed a think-tank let us let us take a look as to how the meeting processes. Half way through the meeting we discover that there are broadly two kinds of personalities: those driving and those being driven. There are few people who are so verbose in projecting their thoughts that they are possibly suffering from verbal diarrhoea with mental constipation and there are some who are going through mental constipation on account of the verbal diarrhoea of others. There is more din in the sacred meeting room than the streets of Delhi and the stalemate has set in. Now someone needs to moderate the discussion process.

As we go further we observe that some right-minded person has been able to break the deadlock by asking the question. “What is the meat of the matter in this bone of contention!” Everyone is stunned. Suddenly the Chief realises that the meeting has taken a different direction altogether and there is on trace of even the basics of what is being debated. The group does not understand as to how agree to disagree. It is evident that partisan forces are working with strong undercurrents and the meeting is being steered with the goals of the sub-groups in mind and not those of the Company. The Chief makes an attempt to navigate the proceedings in the right direction by stating that the group has to create a win-win situation. Now starts the move towards that. The Chief makes it very clear that it cannot be lose-win or even win-lose. So what do we see? We witness that the key members of the sub-groups have started an invisible barter on the action points.

Many imperatives start getting dropped and many start coming up anew. The classical ‘Parliamentisation’ of the company’s think-tank has taken place. The Chief feels that the driving force is now being driven by latent voting. The votes are being cast. The members are exercising their thought franchise based upon rank and friends. The company’s objectives are nowhere in sight. The meeting has to be concluded as it was initiated with a lot of fanfare. The time has come for the Chief to sum up the action plan. The Chief cannot veto the joint action plan as he has already become an equal member of the plan. The meeting gets concluded with a unanimous approval of roadblocks and not opportunities.

This is the ‘Sense and Nonsense in Management’. This is the grim reality. There is only one silver lining in the cloudy skies and that is to understand as to how to agree to disagree. This is not impossible but is definitely challenging. Two people can agree to disagree and still remain friends if their debate is driven by rationale and logic. The only reason for the disagreement is a difference in well-founded opinions. The agreement stems from the fact that both respect each other’s opinion. This kind of disagreement is the beginning point for perhaps the best solution because the idea that will break this disagreement will be even more superlative than the earlier two opinions. Do you agree to disagree?  If yes, you have got it!

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

Panalpina, Safexpress & Miebach Join in a win-win-win-win Alliance

Today’s customer not only expects more from his service providers for less money, but also a network of competent forces that would render seamless services with a time-definite specification. On the other hand, the prerequisites to surviving in today’s complex and tough business environment  are building win-win partnerships that not only provide single-window but also create global logistics. India recently saw the emergence of a major alliance that might just set the trend for more to follow.

Panalpina World Transport India is a leading for warding and Logistics Company that specialises in international airfreight and sea freight consignments. Safexpress is a leading logistics company that has a strong network to time deliver at over 400 locations. And Miebach Consultancy Group is a specialist in supply chain management expertise.  The three signed a memorandum of understanding recently in what can safely be termed as a win-win situation for all the four- the fourth winner being the customer who gets to avail of a seamless flow of goods and services.

Alliances between two or more of a kind are common-between two airlines to complement route network between a service provider and a major account termed key account in freight parlance to ensure preferred service conditions. But this one enjoins two logistics companies with established strengths in different markets and a consultant with known expertise in what the other two are seeking to provide-effective Supply Chain Management. There is no equity swap involved no new companies formed and no sharing of accounts handled individually- only a new consortium to tap the client base that demands total linkages with in out side India. The market segments that the consortium is eyeing include pharmaceuticals, IT, automobiles, fashion, retail and manufacturing sector. Moreover, the introduction of value added tax (VAT) is likely to change the way freight moves and the three hope to reap the rewards of the alliance at time VAT comes into effect in India.

It is also an alliance of giants. The three are said to be leaders in their respective fields: Switzerland-based Panalpina World Transport (of which Panalpina India is a wholly-owned subsidiary) has 320 branches in 72 countries and also has highly developed IT systems. New Delhi-headquartered Safexpress offers integrated logistics management, express, multi-modal, door-to-door, time-definite delivery. Its warehousing space exceeds 1million square feet and a of 2,000 containerised vehicles deliver more than 35,000 packages everyday. German consultant Miebach Logistics Group specialises in end-to-end supply chain solutions.

Says Panalpina CEO, Markus A. Muecke,   “ The alliance enables us to link almost every part of India with world.” While Pawan Jain, CMD of Safexpress comments that the tie-up “definitely gives us a unique edge over possible competition”.  He also claims that partnerships depend on core competencies, as the world gets more and more interdependent. According to Matthias Kramm, MD, Miebach, the alliance is an opportunity to provide value-added services for the customers of Panalpina and Safexpress. Miebach is focusing on Asia strongly. Its Asia operations contributed over 15 per cent the overall revenues, which they intend to take to 25 per cent in the next two years. China is the next focus country.

The alliance is open-ended, with no time-time fixed to evaluate its performance. No figures are being mentioned yet progress will be reviewed after about one year. Till then, happy business hunting!

“There is one thing stronger than all the armies in the world, and that is an idea whose time has come” – Victor Hugo

The word Logistics conjures up images of the Defence services, Military and combat.  As an extended analogy the common person would attribute regimentation and systems & procedures as an intrinsic part of the entire cycle of Logistics.  This is precisely where most people go wrong since the operating models of Logistics would need a regimented application but the formulation and conceptualization of the most appropriate Logistics model would call for a lot of creativity and customization.  Yes, it is true that the word Logistics traces its roots way back to the Greek era and is derived from the word “Logisticos” meaning the science of computing and calculating.  This word was adopted by the Armed forces in a very strong manner with the connotation of “Moving men and material during combat”.  Today Logistics is widely applied in virtually every activity and can form the basis for a domestic kitchen inventory on one extreme and the entire gamut of activities to manufacture an aircraft within prescribed time frame along with stipulated specifications on the other.  Coming closer to the manufacturing and trading world, Logistics is today the most used and therefore the most abused word in our country.  The crux of the matter lies in appreciating and understanding that whilst the conceptualization of a supply chain would need intense divergent thinking and inversely speaking the operations of the model would need a focused and convergent application.  Lets take a quick look at the evolution of Logistics in India and the current status as well as the future trends towards a career offering fast track growth.

Very simply put, most manufacturing organizations have been using the tools of Logistics in an in-house kind of manner assuming ownership of the entire supply chain from the point of resourcing raw materials up to the end delivery of finished goods.  This scenario envisaged in-house management with “No Third Party involvement”.  All this has changed and today the manufacturers are looking at means and ways of out-sourcing on 3PL basis (Third Party Logistics) while they concentrate on their core of manufacturing. While there have been efforts towards good Logistics practice most of the work has gone into looking at the traditional approach and the paradigm fixation that “Time and Competition catch-up quickly with a better Mouse Trap”. 

Today’s buzz words and expressions are Business re-engineering, Process-driven, Flat structures, Centers of excellence, Core competencies, Time compression, JIT, Order delivery window;  Velocity of order etc. etc. Yes there is lot of talk and talk and talk and one needs to really examine as to which of the industry segments really “Walk the Talk”! The fact remains that though Logistics has undergone a renaissance since the early 90’s, there is still ample scope for harnessing the real potential of Supply Chain Management as part of the Marketing process. This is precisely why professionals are required to fill the gap through a good academic background in Logistics and Supply Chain Management backed with some basic relevant project work as part of the Academic Curriculum. Management Schools used to have a fairly low reference to this field but in the last few years the Course content has been restructured to accommodate chapters on Logistics Management.  Recently the Symbiosis Institute announced a full time program in Logistics Management and the National University of Singapore initiated a Post Graduate Course for this growing field two years ago. If the Microprocessor was the main driver of change in the last Century, Logistics will be the principal driver of change in this Millennium. Lets change our mindsets for infinite opportunities!

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)                                                                                                     

From managing his family owned trucking business to running an express courier company to being the founder and managing director of Safexpress, Pawan Jain has come a long way. Founded in April 1997,Safexpress has emerged as one of the country's largest express distribution companies. In conversation with Krishna Kant, he discuses the emerging trends in the industry.

Tell us about the latest trends in the express parcel service?

Time definite door-to-door delivery (TDDD) still has a very small market in India. Of the total road freight market of around Rs 100,000 crore per annum, TDDD accounts for only Rs 600 crore at the moment. However, while the trucking industry is either stagnant or growing very slowly, the TDDD segment is growing at more than 60 percent per annum. A majority of large corporates in FMCG, apparels, footwear, auto-components, consumer electronics, pharmaceuticals, etc. have moved from ordinary road freight to TDDD. In the long run, except for the bulk time-insensitive items, the rest would move to TDDD. Another discernible trend is that gradually TDDD companies like ours are evolving into supply chain and logistics management service providers.

What has been the impact of the slowdown on this industry?

Slowdown has been beneficial for us. We have grown much faster this year than last year. Earlier, the supply chain was just another component of a business process. But as the slowdown squeezed margins, supply chain management has emerged as a strategic cost cutting tool for manufacturing companies. Starting with multinationals and large domestic companies, a greater number of companies are now using supply chain management to reduce their distribution and inventory cost.

What would be the impact of nation-wide VAT on the logistics industry?

VAT would bring in advantages for logistics companies who have targeted and focused on value addition to customers. Once VAT comes in nationally, corporates would not have to invest in C&F for merely tax saving of CST, resulting in express delivery companies replacing them. So our business will increase in size. A centrally located national hub would become feasible, which would allow economy of scale in operations. Our offering would expand to include just in time supplies to customers; order management; payment collection against delivery, etc. And all this without locking inventory in warehouses across the country.

You help many companies cut their operational cost. How do you optimise your cost level?

Our distribution network, which works on the 'hub-and-spoke' system, with hubs spread across the major national highways, covers the entire length and breadth of the country making it easier to deliver any consignment anywhere in the country. Proper planning of routes combined with 80 per cent space utilisation of vehicles provides the backbone of logistics in terms of optimising costs. Better forecasting also helps us achieve optimum cost level. This is achieved not only from good statistical methods but also by keeping a close watch on industrial trends. We have a dedicated team of professional people looking after various industrial trends in the country, thereby providing valuable inputs for optimal forecasting.

How do you plan to compete against MNCs like TNT who are entering the domestic logistics market?

One of the biggest entry barriers in logistics in a country as large as India is infrastructure. Till date, we have invested around Rs 180 crore in creating one the largest logistics infrastructures in the country with over 2000 vehicles, 230 routes, over 400 offices and a very experienced and focused front end. We also have the first mover advantage with some of the leading companies like Reebok, Colour Plus, NIIT, Hilti, HP, Ricoh, Compaq, etc., being our clients. TNT, Fedex, UPS on the other hand have restricted themselves to outbound international business from India and have their core there.

"Our species needs, and deserves, a citizenry with minds wide awake and a basic understanding of how the world works." - Carl Sagan

About a year ago I was invited to give a lecture on Logistics to Post Graduate Management students who were about to enter the Corporate jungle. When I reached the campus the atmosphere in the Auditorium appeared charged with a huge expectation of receiving all the possible information on the latest jargon in the field of Logistics. Since I had reached a bit early students started flocking around me with questions bordering on Engineer-to–order, Activity Based Costing (ABC), Optimized Production Technology (OPT), Demand Forecasting, Nominal Group Technique, Exponential Smoothing, Cycle Counting, Item Rotation, JIT Kanban, Order Velocity, ERP, EDI, Return on Equity (ROE) etc. etc. Having experienced the ground realities I was sure that answers to all these concepts would embed information by rote and not as tangible concepts to form the basis for conceptualized Logistics applications in the future. Anticipating this I had carried just one slide for the two-hour show. Lets replay what transpired thereafter.

I made it very clear that we would be looking at everyday concepts around us to see thoughts and actions, which to my mind represent Logistics excellence. We started with the Mumbai Dabbawalla System which caters to over 24 lac hungry tummies everyday The crowd agreed that it was really a marvel that the Dabba System is driven by a Commune of people with encryptions in indelible colors marked on the Container which are the codes for the routing system right up to the end consumer. All this happens without any IT interface. Men drive the System with a mission and commonsense thinking. So impeccable is the system that each recipient gets the same box everyday and like true logistics it’s time definite both ways. If you don’t have your lunch on time then better be prepared to remain hungry, as the dabba will vanish with the contents intact as per return pick up time. Someone from the group said “Reverse Logistics”. I was happy that the group was getting the real psyche of Logistics at its best.

We moved a bit further coming to the example of a Kitchen Inventory. When I asked the question as to where the rice was kept in the Kitchen considering South Indians the answer was pretty close to the Cooking area and the flour in the upper closet. When I repeated the question to the Northern Punjabi friends the answer reversed. So we had understood the concept of fast and slow moving inventory. The next example was of multiplexes for movies. Everyone concurred that it was a highly user friendly system in Delhi to block the tickets over a phone call but in some multiplexes reaching for the show in time is like reporting for a flight because of congested parking space. So we had grasped the perils of leaving a vital part of the Delivery Chain unattended. By now the students were charged and wanted more.

So here we go with the next on the list being the layout of a chemist shop in a rural and urban area. Someone replied saying that in an urban area the stocks are kept     Distributor-wise. Well would it differ for a typical rural area? The answer came from the group itself that it would as the OTC sale may involve a substitute of the medicine prescribed or requested getting sold as a semi literate rural person would be influenced by the Chemist. Say a Disprin instead of a Saridon, but the literate urbanite would need the Doctor’s concurrence. From this we learnt that stocks are maintained suiting different market requirements for a Chemist shop in different Social conditions!  Some of the students were from Mumbai and obviously Mumbai diehards. This group was very keen to look at one more example, which conveys the pulse of the City. To bridge this so called gap I could think of nothing more appropriate than the Thane Bridge and the toll tax system. It is a wonderful example of outsourcing as the municipal corporation has outsourced the activity of recovery to Contractual body. By doing this the Corporation is assured of fixed monthly proceeds without the hassles of managing the activity with direct intervention. The Logistical masterstroke of the model lies in the fact that the Contractor has to pay the assured amount to the corporation and whatever is raked in over and above the fixed amount is the Profit. This leads to a system, which ensures that no vehicle crosses the barrier without the toll being colleted and also the most important fact   that the traffic flow should not be disrupted. The System is so efficient that the attendants keep the balance to be given back in exchange for a 10 or 20 rupee note ready in the toll receipt itself. It’s a wonderful sight to see cars settling the toll while in motion just in second gear and then spinning off on the highway. When I asked for a response from the group the answer was “Exponential Smoothing”.

Since the group had established a good wavelength I thought it would be a good idea to ask them for some examples based upon their observations. I was not let down as the participation was tremendous. Someone mentioned the logistical aspect of packing for travel and how it differed in case of a Tour or Leisure. Yet another one added the example of entire System and planning as well as the Infrastructure involved for devotees at the revered Tirupati Temple. Not to be left behind one extended the example of Delhi transport system Busses having one door for entry and exit, which was later, changed to a dedicated door system for the convenience of passengers. There were a few minutes left to close. I asked for a volunteer to sum up the days proceedings on one word. The answer was LPR. I said, what’s that? Prompt came the reply “Logistics Process Reengineering”

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

“Peter Drucker’s comment on distribution as the ‘last Dark Continent’ for business to conquer has resulted in a new class of function viz. Logistics Management function that has become a growing concern for many industries to manage. Logistics views transportation, production planning with efficient demand management, distribution network design, location of plants and warehouses, inventory management etc. as integral parts of its function to achieve the overall objective of customer satisfaction. In this, transportation logistics plays an important role to efficiently manage the overall supply chain management It is virtually inconceivable in today's economy for a firm to function without the aid of transportation. Transportation is an essential and a major sub-function of logistics that creates time and place utility in goods.”

Pawan Jain (Chairman-Safexpress Pvt. Ltd.)

The word “Logistics” conjures up images of the Defence services, Military and combat.  As an extended analogy the common person would attribute regimentation and systems & procedures as an intrinsic part of the entire cycle of Logistics.  This is precisely where most people go wrong since the operating models of Logistics would need a regimented application but the formulation and conceptualization of the most appropriate Logistics model would call for a lot of creativity and customization.  Yes, it is true that the word Logistics traces its roots way back to the Greek era and is derived from the word “Logisticos” meaning the science of computing and calculating.  This word was adopted by the Armed forces in a very strong manner with the connotation of “Moving men and material during combat”.  Today Logistics is widely applied in virtually every activity and can form the basis for a domestic kitchen inventory on one extreme and the entire gamut of activities to manufacture an aircraft within prescribed time frame along with stipulated specifications on the other.  Coming closer to the manufacturing and trading world, Logistics is today the most used and therefore the most abused word in our country.  The crux of the matter lies in appreciating and understanding that whilst the conceptualization of a supply chain would need intense divergent thinking and inversely speaking the operations of the model would need a focused and convergent application.  Lets take a quick look at the evolution of Logistics in India and the current status which would needs to be taken in to perspective for the Global Trade community.

Very simply put, most manufacturing organizations have been using the tools of Logistics in an in-house kind of manner assuming ownership of the entire supply chain from the point of resourcing raw materials up to the end delivery of finished goods.  This scenario envisaged in-house management with “No Third Party involvement”.  All this has changed and today the manufacturers are looking at means and ways of out-sourcing on 3PL basis (Third Party Logistics) while they concentrate on their core of manufacturing. While there have been efforts towards good Logistics practice most of the work has gone into looking at the traditional approach and the paradigm fixation that “Time and Competition catch-up quickly with a better Mouse Trap”. Today’s buzz words and expressions are Business re-engineering, Process-driven, Flat structures, Centers of excellence, Core competencies, Time compression, JIT, Order delivery window, Velocity of order etc. etc. Yes there is lot of talk and talk and talk and one needs to really examine as to which of the industry segments really “Walk the Talk” given the Indian reality!

India, with a population of more than one billion people, and a consumer base of 340 million, is one of the largest markets for industrial and consumer goods today. The onslaught of economic liberalization of the 90’s has seen India’s economy opening up to global business players. To keep abreast with the latest international trade and business news, in an ever changing, increasingly competitive market, exporters, importers, traders and manufacturers have to be well informed. The only and the best way to the correct information is through the realization that information in isolation is “no information” or worse still “misinformation” and  “Correlated Information” has the power to navigate people and organizations in the right direction.

Globalization, the growth of outsourcing of manufacturing and rapid developments in IT is changing the face of the Transport and Logistics Industry. Integrated supply chain management presents a unique opportunity for the Global Logistics provider. Leading players now realize that only if they create successful networks of              co-operating companies and treat the world, as a single market place will they become one of the few supply chain management companies of the future.

As manufacturers reduce the number of carriers selected Logistics companies are increasingly becoming solutions providers, integrating and managing all supply chain activities. Global manufacturers are now turning to Global Logistics providers who can serve as their backbone

There is a renewed focus on manufacturing planning and control systems, lead-time reduction, the rationalization of financial resources, win-win strategies, Just-In-Time, supply chain management, inventory management and information technology. There is extensive use of mathematical optimization methods, among other things, for locating plants and planning of transportation routes. Companies strive to attain an understanding of quality in logistics systems and speak of Kaizen and TQM. There is a different perspective when we speak of Regional and National logistics and analyze the effects of infrastructure investments to determine the relevance of logistics systems for Regional and National economic development. The terms green logistics and reverse logistics have recently come into use as we fumble our way towards an increased awareness of the extensive environmental problems, which the future holds for us. With the advent of e-commerce, the business logistics may have to be redefined to integrate the role of Information Technology in logistics. Logistics to be an important area of study where increased knowledge can contribute not only to the creation of competitive companies in an international market but also contribute to a society which tackles the challenges of the future in an effective, resource conscious and environmental-friendly manner.

The search for competitive advantage has lead to greater quality consciousness and the need for cost effectiveness. The global nature of businesses now in the era of liberalization has forced companies to recognize the critical role of logistics in today’s marketplace. As companies are advancing professionally in production, marketing and finance, a greater attention is required in achieving customer satisfaction through effective logistics. Advancement in the Information Technology would enhance this process further and logistics is already an integral part of e-commerce and e-business. It is quite possible that some of the sub function of logistics management would need a redefinition in the wake of IT-emergence. Most of the Order Processing and Order Tracking are being done electronically with the Internet/Intranet and EDI/EFT technologies.

Some of the major issues in India are linked to the  potential cost reduction and service level improvement through reduced regulation, logistics should evolve as a function adapting the growing communications and computing technology, factors affecting customer satisfaction directly by logistics, significance of logistics related costs as a proportion of value added and important decision areas to reduce and/or improve customer service, co-ordination of logistics function in industries along with production and marketing for inbound and outbound logistics and importance of logistics in the overall supply chain management, policies and regulations that inhibit smooth product flow and privatization of infrastructure developments and implementation, privatization problems and an unorganized freight Industry with related problems.

Knowledge of the transportation system is fundamental to the efficient and economical operation of the logistics function in a firm. Transportation being a sub function along with storage, material handling, inventory control and others, transportation cost represents the largest component of total distribution cost. Transportation decisions affect the other sub-functions and there is a close linkage between them. Hence, transport decisions cannot be made in a vacuum.

The importance of the transportation should be seen by looking at the impact of transportation on a country's economy. Studies reveal that in India the total logistics costs constitute nearly 13 percent of our GDP out of which nearly 40 percent is due to transportation alone. In the US, the estimates show that the cost is around 5 percent of the GDP. The major infrastructure required for moving goods from one place to another in India involve the active roles of Roads, Road Freight Industry, Railways and Ports all of which are either managed or regulated by the government. The situation in India is that due to unprofessional management of this Macro logistics, the industries are not able to derive the best out of their Logistics.

Most of the mobility in India is done by road. While the motor vehicle population has grown from 0.3 million in 1951 to 34 million in 2000, marking a 100 fold increase, the road network has expanded from 0.4 million km. to 2.9 million km., only a 7 fold increase in terms of length during the same period. The annual growth of road traffic is expected to be 9 to 10%. Demand in the automobile sector in India would increase the future growth rate of road traffic. Freight transport by road has risen from 6 billion-tone km. (BTK) in 1951 to 600 BTK in 2000 and passenger traffic has risen from 23 billion-passenger km. (BPK) to 1900 BPK during the same period. Freight and passenger traffic are expected to increase to 800 BTK and 3,000 BPK respectively by the year 2003. Commercial vehicles in India are able to run only 250 km. on average per day as compared to 600 km. in developed countries.

National Highways (NHs) constitute less than 2% of the total road network of 2.95 million kilometres, but carry nearly 40% of the total road traffic.  Only 2 percent of their length is four-lane, 34% two-lane, and 64% single lane. Much of the problems are due to the fact that India has been spending less and less on road infrastructure. The First five-year Plan spent 1.4 percent of its total outlay to roads. The share gradually declined and registered 0.6 percent in the Eight five-year Plan.  Even after 54 years of independence, nearly 50 percent of Indian villages are yet to be connected by all-weather roads.

It is estimated that the economic cost of bad roads ranges from Rs.20,000 crore to Rs.30,000 crore annually. Despite the poor conditions and insufficient network of roads, India is better placed among countries like China, Brazil, Hungary, Mexico, Indonesia etc. in terms of the overall roads index computed by Coopers & Lybrand taking into account the per capita road availability, road density, growth in paved roads, roads' share in total transport, quality of roads and vehicles per km of road etc. (India-0.58, Brazil-0,47, Indonesia-0.47, Hungary-0.41, China-0.29, Mexico-0.27).

Yes, all these indices will remain a reality and keep changing; but the ground reality for real Customer satisfaction and fillip to the Economy would still remain the need for Service Providers to integrate; Maintain transparent relations with the customers and work in pro-active Joint Forums for Infrastructure Integration.  At the end of the day, the truth was, still is, and will remain that customer delight will “drive” the Industry. The Industry when it comes to Logistics and Supply Chain Management for Global trade will be “driven” by the classical Catch – 22 of the World as a “Global village” but regulations acting as barriers to even reach “Cities” on time.

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

Many portals have already run into problems pertaining to the Supply Chain. Yes, it’s like running on a conveyor belt in the opposite direction with equal speed. In the end one remains where one was!

The world has witnessed the days of Inventions, mass manufacturing, crumbling of monopolies, the advent of Information Technology, the shrinking of the globe and the era of interdependence with e-business making unprecedented waves. All these landmark periods were guided by some kind of prime movers and it is also true that the prime movers kept changing with the changing environment.  Logistics and supply chain management has always had relevance for any enterprise but since the 1990’s it has undergone a renaissance promising to become the most critical point of single leverage in time to come. Several parallel forces are re-shaping the world of global business with a shift of the supply chain from a position where it was critical to cost and quality to one where it is becoming one of the most powerful ways for companies to offer greater and differentiated value to customers.  With the onslaught of dot coms, the Internet opportunities promise to be the 21^st Century equivalent of the Industrial Revolution. Given this environment Logistics and Supply chain management will undergo further re-engineering, posing tough challenges for Express Service providers and creating opportunities where strategic supply chains will airlift troubled dot coms operating in diverse markets into the realm of competitiveness.

A key factor for the growth is the tremendous long-term market potential of the Indian economy and E-Commerce would ride the crest of this wave.  There is a large emerging middle class with growing disposable income. India though developed to a large extent offers virgin opportunity for products and services, which may have reached near saturation levels in conventional markets but still have tremendous potential for growth through the E-Commerce route.

The E-Commerce revolution has the potential to significantly change how companies operate. E-Commerce is providing a direct link to consumers, allowing companies to mine a wealth of information about their customers and then target their marketing efforts based on the information they gather.  In addition, E-Commerce is creating opportunities for  “disintermediation” in all sectors of industry.  There is already enough hype that, E-Commerce will eliminate barriers to entry and allow new entrants and smaller companies to reach customers world-wide without building a global sales and distribution system. Precisely this is the classical mouse-trap which becomes the “comfort Zone paradigm” for many dot coms. Disintermediation tends to churn up Utopian pictures of simpler supply chains. The point to be taken into cognisance is that the entire Express Industry from a relative point of view is more geared up to provide service to the conventional channels compared to individual deliveries and given this the supply chain systems need to be redefined. Even Document Courier companies, though accustomed to hand