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 handling household deliveries may need to arm their rank and file with inputs to handle commercial transactions. It also needs to be borne in mind that the Courier system may not be able to handle for example White goods, given the mother bag capacity constraints just the same way as Cargo Companies would not be able to handle Documents cost-effectively as the operations run with the Infrastructure of Vehicles and not boys on bikes. It is obvious from this that there is a need for change and the need will not come up tomorrow, it came up yesterday! 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 silver lining in the dark clouds is that there is evidence of change.  In addition, the added flexibility offered by     e Commerce linkages will promote more make-to-order, configure-to-order and postponement strategies.  Finally, as disintermediation becomes more common, shippers will face new transportation requirements that generally will mean shipping smaller, more frequent orders.  Logistics managers should become familiar with the Internet and begin to explore and think creatively about E-Commerce applications.

When it comes to a complex country like India dot com ventures need to be proactive on various issues involving sales tax, octroi and other levies as applicable, title of goods, insurance, the need for revised pack profile, delivery to remote locations beyond the network of even wide spread service providers and the freight component.  In a normal brick and mortar transaction the channel margins are certainly there to stay, but the predefined supply chain has already addressed most of the above issues to be able to offer a retail price as a fixed landed cost to a walk-in customer.  In the case of E-Commerce transactions a dot com company would like to desist from offering a basic price along with various add-ons which are essentially subset components comprising of the subjects mentioned above.  What adds to the complexity is the fact that we have 35 states and union territories with a diverse tax regime for different states along with entry tax in a few states as well as octroi and basic levies.  The very fact that these differ from state to state and the fact that some levies such as entry tax and octroi are commodity specific, makes the task even more challenging. Many states require pre-defined forms and permits for goods to enter the state borders and as per the Law only valid CST\LST registration Number holding buyers are allowed these in advance in most cases. Given this scenario the question is that how would the end consumer, without any trade activity organise these forms and documents? Would it not be more convenient to go for a hassle-free purchase to the good old brick and mortar? Added to this is a reality that many dot coms in India driven by the web enabled wide reach to a portal are tempted to offer deliveries in multiple cities and townships.  Given these models it becomes a mind-boggling task to work with simulation modules, which plough in the tax elements, levies, insurance and the freight component to arrive at landed cost for the end consumer.  Even after such a pre-mapping the landed cost would vary depending upon the location of the alliance partner, as the resourcement point and the address of the end consumer.  Therefore the role of the express service provider gets enlarged from just a mere pickup and delivery mechanism to almost as that of the content provider guiding various portals on drop boxes etc. for variable landed cost and delivery schedules. 

The other issue most critical for the success for dot com portals is linked to the quality of packaging. While the traditional Channels have required the carriage of multiple pieces as part-bulk or bulk, it goes without saying that the packaging has been designed accordingly. To take an example, if a consumer buys an electric iron from the traditional brick and mortar he or she just takes the same packed the way it was displayed in thin cardboard packing with the Company brand on the box. Also the carry bag is handled in kid glove manner as the proud owner of a new commodity. The same piece arrived at the retail outlet in multiples of 20 pieces per Carton and that too, a five ply corrugated Carton, which could withstand transit covering a long distance across the country. Now comes the Million Dollar question. Will the Alliance partner supply the same in a five ply corrugated box from the manufacturing unit to the consumer as a single piece? The answer is no and the reason is that the well branded tall leader from the field of consumer electronics will not be willing to give such customised packaging till volumes pick up and the dot coms start attracting critical mass. The other reason is that of margins. Perhaps the cost of such packaging will erode the wafer thin margins in such products despite disintermediation.

The next issue is linked to the pick up and delivery cycles that are followed in the Express Industry. The Commercial world has formed a convention over the past several years whereby cargo is picked up or dispatched late afternoon or towards evenings and the same is delivered the next day. In other words while operations focus upon pick ups which peak up during late evenings, the deliveries start early mornings moving towards a lean pattern towards late evenings. The cycle required for dot coms is in the reverse order. The pickup required from Alliance Partners would be ideally late during the day and deliveries late evenings when customers are at home to receive the goods they have ordered. This brings us to a point where ready-made networks would look like the plain Vanillas whereas each and every portal may need different flavours as customised solutions. It is obvious from the above that service providers who have an experience and proven track record in handling outsourced Third Party Logistics models would tend to fare better in the customisation programmes, since the 3PL inherently involves customer driven solutions. It is also true that many discerning portals are going for a hybrid of the classical brick and mortar on the one end and the ideal disintermediation at the other end. Yes, dot com segment players are going for outsourced warehouses with stocks to ensure fast deliveries instead of depending upon the supplies from Alliance partners covering long distances to reach the end consumer. Another significant application of the outsourced Warehouse and distribution is linked to the clubbing of different commodity to service a single order. Let’s look at a typical case to exemplify this point. A diverse multi product portal may be offering a wide range of products with Alliance partners from the manufacturing point of origin. Now if a consumer clicks on the portal and orders four different products the goods would come from different resourcement points under different Waybills. This means that the consumer would be receiving the order in four parts and possible on four different days depending upon the location of the resourcement points.  Now, this amounts to bad customer service to say the least. So how does one solve the problem ? The first step is aimed at tying up with Alliance partners who have a National presence. In other words the goods would be resourced from the Depots of the suppliers on local basis. This may reduce the margins but would trade off on the freight component. Next we need a Warehouse where the goods are stocked not as a stock and sale model but more from the angle of having a place to aggregate different items and ensure good packing as a single order delivery. The consumer is satisfied as the items have been delivered as a single order at the same time. The portal can plan the supplies in such a way that there is virtually no stock and the resourcement is on a back to back basis with both the inbound and the outbound movement on Intra-city basis. Such models have the potential of building up huge volumes as the delivery aspect has been made the prime mover for he model. The only word of caution is that such models may not be workable in case a portal is promising deliveries in multiple cities and townships with an extremely wide product portfolio. So who said that the brick and mortar is dead. It has changed to click and mortar!

The dot coms need service at two ends to complete a transaction at the earliest to ensure good customer care. One end is the pickup from the Vendor or Alliance partner. This is a familiar sight for most Express Service providers as it is the beginning point of the Channel. The other end is a not too familiar end, that of the Consumer. A consumer would expect the delivery to be made as per availability time stipulated and the dot coms would ideally speaking like the delivery boy to have the politeness of a Customer service lady in a Multinational Bank combined with the speed and efficiency of a fast food home delivery boy along with the operational skills of a front end operations person from the Express Industry. Please bear in mind that the only time a consumer sees a human face in an E-Commerce transaction is at the time of delivery and the fat remains that Logistics and Supply Chain Service providers manager this human face. This would form the guiding spirit for the Express and E-Commerce Industry and the future would evolve around the same. Welcome to the world of  e-com@logistics !

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.) 

E-Business has become the Buzz-word and the papers are splashed with news on new Ventures, Market Capitalisation, Listings on NASDAQ etc. etc. Content, Search Engines, Web Strategy dominate news headlines. Tall advertisements and massive advertising budgets were swung into action to get their fair share of the eye-ball game. The irony is that the game could well be over though it seems to have just begun! Yes, dot com portals need to tread with caution and give equal importance to the Supply Chain aspects amongst the list of considerations. Reverse Logistics will decide the winners. Those who begin with delivery definitions will be able to backtrack to the best supply Chain model.

Pawan Jain (Chairman-Safexpress Pvt. Ltd.)

The Express Industry worldwide has a host of players from various segments and these players within the Industry are interdependent on the Core Competence of each other to offer solutions to valued customers. In the last five years India has witnessed the entry of all the segments. Given this, it may be said that India is a fair representation of Global benchmarks. However the correct perspective would be that India has a representation of virtually all the segments that comprise of the Express world but the country has a long way ahead to attain Global standards in many fields. The role of this Industry towards the Commercial Enterprise and Society has gained a larger significance with the irreversible process of Globalization. With trade borders getting reduced and the regime of deregulation gaining momentum there is a huge demand for improved and exemplary Supply Chain Management Systems. This involves the active participation of all the Industry segments comprising of Integrators, Clearing and forwarding agents, Supply Chain Management Software companies, Warehouse Management services, Container Leasing Organizations, Shipping Liners, Material Handling equipment manufacturers and many other specialized areas of activity.

When one scans the Indian horizon it becomes evident that the challenges faced by service providers are tremendous. To begin with the size of the country poses a huge challenge to make a Nation wide network, which is significant and large enough to service the primary and secondary markets. This gets further compounded when we examine the Sales Tax norms where movement from one state to another is a complex task. In sharp contrast one can move goods without any major hassle from one country to another throughout Europe. The most important element and therefore intricate is the Indian Diversity, which has complex loops based upon Psychographics, Demographics, Linguistics, Religion, Community thereby leading to a wide range of varied taste and preference. It is no wonder that discerning marketers look upon India as at least five distinct Geo- marketing segments if not more. From this background what emerges is that the best global benchmarks also require an equally developed arena for the best practice. Coupled with this is the fact that the best way to leverage the global know-how is through the right Domestic practitioner. This leads to the logical conclusion that there is enough scope for cross-segment interface to enable a complete solution for the customer.

It is also true that the Domestic component of the service forms the most critical component to make India deliverable. Therefore the Global Supply Chain though seamless requires a dedicated management within the country through experienced hands providing synergies through Service providers who understand the global benchmarks and at the same time have a network and experience to act locally with Logistics and Supply Chain Management capabilities as a single window solution. While this creates high level of synergies one also needs to examine how Express Segment overlaps can lead to disservice. A case in point that of typical Document Courier Companies and the Express Cargo Segment. Lets take a closer look at this example.

As mentioned in the overview typical Document Courier Companies and Express Cargo Companies operate with different paradigms and the temptation to enter the others arena is always very strong given the fact that both segment players offer a door-to-door service. One has to tread with extreme caution in the choice of the Service partner since both segments come from a basic area of Core Competence. This leads to the logical conclusion that adding another service element at the retail end does not prepare the requisite Infrastructure at the operational backbone level to provide befitting services. Lets examine and compare the macro points, which are the prime differentiators between the deliverables from both the segments. For the purpose of this examination, I have used the expression “Document Courier Company” (DCC) to denote an organization whose prime business is in the field of servicing Express Documents and small parcels whereas “Express Cargo Company” (ECC) connotes an organization whose prime business lies in handling Commercial Cargo with the requisite Infrastructure as well as Third Party Logistics Management capabilities.

The operational Rank and file of a DCC would not have the Commercial acumen to handle Cargo loads, whereas an ECC has manpower whose daily task lies in handling Commercial Consignments as per the Statutory requirements of the Country. The DCC is poorer on this subject not by choice but by default as the prime business is Documents, which are non-commercial consignments. The operational infrastructure at the pick up and delivery end comprises the 3B principle, meaning a Boy with a Bag on a Bike. Therefore, Cargo handling becomes a special activity when called for as the prime business runs on the 3B principle. An ECC has containerized vehicles at the pick up and delivery end along with a Driver, Escort and helpers for handling Cargo loads. Given the mindset of handling Cargo loads, the only Documents that are handled by an ECC are the Statutory Forms and the Waybill to ensure safe transit as per the Laws of the land. Given this in a reciprocal manner an ECC is ill equipped to handle Courier Documents not by choice but by default.

The operational Line-haul system of a typical DCC works on the principle of consolidations in a mother bag as the items are small and the transit takes place in mother bags by all modes including rail. In the case of Air Consignments as well the Mother Bags are cleared on the conveyor belt without coming under the scrutiny of the authorities for Sales Tax, Octroi etc, thereby leading to the possibility of penalties in case commercial consignments are found in these bags. A typical ECC has ISO 9002 Containerized vehicles for the Line-haul and the consolidations are comfortably accommodated in these large vehicles for safe transit. The Drivers and Escort of such vehicles are fully trained to handle check-post matters since it is a routine for them.

A DCC has lower levels of Logistics capabilities since the Core business is linked to Non-Commercial Consignments, whereas an ECC has tremendous expertise in the Field of Third Party Logistics since the Core Business involves handling of Commercial Consignments. Since Logistics involves Operating Systems in conjunction with Statutory requirements an ECC is better equipped to handle Third Party Logistics requirements.

In terms of Infrastructure a DCC has smaller intermediate Hubs as the weight per consignment is very low whereas an ECC has larger hubs with Dock levelers and Load platforms as the prime activity is Cargo Consignments.

A DCC and an ECC are two distinct segments, which cannot service both segment requirements through the same Infrastructure as the Transaction profiles are diametrically opposite. For the diverse Segments of the Express Industry “the only way to create customer delight is to perform your act in which you have the right”.

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)  

Peter Drucker’s comment on distribution as the ‘last Dark Continent’ for business to conquer resulted in a new class of function, which is Logistics Management. The  function that has become a growing concern for many industries and is today regarded as the single most critical point which can leverage business towards success. 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.

Two truths have become apparent in today's world of warehousing and distribution. One is that companies are demanding greater performance and a more cost-effective operation, the other truth is that warehousing and distribution groups are continually fighting for limited resources. Understanding the condition of operating support system positions the firms to effectively evaluate the options for the future. The first condition is dealing with the realities of service and cost. Successful overall performance requires balancing the strategic sales plan and the sales support operation. The third party logistics  (3PL) option becomes viable because of the real risk of trying to do too much with too little.

The second condition deals with the law of diminishing returns. There are many points along the time line of an operation when different combinations of throughput demands will result in system response imbalances. At the same time, there may be a resistance to upgrading the facility and the operation. The 3PL option becomes viable because of the risk created in working with overused resources.

The third condition deals with changes in customer ordering characteristics and processing expectations. As times and conditions change, customer response programs must be adaptable. Changes in the support operation requirements test the system's reliability and flexibility. Response programs can create unpredictable behavior in any support system. Any deviation from the initial planned support system can grow to affect the system's future state, and this may upset the balance of cost and service. For all of these reasons, 3PL is not only a viable option, but it is inevitable.

The 3PL option would result in the reduction of overall costs, but it must be a joint effort by the Service provider and the customer. This option should be exercised immediately in case there is need for expertise that is not available in house. Customers should be open to the fact a third party logistics provider can handle the organization’s products better than that the organization can. Also it is clearly evident that Classical in house corporate logistics departments are only capable of giving "average" service to all classes of internal trade. Third party logistics providers can excel in specific service to a specific internal department. Third party logistics providers can bring into the relationship "cross functional" industry experiences that the client companies do not have

An organization, before proceeding to outsource its logistics activities should analyze its requirements, its operating costs, it’s core competence areas and finally come up with the list, which are to be outsourced.

The organization needs to take the time to list as many system and operational enhancements that it would like to see. Also, the management should spend some time with its staff on this matter and allow them to assist in developing a "wish list." The employees will prove to be well qualified for this assignment. To assist further, the appropriate method of analysis should be considered whereby attention could be focused initially on "existing problem areas". These problem areas are normally in the following areas: Informational Timing Delays-batch processing; Outdated Systems; Technology; Manual processes; Inventory Accuracy Levels; Inventory Carrying Costs; Frequent Inventory Damages and Shrinkage; Just In Time-Next Day Processing Requirements; Statistical Reports, Same Delivery Day Consumer Surveys; New Customer Service Requirements.

The organization should become knowledgeable on the day-to-day expenses of its in house operations. Many organizations lose sight of the true costs associated with running a Distribution and Delivery Operation. It is important that these numbers are known. Later on in the quest for the right solution, it will be needed for like to like comparisons. The organization should be aware of Labor cost, Overtime, Training Costs, Utility            Costs, Facility Maintenance Costs, Lease Costs, Systems Costs, Damages, Delivery Expenses, Transportation costs, All Insurance Costs, All Supply Costs, Distribution and Delivery Costs as a percentage of "Cost of Goods Sold?"

So how does one go about outsourcing logistics? The first step in the right direction is getting a grip on the Request for Proposal (RFP). The customer's RFP process should focus on finding the best fitting logistics provider. This implies that to get a maximum return, the customer will need to leverage off the provider's knowledge and experience. Too often the customer focuses on specifying the details of the processes that the provider will follow rather than focusing on defining the outputs of the effort and allowing the provider to develop their brand of solutions.

Both provider and customer need to map out the processes that support functional needs. A complete flowchart of the operation will help all parties level set and ensure that there is a hand-off plan between functions. One of the common flowchart mistakes to avoid is in neglecting to focus between the boxes on a flowchart. It is a natural tendency to work well on each of the functions within a box. The functions in each box on the flowchart are carefully crafted, but there is a huge opportunity if the focus is on the hand-offs between the functions.

While selecting a "third party logistics partner", the company may find itself being a little apprehensive about the path it should pursue for the right solution. In today's market place, there are several options available. Typically, these options fall into three categories: In-house Systems Development, Outside Systems Integrator, 3PL cum distribution Service Companies.

If the organization has an existing systems staff that is available for a full time project, its first stop should be to discuss this undertaking with them. Perhaps enhancing its existing system is a likely consideration. However in many cases, the in-house systems staff tends not to be completely knowledgeable on the functional aspects of warehouse systems. Also, they may not have any in-depth experience with the latest technologies being used in today's Distribution and Delivery environments.

A second option would be to contact an outside Systems Integrator. As a consultant, the Integrator can help the organization in the analysis and design of a "systems solution" for its distribution needs. Another option that is becoming more and more popular is the use of a third party logistics service provider who has a Distribution Network and offers holistic services. 

It is an exciting time for the Third Party Logistics Industry, as technological progress enables providers to offer new services, including coordination and integration services that are necessary to support the complex new business processes that are being demanded. For the customers and service providers one critical decision will be how to organize for innovation. Those who recognize that “there is only one constant and that is change” will emerge the winners.

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

Once a friend of mine was narrating an incident involving an interview he had appeared for saying that he had reached almost on time for the interview. Without waiting to get filled in with the interview details I asked him as to what was the outcome. He said he did not get through and counter questioned me asking as to why I did not wait to hear as to how the interview progressed. In reply I stated that I knew the end result but just wanted to confirm the same since he had reached the venue ‘almost on time’. We all are victims of such communication paradigms in every day life. The moot point is that one can reach a place either on time or not on time as time is in a state of flux and there can be nothing like almost on time! Another friend who was part of this conversation stated that this was truly a fact. There we go again. If something is a fact it has to be true or else it cannot be a fact in the first place. The tête-à-tête drifted to some other subjects and someone remarked that he had a terrible road accident in which he had nearly died. Now one can be either dead or alive not nearly dead. By now the room was charged with the apt atmosphere for social talk and gossip.

The friend who had gone for the interview was narrating an incident from his younger days when he was asked by his teacher to act naturally in a play. He said he almost exactly did so but was clearly misunderstood by the audience. Thereafter he was sent to study advanced basics in dramatics. After the education he was asked to play the role of an anonymous colleague with arrogant humility and balanced insanity. He told the teacher that this is a real challenge. She replied back saying that you have just gone through a course in advanced basics. Therefore please apply controlled enthusiasm and be cautiously optimistic for the final show. This friend actually wanted to hit the big scene in Hollywood where he could be dangerously safe. So pursuing this objective he started rehearsing for the role of a bankrupt millionaire. He started working with dynamic equilibrium and put himself on diet ice cream to reduce weight.

This other friend of mine incidentally looks after the department of interior, responsible for everything outside since he had mastered the elementary computers. He is a cheerful pessimist and works with energetic exhaustion since his work involves the outside. He is right now working on a project involving the distributed collection of waste to be recycled for energy. He is a very meticulous worker and has exact approximations on virtually everything under the sky as the work involves the outside. He has a full time hobby of friendly arguments, which leads him into flexible loyalties. The other friend has a hobby of making guaranteed forecasts.  Both of them go out twice a year on working vacations. They are always alone together and never take me along. During these trips they are very fond of collecting genuine imitations of various things. I forgot to tell you that after being a nameless celebrity in Hollywood the other friend had applied for a job and works with passive aggression seeking new assignments. He does not meet with success as he follows the strategy of known covert operations. He succumbs to a weakness during interview situations, as he is indifferently attentive.

Both of them have one thing in common and that is the fact that both are devout atheists.  The last time they had this working vacation they had carried some canned fresh fruit for me, which I left completely unfinished. They are also fond of spreading secret rumors to cause simple confusion leading all recipients to make a sure guess as to what transpired. They call this activity unspoken suggestion towards unbiased journalism.

The last time this happened there were chances of social violence as a small crowd had gathered and a Government organization had to use peace force to break the impasse since there was sound filled silence.

Coming back to the activities of the friend who is employed I must keep you well informed that he believes in mass customization and this is the hallmark of his success. He has some other oddly appropriate activities and has neutral charge over all the areas of responsibility. The other friend has some other unique traits. When he goes for interviews he is positively negative and draws preliminary conclusion with proud humility. He also has this habit of running after astronomically small opportunities. He is brilliantly dull but a blameless culprit of his own situation.

We all fall prey to there self made contradictions. While some are fairly acceptable, many can be very deceptive as well. To follow the norms of good communication we need to master the art of good listening. An old Irish proverb says that God gave us two ears and one mouth. Perhaps he wanted us to listen more and speak less! It is ironical but true that active listening leads to good speaking and writing skills. I know of three people who were once looked upon by their peers as good balanced personalities. Today the perception of people is very different as all three are victims of poor communication paradigms. They are looked upon as Comic caricatures. The message is very clear. It’s directly under our control whether we want our communication skills to sound like a tragedy or a comedy or as the correct paradigm. Are you listening or hearing!

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

Peter Drucker’s comment on distribution as the ‘last Dark Continent’ for business to conquer resulted in a new class of function, which is Logistics Management. The  function that has become a growing concern for many industries and is today regarded as the single most critical point which can leverage business towards success.

After the Logistics renaissance of the early 90’s, more and more, logistics is being viewed by companies as an important part of competitive positioning, equal to research and product development, manufacturing capabilities, and sales & marketing. In most industries, you lose if you haven't made the right amount of product available, in the right place, and at the right time. As leading companies get better at logistics management, plants run more smoothly and product availability for customers becomes a tangible competitive advantage. Logistics is changing rapidly, driven by the overarching trends of globalization, demographic shifts, technology, and new forms of competition. Lets take a closer look at some key trends.

The first is the growing importance of logistics. Many companies are recognizing that the logistics functions previously buried deep in their organizations deserve A-level status, hence the emergence of the Chief Logistics Officer. Not only is logistics a critical element of costs, it is also becoming an important competitive weapon for market success. The fourth "P" of marketing, “Product, Price, Promotion, Place”, is really about product availability, which has everything to do with logistics i.e. products and materials available in the right quantities, in the right place, and at the right time.

The second is linked to dynamic sourcing and markets. In a global marketplace, supply chains cannot and do not remain static. Companies are constantly evaluating their source locations to be sure they are procuring the cheapest most reliable materials, and moving quickly to serve markets where they can find the greatest growth and margins. Logistics flexibility is the key to success in this more fluid environment.

The third is improved pipeline visibility. Some carriers can tell you where your specific shipment is right now, but most can't predict arrival times or automatically notify you of delays. With web-based tools and combinations of wireless barcode/RF/satellite/cellular tracking devices, the logistics world is slowly moving toward nirvana: fully integrated, multi-modal, multi-carrier real-time visibility down to the SKU/item level. This will drive all kinds of productivity changes for the logistics manager, and alter the competitive position of the various modes of transportation.

The forth is associated with collaborative demand planning (CPFR). Collaborative planning, forecasting and replenishment are taking the logistics world by storm. Fueled by supply chain management tools and web-based collaboration tools, CPFR will produce much better information about what's coming ahead, allowing more efficient resource planning and deployment by suppliers, manufacturers, and logistics service providers.

The fifth area involves 3PL/4PL expansion. Outsourcing logistics activities to third parties (3PLs) and fourth parties (4PLs, super entities who coordinate the 3PLs) will continue its strong momentum, driven by desires to reduce total supply chain costs and respond quickly to new sourcing and market opportunities. However, many companies have found that talented senior logistics managers are still necessary in-house to guide and control the 3PL/4PL partners.

The sixth initiative, which is gradually getting transformed, to a non-happening place is B2B site rationalization. There are over 100 transportation marketplaces on the Internet, and most will not survive despite strong growth in e-commerce transactions. As the dotcom failures and mergers continue, several logistics mega sites and a few mode-specific sites will emerge as the winners. These sites will prosper less on providing marketplaces for spot transactions (which represent about 20 percent of logistics buys), and more on offering process workflow, optimization, and collaborative applications. Leading companies realize that the true business value of the Internet is more than merely automating transactions. It involves real-time sharing of information that allows companies to collaborate with customers, trading partners, and other members of the extended supply chain.

It is an exciting time for the Third Party Logistics Industry, as technological progress enables providers to offer new services, including coordination and integration services that are necessary to support the complex new business processes that are being demanded. For the customers and service providers one critical decision will be how to organize for innovation. So we are finally in the era of the CLO and the success of the enterprise will depend heavily on good practices in Logistics and Supply Chain Management. This reality cannot change till mankind creates a scientific revolution by encrypting matter say a computer in soft form and decrypting the same at the delivery end back into matter.

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.)

Outsourcing, once a mere option, has today become a competitive imperative. The growth of the Internet, the rise of mass customization, and a renewed focus on core competencies instead of vertical integration mean that original equipment manufacturers (oems) must contract out part or all of manufacturing, assembly, distribution, and support operations.

The idea behind outsourcing is a blessing to oems worldwide. The reality, however, has more often been a curse. The reason is that the decentralization of manufacturing, fulfillment, and support operations creates a myriad of challenges in the OEM's newly outsourced supply chain network. Companies that fail to meet these challenges actually lose day-to-day control over their business processes, and their outsourcing initiatives, therefore, produce chaos instead of a rapidly ordered scalability.

Lets look at a few myths of outsourcing to help manufacturers realize the original vision of this option: The first myth is that “My outsourced partners are all supply chain experts”. The reality is that they know very little about your (or anyone else's) supply chain. What they are experts in is producing the maximum volume of product for the minimum cost. Doing this does not require much visibility into their supply chains; it requires focusing on their internal business processes.

The old saying of "garbage in, garbage out" applies here. The best partner in the world will do a great job of building perfectly to specifications and delivering on time a product that never has and never will work. It's your responsibility to ensure that your outsourcing partner knows your current specifications (not those planned three to six months ago, which may now be obsolete), and that you have real-time, Web-based access to their work in progress and bills of materials. Only through such oversight can you enable your outsourced partners to produce as though they actually were supply chain experts.

The second myth is linked to the paradigm that “My partners have state-of-the-art information technology (IT) infrastructures”. You may assume that your outsourcing provider has a fully automated system and end-to-end electronic data interchange or Web-based links with its suppliers. Unfortunately, this assumption is not grounded in reality. The reason is that most outsourcers have low profit margins and any cost center that does not directly relate to product quality becomes a candidate for the "budget axe. "

Consequently, new investments in IT infrastructures are about as common as ice storms in the Sahara.

Yet another myth is set on the mindset that “My outsourced partners will provide expert project management”. These partners may get the job done, but they'll do it their way, with their own processes, and without an interest in integrating their data with yours. How can your reconcile these apparent conflicts of interest? First, you must recognize that your outsourcing partners wouldn't be in business unless they had many other customers' demands to satisfy, many other deadlines to meet, and a high attention to cost containment.

Another mouse-trap is that “Outsourcing automatically gives me a time-to-market advantage”. In many cases, this myth is the most compelling driver of an outsourcing policy. But unless you carefully select your partners, provide them with integrated access to your supply chain systems, and enable your company to supervise the relevant projects, it will be your more nimble competitors who will realize the advantage. Why? Because contract manufacturers' processes and systems have been designed for mass production, not for mass customization and weekly new product introductions.

The next myth is that “Fulfillment is easier to outsource than manufacturing”. Fulfillment companies, like manufacturers, have to optimize their cost structures. These firms are, therefore, also reluctant to invest in IT systems that would optimize the management of inventory and accelerate their own supply chains. Moreover, because fulfillment firms typically pass on their costs to their customers, there is, in the short term, no market imperative for such firms to become more efficient.

But there are strategies that you can employ that will deliver meaningful benefits to your fulfillment partners and that will enable you to capture the business of the best of these partners. Specifically, you can deploy a system that automates the replenishment of stock prior to the occurrence of a product shortage. The benefit to your partner will be direct and compelling: lower inventory carrying costs. The benefit to you will be that you can now gain from the outsourcing of fulfillment the same advantages as you would from the outsourcing of manufacturing.

Intelligent outsourcing--outsourcing based on the reality of your contractors' businesses, not on your hopes, and outsourcing in which you confidently provide executive control of the supply chain network to your less technology-enabled partners will make your company much more competitive and responsive to market trends. By reclaiming your management responsibility through the deployment of a secure, collaborative, real-time platform, you can operate your outsourced supply chain as though it were a single enterprise of divisions within your company to a Third Party Logistics Service provider who integrates the supply chain. Today's dynamic markets are characterized by short product cycles and constant innovation and, through your adoption of such  myth-shattering outsourcing models as “Third Party Logistics”, your company can truly thrive in the New Economy. The only word of caution is that be very careful in your choice of the Service Provider. This can make or mar your business!

Jagdeep Luthra ( Vice President 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. 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.

In India, the express service providers offering or claiming expertise on total Logistics solutions have their core based upon the genesis of the organization or the segment.  We have traditional courier companies who are general service participants of large integrators.  There are numerous clearing and forwarding agents having an expertise in handling international in bounds and out bounds.  In the very recent times, foreign companies have also entered claiming an acute understanding of the entire supply chain.  There are some organizations, which have evolved from the conventional trucking segment offering time definite express service across the length and breadth of the country.  Yet another segment is that of warehouse wholesalers.  Customers scouting for the correct service provider have to be extremely cautious in their choice.  One is not saying that Companies are per se bad service providers but it is very implicit that by adding Logistics as an extended arm add-on product it does not make the human frame for a complete Logistics body.  Most courier companies have their core in handling documents and lack the infrastructure and ability to handle cargo, which is critically required for Logistics.  Clearing and forwarding agents are doing a splendid job for the international trade community but there service cannot network beyond airports, seaports and dry ports.  The foreign entrants who specialize in supply chain management do not have a network to manage the chain!  They can define and formulate an appropriate model but would lack the ability to operationalize the supply chain. The warehouse wholesalers have large covered space to merely warehouse and re-distribute within a State.  From this it is very obvious that all these segments after being awarded Third Party contracts would have to further outsource to a fourth party for a holistic management.  The number four is certainly higher than number three but Third Party Logistics have to remain with the Third Party as one entity and not an octopus born out of syndication and association.    This brings us to the only segment, which can really offer a total solution and that is the Express Cargo service providers who by means of backward and forward integration are well poised to provide the most appropriate service. The other alternative is the combination of Domestic and International Integrators to offer an invincible proposition as Two Leaders; Two Networks and One Choice for customers.

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 service providers really “Walk the Talk”!  It is sad but a Truism that most Express Service Providers promise much more and perform far less than Customer expectations.   Set-ups offering only Warehousing facility talk of Logistics; an individual owing two trucks talks of Logistics; one of the numerous agents for Airlines and ATOs talks of Logistics; a consolidator of Cargo talks of Logistics; many freight forwarders and clearing agents whose core competence lies in  customs clearance talk of  Logistics and one can go on and on and on!  This scenario leaves the customer with no choice but to keep experimenting with fragmented services from various service providers without even knowing the true and genuine providers of such services.  A genuine service provider would need to have a large enough domestic network along with in-house integrated Logistics centers and a total understanding of the customers business to arrive at a strategic approach with an integral purpose.  An integrated principle is beyond merely supply chain management and this needs to be combined with distribution strategy re-formulation and pro-active distribution management. Isolated attempt on co-sharing of services from various service providers would lead to only symptomatic relief whereas the radical solution would come from single window solution providers.

Customer expectations are really soaring high since the pace of globalization cannot be  reversed. The Express fraternity has to really wake-up to meet the demands of large corporate giants. India can import products, India can import technology, Indian can import processes and techniques but India cannot import an Indian network since there is no one exporting an Indian network.  This is a reality and if this was a fallacy then why would large international integrators be dependent upon domestic service providers having their roots within the country.  If this was untrue then why do we talk of the gateway to India?  Why do the integrators not talk of the gateway to Tamil Nadu?  They cannot because only domestic network providers given the complexity of our country can define the gateways of various States and Cities and Towns.

So what are the emerging trends in the Express Industry linked to further automation and what are the Customer expectations? Speech recognition systems through voice technology without the need for keypad entry would replace the conventional systems of entering through keyboard thereby making Operational transactions more efficient and accurate.  We would see memory in a button concept which are encapsulated Micro Processors wherein several pages of information can be stored and retrieved by merely pressing the button. Yes, all this will come and will come to stay;  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.

Jagdeep Luthra ( Vice President Safexpress Pvt.  Ltd.) 

Barista, one of the favored outlets for coffee and snacks in the Indian sub-continent, is a good example of transparency in supply chain management operations.  In fact, it would be a good case study to highlight as to how a logistics service provider can make his operations transparent to the consumer oriented company, in this case the Barista chain of coffee shops. For the newly established Barista outlets in Indian cities, warehousing the supplies at posh locations in the heart of the city is a costly proposition. Leading logistics company Safexpress has taken over as third party logistics (3pl) partner to supply each Barista outlet in different Indian cities their ingredients for that just right coffee cup, Just-In-Time, (JIT). This will leave Barista absolutely free of any investment and recurring costs for logistics and warehouse management.

Warehouse management is the latest area where companies are trying to cut the costs and dilute the level of resources employed to that area. Outsourcing logistics is a trend that started with the large supermarket chain in the United States and Canada. For the supermarket in North America, logistics is a non-entity as far as the operations workflow chart goes. They just concentrate on the maintenance of the shelf space. The JIT operations aided by weather forecasting are fully carried out by third party logistics providers.

Safexpress, with considerable expertise in Supply Chain Management looks after the distribution and inventory requirement of Barista outlets operating from its mother warehouse in Delhi. This mother warehouse further supports three regional warehouses in Mumbai, Calcutta and Bangalore. Barista currently operates 82 outlets across 11 cities in India. It is serving around 15,000 people every day, and by the look of things, this is just the beginning of a bigger wave. With a new outlet opening every 10 days, Barista expects to have 175 coffee bars by 2003.

In such a scenario, how does Barista manage its supply chain? Which, of course, is not its core business but is still critical to its success. The answer lies in their logistics and Supply Chain Management Company, Safexpress. Safexpress, India's largest express company, offers complete logistics management solutions to Barista and in a way contributes to giving the Barista customer a world class coffee experience at a much better price.

A typical Barista outlet world be 1000 sq-ft store with seats around a table. Around 95 per cent of the space is occupied by around 60 seats and the rest of it is the administration utility corner required for processing orders. The inventory space is zero per cent and a set amount of supplies ranging from paper cups to coffee beans are replenished on daily basis. The daily replenishment ensures minimum order quantities. The efficiency of supply chain, in such a case, becomes a critical issue and hence requires the best of logistics management.

Safexpress with its hands fully into Supply Chain Management looks after the distribution and inventory requirement of Barista outlets operating from its mother warehouse in Delhi, Which further supports three regional warehouses in Mumbai, Calcutta and Bangalore.

The above four warehouses cater to the supplies for the outlets in the respective cities as well as the whole of that region's outlets. So Delhi's mother warehouse is the biggest of the four supplying the remaining three at Mumbai, Calcutta and Bangalore as well as all the four regions' demands. All three regional warehouses in Mumbai, Calcutta and Bangalore have one-week stock for fast moving items and three-week stock for slow moving items.

The Safexpress logistics strategy focuses on reducing product response time thereby ensuring that the customer's demand is met at the right time, right place and at the right cost. The key lies in understanding the customer demand pattern, tracking transit time reliability, capturing real time data and through continuous replenishment. Any supply chain strategy has to dovetail with the business strategy. The two have to be in tandem and there had to be a perfect alignment between them, which is exactly what Safexpress aims to do. So with Safexpress in charge of Barista's supply chain operations, the much-desired cup of coffee will never be late, will never be unavailable.

How the supply chain in this new venture is going to be in a win-win situation is something worthwhile to contemplate given the rich experience that Safexpress has. Safexpress Barista tie up is an example for those who are trying to get familiar with the role of third party logistics or popularly known as 3PL partner's role in Supply Chain Management in the current business environment.

As globalisation catches up, outsourcing is getting more and more popular as a business strategy. In the supply chain management 3PL is a proven practice worldwide and is gaining acceptance now in India as well. Ideally, a 3PL partner should unburden a client off its logistics tensions. At the same time, a 3PL partner must prove credentials by way of ensuring cost rationalisation as a measurement of his performance.

Safexpress as an expert 3PL solution provider is exactly trying to be the same role model that purists of Supply Chain Management philosophy talk of i.e., to really unburden Barista off it's logistics tensions through expert logistics manpower, optimum utilization of resources, including manpower, space, infrastructure, etc.

Barista stands to gain from Safexpress' faster TAT for all performance indicators, handling expertise of consignment, products in general. Currently, Safexpress is having a nationwide network of over 425 metropolitan cities and townships with state-of-the-art infrastructure, backed by cutting edge Information Technology, systems and warehousing space exceeding one million square feet. The company has more than 2,000 all weatherproof IICL V containerized vehicles, covering 750 routes, through 20 hubs and super hubs. Being a frontline 3PL company its domain knowledge of all aspects including statutory, Functional, operational, logistical and managerial will also go a long way in maintaining smooth operations. And no doubt it will boost cost effective partnership.

Further, Safexpress has the capability to suggest business models packaging parameters, reduction of logistics costs, as a value addition to its customers. Domestically, Safexpress is the largest 3PL-service provider with over 40 customers in the 3PL area. Meaning Safexpress can not only carry expertise and experience in 3PL but also can bring in these experiences to best use in whichever of the crunch area client is requiring, as bulk of its expertise comes from Indian context.

Safexpress is streamlining its warehouse management too by developing innovative software and web tracking facilities. It has offered to create warehouse space for Barista to offer effective warehouse management system and complete MIS solutions. It will be offering its solutions through in-house WMS software, which has been developed and customized on the Tally based platform. The end result is a completely, web compatible solution for cargo and warehouse management. This shall be utilized wherever there is a gap of reports/analysis in the Barista system, if any.

Safexpress is has also offered Barista a completely web based waybill tracking system for online delivery tracking of consignments. Safexpress has adopted state of the art information technology applications to leverage value added services. The company provides on-line real time information through its unique track and trace system. Safexpress has also pioneered a perfect blend of 'Radio Trunking' technology along with V-Sats links and satellite communication for monitoring route vehicles and intra city runs through a Global Positioning System. Strategic Alliances with Supply Chain Management Software Organizations provides a cutting edge for a holistic service.

In the end that cup of coffee tastes doubly good.

Ravi Ranjan Prasad

It was in 1995 that Pawan Jain (47) decided to extend his cargo business by getting into specialised door-to-door distribution of high value cargo. He delineated four routes, took a fleet of 12 vehicles and 20 people to start the new venture through nine offices. Today, with a turnover of Rs. 225 crore and 470 offices all over the country.

Safexpress delivers an average of 45,000 packages a day. Besides, the company's warehousing space exceeds 2 million square feet and the client list of Safexpress include NIIT, Wipro, Hilti and Compaq, which require high precision in handling and delivering their sophisticated products.

With the opening up of the economy and multinationals setting shop in India, Mr. Jain saw greater opportunity in the Indian market. "I got excited by the business opportunities that India's complex logistics scenario offered particularly at that time that I decided to take a plunge, "says Mr. Jain, CEO Safexpress Logistics. His aim is to make Safexpress a one-stop shop providing complete logistics solutions. India Inc. takes a lot at whether this can be done.

Strategic Extension

Safexpress started with a modest trucking business in 1975, with its reach in Bihar, Bengal and the seven sister states of North-east India. This business mainly dealt with carry raw materials and finished goods from one place and did not require either sophisticated containers which Safexpress now has nor did it require specialised handling. In 1987, the company diversified into door-to-door courier service all over India, through its company Overnite Express. Realizing that more and more paperwork and document transfer is carried through e-mails and that it is difficult to compete with multinational courier companies with their strong brand equity and network, Mr. Jain decided to give the courier business a yet another related business status and went ahead headlong with the cargo business.

With a fleet of 2200 weatherproof containers servicing 470 destinations nation wide the operational network covers more than 2,70,000 km daily on the round the clock basis. Besides cargo movement, Safexpress also services through air and multi-modal connectivity through its service SAFEAIR. However, its USP lies in providing a readymade packaging solution giving high value cargo added safety and security by surface and air mode.

Outsourcing And Franchising

To grow, Safexpress has followed the route of franchising and outsourcing. "We don't own the fleet, rather all trucks that carry our goods are outsourced," says Mr. Jain. He believes that Safexpress' expertise lies in transportation and not managing fleet and therefore prefers to outsource. However, in order to enjoy the truckers' loyalty, he is involved at every stage from financing truck-owning where Safexpress becomes a guarantor to maintenance of the vehicle. He also says since the company is involved in cargo management and not asset building it makes sense to outsource. "This also helps us retain our debt-free status besides keeping us free from labour union and other problems," says Mr. Jain.

Strategic Alliances

Realising the importance of integrated supply chain and logistics solution Safexpress entered into two major strategic alliances. One, with Panalpina World Transport (India) and the second with Miebach Consulting Group.

The alliance links the global network of Panalpina World Transport spanning over Indian states. The alliance with Miebach Consulting Group provides supply chain management services backed by the technical advisory service of Miebach which has expertise in integrated supply chain and logistics solution. The alliance with Panalpina gives Safexpress access to 300 branches to over 70 countries.

With these alliances Safexpress becomes one of the three major domestic players along with the Rs 450 crore Transport Corporation of India (TCI) with its brand UPS and other transport major, Gati.

Upgraded Technology

Safexpress adheres to global positioning system (GPS) to constantly monitor the movement of its vehicles. "We have special antennas through which speed and location of the vehicle can be spotted and SOS messages can be tracked,” says Mr. Jain.

The company also has its website and an online information system through which the sender of a packet can find out the status of his packet. The online system also has the extended facility of electronic signature to further facilitate its customers.

"Safexpress provides an online real time information service through its track and trace system and we have blended radio trunking technology along with VSAT and satellite communication for monitoring route vehicle," says Mr. Jain.

The company has also devised a money management services through which it provides the facility for collection of at the time of delivery with the draft being sent to the shipper in a few days, imparting liquidity for working capital.

Concentrating On Core Business

Yet another strategic move that Mr. Jain made was that he transferred the management of its courier business to another partner. "I realised that the courier business was not a growth area for us and I gave it on contract to a partner while I am focusing on the core business of logistics management," says Mr. Jain.

Even through Overnite Express (the courier business) has contributed Rs 125 crore to the group business of Rs 350 crore, Mr. Jain believes that it would not be a priority for focus it in future. "I'll call it yet another business," he adds.

On the other hand, the company is concentrating on building its strengths in the warehousing area. It is also developing logistics parks in Indore, Bangalore and in Navi Mumbai. The company is also developing a one lakh square feet of warehousing in Delhi with an investment of Rs 7-8 crore. While this is going to be company-owned warehouses, Safexpress also has outsourced warehouses in different parts of the country.

"We have the model of, pay-as-you use warehouses as well those on contract," says Mr. Jain. He also says that more than 100 multinational companies are using the customised warehousing facilities that Safexpress is providing with all modern amenities.

Future Growth

Mr. Jain says that at a time when the transport and logistics industry is growing at 20 per cent, Safexpress is growing at 40-45 per cent and he foresees a better growth for the industry as well as the company in the year 2003. "With value added tax system in place from April 2003 the industry is expected to grow at 30 per sent and we as major players feel that the industry has the potential to be a Rs 1,000 crore. The current convener of the Confederation of Indian Industry (CII) Committee of Logistics, Mr. Jain says that the average running truck time is only 40 kmph because of check and toll points. "This speed could be increased tremendously by making the taxes and regulation norms easy," says Mr. Jain.

In the future, Safexpress plans to venture into marine business, separate its information technology business and start a global tracking system for the fleet, get into more strategic alliances for its initiatives and perhaps even start a logistics management institute. It also plans to customise services for e-commerce. Does all this suggest huge investments? "Not really. Most of it will come up in a step-wise manner mostly from internal accruals. We are a debt free company and will maintain that," says Mr. Jain.

Starting from a simple trucking in 1975, this first generation entrepreneur has come a long way. And he has done it alone, as his family was not a part of his venture. It however, remains to be seen how far he will be build upon the brand that he has built in this highly fragmented industry.

New Delhi, April 14

The Confederation of Indian Industry  (CII) estimates that logistic cost may account for 12-13 percent of gross domestic product (GDP) of the country, but efficiency improvement of this sector could add three percent of the GDP in the short term helping industry to be more competitive.

CII will soon be presenting a white paper to the government highlighting the above to enable the adoption of world standard supply chain and logistic management practice. In the U S and other developed economies, logistic account for under six per cent of the GDP.

The key focus areas for CII’s national committee on logistics in this white paper, titled ‘Logistics--- the Route Map to Competitiveness’ are bottlenecks transaction cost analysis, alignment of policies procedural, infrastructure and documentation simplification while drawing a linkage of all these factor to their economic impact.

The committee has also pointed out to the projected impact of initiating reforms in various sectors. Licensing reforms and foreign direct investment (FDI) could contribute an additional one and 0.5 per cent respectively to the GDP, while labour reforms and recognition of retail as industry could add a further 1.5 and two per cent respectively to the GDP in 24 months. In contrast, logistics efficiency improvement is expected add three per cent to the GDP, thus having the maximum short-term impact on the GDP.

Safexpress managing director and convenor of the subcommittee on policy and procedural issues in domestic trade Pawan Jain told FE that logistic is not a subject covered by any one central ministry and is effected by different laws in various states. The presentation of the white paper expected to be made between July and October this year, would thus cover 8-10 central ministries as well as about 10 key states.

Mr. Jain also came out in support of the value added tax (VAL) saying that “being a national tax, it will not only simplify maters but also avoid losses due to tax differences. Goods are transferred to and fro from lower tax regions leading to a lot of unnecessary transportation.”

A major concern to be highlighted in the white paper would be a loss of up to 45 per cent of time of truck as they move goods across country a state borders. Calling for seamless movement across the country, the logistic industry feels the time so saved can utilized elsewhere with the customer enjoying the benefits of the resultant cost savings.

The committee is also working on determining transaction costs for industry taking into account taxes, port handling, transportation documentation and export credit. These will provide a benchmarked cost analysis of direct loss and opportunity loss across various industry groups and help draw up an international comparison. This could also help in developing an “ideal” Indian model of multi-model transport after taking into account perspectives of all key stakeholders.

An effort is also under way to create awareness of logistics being a competition driver at three levels -. Central government, state governments and users. Specific suggestions will include integration of international logistics with domestic logistics, an example being uniform sale tax or value added tax (VAT).

Instead of looking at logistic issue ‘as a whole’, the paper will look at the top 10 or 15 promising sectors of the Indian economy and then identify logistics issues, bottlenecks and suggestions for enabling these sector to compete with global supply chains. A special thrust is expected to be given on ‘Gateway’ issues like ports, airports and customs as well as multi modal issues.

Logistics firm Safexpress is finding that technology helps it to provide new levels of customer service- and also overcome a few typically Indian infrastructure glitches -By Alokesh Bhattacharya, India Today

Smart Inc, May 2003

AS YOU'RE DRIVING BACK FROM WORK, you barely notice a  Safexpress  delivery vehicle  buzzing past the other way. Nothing unusual enough to tickle your interest, but if you've sent a shipment through the logistics company, you might be left wondering if that particular vehicle might be carrying it.  To set your mind at peace, you could just walk into a cyber café, or better still, use your mobile  phone. While you may not get the vehicle number, you can get pretty close. Here's how.

ENABLING IT

For the cyber cafe part, Safexpress, like most logistics companies, introduced a Web-based shipment tracking module. In this system, you need to go to the company's Web site (www.safexpress.com) and punch in the waybill number,  which is basically a shipment number. All the details of the shipment show up on the Web site, showing information on whether it has been delivered, not delivered, etc. 

But Safexpress wasn't satisfied with some-thing that everyone else did. So it started looking for differentiators.  An infrastructure glitch, common in India, gave it that opportunity. And this is where the mobile phone part comes in.

The Web-tracking module is dependent on the availability of the Internet. After all, you need to connect to the Internet to check the status of your shipment. And in India, that can be a problem, particularly in smaller towns. Besides, if you're one of those unlucky souls who work for organisations that don't allow their employees to access the Internet within office premises, of what use is a Web-tracking system to you?

To tackle such situations, Safexpress implemented a tracking solution called SMS Track. A client wanting to know the status of his shipment has to punch in the waybill number in his mobile phone and SMS it to 9821113113. The message is routed to the corporate central server, which responds with an auto transmit message giving the status of the consignment or the delivery details as the case may be.

That sounds simple, and for you as a user, it is simple. But for Safexpress, its success hinged on two crucial factors:

1. The first problem, again, was the issue of availability of Internet connections. That’s because use the data has to be sent to the Web server, over the Internet, before you can SMS your enquiry. As Anil Syal, General Manager, Marketing, of Safexpress, points out: “If I send something from, say, Cochin to Gorakhpur, the Gorakhpur guy needs to sit on the Web to upload that information. But there are about two cyber cafes in Gorakhpur, and getting a dial-up is like a marathon.” And the problem applied to many cities and towns where Safexpress operates.

2. The second critical factor was the time lag between delivery of shipments and upload of delivery information. Delivery vehicles move from point to point in a town delivering shipments, and the actual upload happens when they come back to office.

Both these issues were tackled once again through a mobile phone technology solution. Safexpress upgraded the SMS Track into an SMS Update system. In this system, after the delivery person delivers a consignment and in the interlude before he reaches the next stop, he writes the waybill number, delivery code ("D" for delivered, "UD" for undelivered, etc.) and the name of the receiver, and sends the information through SMS (9821113113 again) to their data server, which uploads it on their Web server. The entire process takes 30 seconds.

This system, therefore, effectively took care of both issues. The time lag is removed because the delivery person uses the time between deliveries to upload basic delivery information, and as a result clients are able to get instant feedback on shipment status, using mobile phones instead of the Internet.

And in case you're the hacking kind and are thinking of ways of using that mobile number to hack into Safexpress’ systems, think again. The mobiles that are used for upload are pre-authenticated. So no joys for hackers here.

Pawan Jain, Chairman and Managing Director of Safexpress, rubs it in further, "We have a tie-up with VeriSign Secure site to ensure complete security of visitors' information."

The full details of the delivery, of course, are still uploaded at the end of the day. So for a detailed shipment status, you still have to use the Internet, but at least your mobile saves you the wait.

While SMS Track is innovative, it is not unique to Safexpress. Logistics company UPS, mentioned by Syal, has its own version of SMS Track;  Blue Dart Express, another leading logistics player,  also  has  two  mobile  services  named  "MobileDart-WAP" and "MobileDart-SMS"                                                                   

Having said that, Safexpress' application appears to be the most user friendly. UPS' application requires user registration on its Web site (www.ups.com) and to use Blue Dart's systems,  you need to have either a WAP phone or a mobile phone that  supports sending e-mail over SMS. On the other hand, Safexpress' SMS Track can be accessed from any mobile phone, without any need for registration or support for sundry technologies. 

ADDING VALUE

Leveraging of SMS technology was not the end  of    Safexpress’ tech offerings. It took a couple of more initiatives to give greater value to customers.

The first of these two additional initiatives is the e-PoD (electronic proof of delivery). The PoD  document is the most important piece of paper for customers sending shipments. That's because logistics companies carry commercial shipments (think of IBM sending a shipment of 100 PCs to an engineering college) that, while not unreplaceable, can have unpleasant implications in terms of major costs involved—insurance, time, damage to business reputation, etc. And when a consignment is received, the PoD is the document that confirms the transaction.

To allow their clients to have almost instant proof of delivery, Safexpress implemented the concept of the e-PoD. Syal says, "We did  something that was the first of its kind in the country and second only after another company in the US, which is UPS.

"We pulled up that PoD, scanned it, and put it on the Web. So a company sitting in a distant part of the country will not only be able to confirm that the shipment has been delivered, but will also be able to see who has received it. And that actually becomes proof."

Of course in due time the original POD will also reach the company. But even if it reaches two days later, the e-PoD gives the company almost instant proof of the shipment having been delivered. As Syal points out: "These timelines are critical and every day becomes important. So this has been extremely  helpful  for  our  customers."

The other technology tool introduced by Safexpress was a logistics e-planning tool called Virtual Cargo. This resulted from Safexpress' analysis that several logistics managers would like to plan their shipments since an enterprise may have to send shipments over a wide area, and there are deadlines and datelines on when they should reach.

In this system, at the Safexpress Web site, you need to input despatch details including date of despatch, source and destination. A response comes out saying how many kilometres this consignment is going to travel, the checkposts it will go through, documents required, whether the destination requires specific permits or forms, payment of octroi or entry tax, and other such statutory requirements.

It also specifies when it would reach by surface, and when it would do so by air. So you can plan on sending it by air or road, or reschedule the consignment according to when you want it to reach the destination. That way, you can plan your shipments onsite, without even talking to Safexpress.

ROLE OF IT

Technology has an important role in a logistics company’s growth, but it can only be an enabler, not a driving force. As Jain points out: “Our IT initiatives have played an important role to accomplish our goals. But one must not forget that IT is a facilitator and also a reflection of what the actual reality is. Our service levels are determined by good operations and IT reflects the same.”

Syal agrees, “While IT does not drive growth, it certainly supplements other factors that contribute to growth. Safexpress is taking every year a growth in the last financial year, from Rs 173 crore for 2001-2002 to Rs 205 crore in 2002-2003. And while it cannot be said that the IT initiatives have solely driven this growth, they have certainly contributed to some extent. But the moot question here is whether Safexpress’ customers are aware of the IT services available, for them to derive any value.

Several companies such as Planet Sports-a retail company dealing in brands like Marks & Spencer, Puma and Spiderman-and ITC’s Lifestyle Retailing Business Division have Safexpress as their exclusive logistics provider. While Syal maintains that his customers are “jumping with joy”, the customers’ responses are somewhat less grandiloquent.

For instance, Bikram Seth, Head of IT at Planet Sports, is happy with Safexpress’ services, though not with the way it has used IT. He says, “We are happy with their services, but from a technology point of view, I feel that they have not done much in terms of customer-facing applications”.

"Their Web site, where I can track my shipment by entering the waybill number, is a positive. But I'm not aware of any mobile phone application that they have. It goes to show that they have not been able to educate their customers about what they're doing.”

Syal sees it differently. He says, "I can't tell a customer that I'm using all these technologies. He will eventually start realising it. Who cares if you've spent Rs 5 crore on some or the other technology till the time they see results out of it?"

True, but then how does one see results from a technology like SMS Track unless one knows about  it? Being in the critical business of customer service, Safexpress appears to have some work to do on its machinery to inform customers on what services are available from a technology perspective.

This is particularly  important  since Safexpress is looking beyond India now. It has entered into a strategic alliance with Panalpina World Transport, a global logistics provider, linking Panalpina's network spanning over six continents with its own. This will allow it to operate across 300 branches in 70 countries in addition to the 483 in India. Disseminating information on technologies implemented, and not merely implementing them, will help to add value to this relationship as well.

Logistics companies quote the industry size to be to the tune of Rs 1,00,000 crore. This would necessarily include the unorganised players as well. However, a logistics industry expert from  CII (Confederation of Indian Industry) negated this figure saying that the sector is too unorganised to be able to conclusively arrive at even an approximation. The source adds that the figure may even be more than Rs 1,00,000 crore if transportation, storage, handling, etc. are included.

But whatever the size of the industry, it goes without saying that good operations, sustained by strong technological innovation, will determine which logistics companies deliver profits, and which ones get lost in transit.

SAFE TECHNOLOGY

In order to enable their customers keep track of their shipments faster, logistics company Safexpress initiated a few technological innovations. These include:

Web Track: At the Safexpress Web site, www.safexpress.com, the waybill number of a shipment is typed in; the Web server responds with details of the shipment, whether in transit or delivered.

SMS Track: The waybill number is SMS-ed to 9821113113; server responds with delivery status.

SMS Update: Delivery person SMS-es to 9821113113 the waybill number, delivery status, name of the receiver in between deliveries. Results in instant uploading of delivery information.

e-PoD: At day-end, all PoD (proof of delivery) documents are scanned and uploaded onto the Web server, so the customers can have almost instant proof of the shipment having been delivered.

Virtual Cargo: Onsite shipment planning tool. Source, destination and date of shipping entered in a form in the Safexpress Web site; server responds with information on checkposts the cargo will pass, documents that’ll be required, taxes that may be needed, and expected dates of delivery by surface and by air.  

HOW  SAFEXPRESS DID IT

Organisation: Safexpress

Industry: Logistics services

Infrastructure: Nationwide  network  of 483  metro  cities  and  townships; warehousing  space  exceeding  two  million  square  feet; over  2,200  all  weatherproof  IICL V  containerised  vehicles; covering  750  routes  through  20  hubs  and  super  hubs  over 270,000 km;  delivering  over  45,000  packages  every  day  of  the year. All offices, hubs and regional offices connected to the central server  through  dedicated  leased   lines. Data  server  is  SQL  and  all  applications  on  Oracle  8i.

Problem: Providing information on status of shipments, whether in transit or delivered, in the shortest possible time.

Solutions provided: Web track, a Web-based tracking tool; SMS Track, a cell phone-based tracking system;  and  SMS Update, an application  to  upload  delivery  information  through  cell phones .

Vendor: SMS Update outsourced from US-based  company Sonic; all  other  applications developed in-house.

Cost: Around Rs 4 crore

Implementation details: Gone through a phased manner in investments. First phase was low cost, around Rs  1.2  crore. Second phase  was  more expensive, around  Rs  2.5 to 3 crore, due to investments in  high-speed scanners and equipping  60 non-mobile centres with mobile phones .

Set up the infrastructure and hardware themselves; customisation of SMS Update done by Sonic's Indian agents  with  the  help  of  Safexpress' engineers to suit their requirements. Systems was implemented in all 483 cities in about six months.

Major gains: Customer satisfaction due to efficiency in tracking shipments; steady growth in number  of customers and revenues.                  

HOME RUN  About 2,100 copies of the book sold in the city on Saturday despite the weather .And it wasn't only the kids who queued up.

GLOBAL GLUT As pottermania took over the world, the author was expected to make the $50 million from the first day's sales alone.

Book sales hit the roof as Potter weaves magic.

DARNED RAINS! Park street was flooded, and so was most of the city . Would Kolkata dip its dainty ankle in the dirty waters or wait a day? Kolkatans chose to be overcome by Pottermania. Despite the rain and the waterlogging, select bookstores in the city recorded the highest sales ever of a book on the day of its release.

While Oxford Bookstore on Park Street sold over 200 copies of Harry Potter and The Order of the Phoenix, Landmark Bookstore on the flooded Lord Sinha Road sold about 400. The seven other retailers in the city between themselves sold nearly 1,500 copies. Still, the city fell behind the metros and cities.

"We'd have sold at least a hundred copies more if it hadn't rained today. We have stocks of another thousand of and we're expecting a  sellout over the next 10 days or so,” said Landmark's Gautam Jatia. The response to the book, Jatia added, has been fabulous considering the fact that it costs a whopping Rs 795.

Oxford retail manager Sharmila Dasgupta said: "We've created history . We've never sold as many copies of a book on the day of its release. And the best part is that not only children, but even the aged came to buy the book today." She expects to sell another 50 copies on Sunday. We've stocks of another 150 copies that will be exhausted by Monday."

 The promotional events at Oxford and Landmark drew good response. But perhaps the happiest were executives of Safexpress Pvt Ltd - the couriers who delivered nearly 69,000 copies of the book in the 20 cities across the country. They made all security arrangements - the first time in the country - to ensure that not a single copy gets stolen or misplaced before its release on Saturday morning.

"The books reached us a week ago and we transported them to all the 20 locations amid tight security . We tightened security after copies of the book were stolen in the UK. We're happy that everything has gone according to plans," Safexpress General Manager (Marketing) Anil Syal told Hindustan times from New Delhi.

Potter sales keep rising like phoenix. (THE STATESMAN, New Delhi-  24 June,2003)

NEW DELHI, June 23 - The new Harry Potter book, which hit the book stalls on Saturday morning, has been in heavy demand, which has put the retailers in the rat race to sell the book. The retailers have been offering discounts on the book so as to attract the customers. There are also some retailers who are happy without giving any of the discounts.

Besides the retailers in authorised book stores, there are these roadside vendors who have also taken up selling these books which is priced at Rs 795. "We cannot do anything about these vendors as long as they are not selling the pirated copies," said the vice-president of Penguin India Limited, Mr R M Sukumar. The Penguin India Limited is the sole distributor of this book all over the country. In Delhi, they have four major distributors who are meeting the demands of the retailers.                               

Shops in Central Delhi like ‘The Bookworm’ and ‘Galgotia Book’ are also offering a discount of 10 per cent. "We have to give discounts as there is a good bit of competition around,  with so many book shops," said Mr R K Galgotia  Book.

Till date, The highest number of sales has been recorded at the Om Book Shop in South Delhi, which is offering a  25 per cent discounts to its customers .The owner claims to have sold over 500 copies at a discount price of Rs 595.

On the other hand, there have been other shops like the ‘Jain Book Agency' and 'New Book Depot', which are happily selling the book without any discounts.

"There is no hard and fast rule about about discounts. Our sale has been good without the discount," said the owner of 'New Book Depot', Mr R Chandra, "Readers want the books to read then and there.

By placing the orders with ‘Indiatimes', it would take a minimum of one week for them to get the books delivered, "said Mr Chandra. "There was a lot of demand on the first day. Gradually it is coming down and we have ample stock. There should not be any shortage," added Mr Chandra.

Safexpress as distributor

NEW DELHI, June 23, -  Penguin India, the publisher of the latest 'Harry Potter' book, has appointed leading logistics company Safexpress as the sole agency for distribution and warehousing of nearly 69,000 copies of the book across the country.

The hype around the 'Harry Potter and the Order of the Phoenix', especially after recent reports of theft of thousands of copies in UK, forced the company to take extra security measures after the books landed in India, till its launch on June 21, Safexpress General Manager (Marketing) Anil Syal said.

The company had to ensure safe custody and delivery of the books to distributors in 20 cities, Syal," This is the first time that a book has been launched in tandem with the global launch and logistics arrangements of such a nature and scale have been made. We had to ensure that the book was delivered to distributors simultaneously in 20 cities," he said.

The new book, the fifth in British author J K Rowling's hit series, has met with incredible success globally. - PTI   

Extra safety for Harry Potter book (THE TRIBUNE, New Delhi-  24 June,2003)

NEW DELHI: Penguin India, the publisher of the latest 'Harry Potter' book, has appointed logistics company Safexpress as the sole agency for the distribution and warehousing of nearly 69,000 copies of the book across the country. The hype around the “Harry Potter and the Order of the Phoenix”, especially after recent reports on the theft of thousands of copies in the UK, forced the company to take extra security measures after the books landed in India, till its launch on June 21, Safexpress General Manager (Marketing) Anil Syal said here. - PTI

The trailer has a capacity of 22 tonnes and is powered by a 150 horse power TATA 3015 EX engine.

Safexpress launched another innovative product in the express industry this August from its Gurgaon Super Hub, flagging off the first 40 feet tractor-trailer on the Delhi- Bangalore Route. Powered by a 150 horse power TATA 3015 EX engine, Safexpress’s 22 tonne vehicle rolled off with 19 tonnes of high value goods with a target to cover the Delhi-Bangalore route (2,200 km) in 64 hours. Fitted with long haul fuel tanks to store 1,000 litres of diesel, the vehicle needs no refuelling on the way. Also the vehicle is GPS enabled for real time tracking through the satellite that went live as soon as the vehicle rolled on the Gurgaon highway.

Flagging off the multi-axle vehicle on its maiden run to Bangalore, Pawan Jain, CMD, Safexpress claimed that the newly launched product is the first of its kind in the express industry and a benchmark for the future of road transportation in India. Captain Aman Bhalla, General Manager- Operations, maintained that the new product would help create a network that is cost effective, highly efficient and would become the backbone of the Safexpress network for the coming years. He also felt that because of increasing input and operational costs on account of toll tax, dynamic fuel prices, steel and rubber, solutions have to be found very fast.

On being quizzed as to why the vehicle was launched specially on Delhi-Bangalore route, he said that the North–South corridor is the lifeline for Safexpress as it links two highly lucrative markets. This can be ascertained from the fact that Safexpress on as average carries in excess of 7,500 tonnes of load per month between this corridor. This product will serve as the growth engine for safexpress and would help it gain further foot-hold in the highly customized 3PL environment.

This newly launched product will not only take advantage of the improving road infrastructure but also lead to increased capacities while keeping the costs down. It will aptly serves the goal of the company to keep finding ways to cut down cost as this 40 feet tractor trailer doubles up for two 9 tonne trucks running on the Delhi-Bangalore route, saving on the cost of diesel, maintenance of the vehicle, manpower requirements etc.

Sachin Baxi & K Yatish Rajawat

.AN India on the move requires people who can really get going. Movement of goods in a growing economy is a huge business opportunity. A traditional Marwari, Pawan Jain started his trucking business career in 1975. He realised that there was a much bigger opportunity in services and logistics than running trucks. He created a Rs 110-crore trucking company called TransSolutions and then branched out into couriers, primarily documents, along with his cousin Om Prakash Rajghria to start Overnite Express, one of the leading courier companies. The courier business was competitive and Mr Jain wanted to do something else to tap the growing need of companies for advanced large-cargo transportation. The two partners did not see benefit in the new opportunity and parted ways. Mr Jain diluted his stake in the company over the years and does not hold any stake now in Overnite Express.
   He started Safexpress in 1997 to address the growing needs of foreign firms used to time-based delivery of their products to consumers. Foreign companies in the consumer durables, IT and telecom products need vendors who could safely deliver their products across the country. None of the existing trucking companies were capable of meeting the demands of these companies as it involved a deep understanding of the sales tax, octroi and local roads.

Mr Jain decided to create a business model which could address this need. He created a business with no assets and liabilities, a pure service organisation at Safexpress. Now the company has more than 527 destinations within the country. But it does not own a single truck. It has created hubs to store and manage inventory, but does not own a single warehouse.
   The company works with trucking companies and helps finance, insure and buy trucks for them. Even the warehouses are run by companies either owned by Mr Jain’s extended family or other private companies and leased out to Safexpress. Safexpress may cross a turnover of more than Rs 400 crore in March, 2006, and has margins of more than 20-22% because of the lean management and no-assets business model it follows. “We started with an investment of Rs 1 crore by my wife and I. We did a turnover of more than Rs 40 crore in the first year itself. We have been growing at a rapid pace due to the rising needs and consumption culture percolating to small cities,” Mr Jain says.
   The firm has more than 3,000 container trucks, but works with trucking companies who are sole suppliers to the company. Each truck employs more than three drivers. “HP, Acer, Dell and the retail chains have an huge requirement for inventory management. We manage the complete back end for some of the large retail chains like Globus. We have been able to do this is because of the systems that we have put in place,” Mr Jain says.
   “Over the past eight years, many trucking firms have tried to enter the cargo logistics business, but have failed,” Mr Jain adds. MNC logistics companies like Semcorp of Singapore has not been able to make much of a headway. Mr Jain says there are several emerging businesses where manufacturers need a time-based delivery. Fashion or garments is one industry where changing tastes means that cargoes need to be time-bound. Safexpress claims to be working with some of the largest brands in the industry.

Intro: India would do well to learn a few lessons from China if it is to boost exports in manufacturing sector 

Body Copy: For decades, India campaigned for abolition of MFA (Multi Fibre Agreement) quotas. These restricted, how much natural fabric made products, a country could export to say, the US or Europe.

Finally, in 2005, the quotas were phased out. That was good news for India. Exports have grown at above 25 percent. But it is even better news for China whose textile exports have shot up 1,000 percent!

China has, over the last decade or so, emerged as the factory of the world. From toys to footwear to electric appliances – it makes and exports everything. Research shows that unless an American firm can shave off 30 percent from its costs, it has little hope of competing with Chinese firms.

It is fashionable to explain China’s success in rather simplistic ways: cheap, hardworking labour, government support and good infrastructure. These however don’t explain why China is doing so well in product categories such as telecom equipment where labour accounts for little in overall costs. Besides, if cheap labour confers such an unbeatable advantage, why has Vietnam not taken over!

The point is that labour and even capital costs less in China but that is not the only reason for its phenomenal success. There is a strong supply chain angle too.

Robust supply chain clusters are as important to China’s manufacturing miracle. An industrial cluster is essentially a collection of many interrelated supply chains (or supply networks) containing many levels of independent suppliers and manufacturers with different suppliers possibly serving the same manufacturer, and different manufactures ordering from the same supplier. These many-to-one, one-to-many, or many-to-many relationships are also possible between the manufacturers and customers. There are now well more than 1,000 supply clusters for export products, covering almost every major product category.

How do they help?

There are four parts to the whole equation: facilities, transportation, inventory, and information. The greater the flexibility, the more effective the supply chain. A cluster has hundreds of facilities – essentially manufacturing units – that can churn out a product or component. In case, one company cannot scale production to meet a spike in demand, additional inputs can always be sourced from another player. Capacity pooling becomes possible due to geographic proximity.

It also makes it easier for a logistics service provider to aggregate cargo and therefore operate with greater efficiencies. Consider the fact that enormous quantities of products are exported from China and an estimated 60 percent of Chinese exports are made from imported materials. Bulk and aggregated full truckload or containerload shipping obviously becomes a competitive necessity. The cost benefits from such massive consolidation trickle down to the individual firms and ultimately to the end customer.

Moreover, the short travel distances allow for increased responsiveness and efficiencies. Geographic proximity of the facilities and activities within a supply cluster facilitates the flow of inventories (raw, work-in-process, or finished-good inventories) in a somewhat just-in-time manner. With frequent small shipments occurring between facilities, in-transit inventories—which tie up working capital—are minimized. In reality, this is the current management practice in China. Many firms use a continuous replenishment ordering policy although they may not be able to identify the process as such.

Within the supply cluster itself, shipping costs between suppliers and manufacturers are greatly reduced because of the close proximity of these firms. Consider the example of the Flextronics production campus in the Pearl River Delta town of Doumen, Guangdong province. Situated within 149 acres are 13 factories employing 18,000 workers producing cell phones, X-box game consoles, PCs, and other hardware. Within a two-hour driving distance of these factories are thousands of suppliers that provide almost every service and production support required by Flextronics. This logistical setup alone results in component costs that are less than 20 percent of similar products produced in the United States.

Two of the main difficulties of managing a supply chain are determining system wide costs and dealing with demand uncertainty. A supply cluster addresses both of these challenges through its inherent advantages in efficiency, effectiveness, and flexibility.

The point: Efficiency and effectiveness of supply chain influences competitiveness of not just a company but a country as well.

Intro:  With the ever-growing strategic role of Supply Chain Management (SCM) in businesses, things have never been rosier for SCM professionals

Matter begins:  From amoeba to dinosaurs, or from the first steam engine to the modern day auto marvels, the constant underlying theme of every change has been evolution. And invariably, what has underpinned this evolution is the environment. Supply chain management has been no different either. From a modest beginning as a loose coupling agent among functions—such as purchasing, manufacturing, and logistics—to an integrated and cross-functional discipline today, it has been a remarkable journey for SCM. It has provided critical value addition to businesses in terms of supply and demand management, sourcing, inbound transportation and logistics, manufacturing, quality assurance, outbound distribution and customer support. And all of this has been driven by continuously evolving business needs. So the movement of supply management professionals up the corporate ladder today is only logical, considering the afore-mentioned competitive advantages they bring on board. But this opportunity also brings its own set of challenges.

The constantly changing business environment demands continuous evaluation and updating of specific skill sets on the part of SCM professionals. Complex global markets and greater expectations from customers and corporate boardroom are driving this change. The reason is very simple- what’s in vogue today might well be useless tomorrow. Things like strategic sourcing, spend analysis or supplier development processes — terms that didn't exist 15 years ago — are prime examples. The demands on SCM professionals to handle multiple supply chain functions in terms of both operational and managerial work has never been greater. Established subject-matter expertise involves real-time appreciation of the day-to-day processes, challenges and issues in various supply chain functions. The ability to identify and evaluate trade-offs between functional obligations and organizational goals, is another vital aspect of the modern-day SCM professional’s skill set requirements. As a case in point, a SCM professional must be able to balance customer service and quality with total supply chain costs. For this to materialize, he or she has to have a good understanding of the entire spectrum of supply chain planning, management, and measurement activities involved in purchasing, manufacturing, and logistics.

Effective technical skill in terms of applying information technology (IT) to supply chain is another critical aspect. With IT enabling SCM in a big way, a better appreciation of technology selection, implementation and application is paramount for any aspiring SCM guy. Team building and leadership have also become crucial. Ability to lead projects-both at an internal and external level is an imperative. Other soft skills like communication, negotiation, problem solving, customer focus, change management, conflict resolution and project management are also vital aspects of context-independent abilities. All of this is reflected in the fact that enterprise performance is directly related to supply chain performance.

So how to do it then? Well, the approach is to freeze the vast requirements into a three-pronged framework around the organization's short- and long-term strategic goals, and then drill it down to the specifics of the supply management department. Putting it simply, three categories define the broad contours of the framework: Technical & Process Skills (TP), Creative & Strategic Skills (CS) and Interpersonal & People Skills (IP).

Now comes the solution. On a starting note, play a pro-active role in terms of participation in industry conferences and associations and publication in business/professional journals. Certifications are another way out, with many organizations like CSCMP (Council of Supply Chain Management Professionals) and APICS (Association for Operations Management) offering courses for working professionals. Another approach is by means of a strategic partnership between enterprises and educational institutions, to identify the skill set gaps and eliminate them with customized training. At the same time, real-time tracking of changing business needs will ensure that the competency requirements are in sync with the change.

Intro: Despite various resource constraints, all is not gloomy for small and medium enterprises (SMEs) as far as their logistics operations are concerned.

Smart and innovative approach is the need of the hour.

Matter begins: David vs. Goliath has always been a classic case of the underdog pitted against the seemingly overwhelming, stronger opponent. Well, in today’s cut-throat free-market economy, life’s certainly not easy for small and medium enterprises (SMEs). Delivering the right product at the right time and place to the consumer has become critical to any business’ success, irrespective of its size. And in this battle for the consumer’s attention, logistics planning has come to play a crucial role.

By the dint of their smaller size, SMEs face a number of constraints as compared to the bigger, resource-rich enterprises: financial prowess and human resources being the two most crucial ones. With less to spend on logistics infrastructure, SMEs are at a distinct disadvantage vis-à-vis the big players, at least on paper. This entails both in-bound logistics as well as out-bound logistics. In an SME, typically, raw materials are procured from suppliers/dealers through different transport service providers. Thus, the cost and time taken in each case varies. The picture is pretty much the same at the other end of the spectrum as well. Finished goods are dispatched to different customer locations at highly fluctuating distribution costs. This impacts adversely the delivery reliability and customer satisfaction. So the whole value chain suffers, right from the backend to the front-end, i.e. from the supplier stage to the buyer of the final product.

Lack of enough human resources is another challenge for SMEs when it comes to executing various logistics-related work processes. Be it mapping inventory management activities to the supply-chain, or production scheduling based on the demand forecast, SMEs don’t have the employee strength to allocate dedicated resources for these kinds of activities. So one might have a scenario where the product could be well-established but might not be available to the consumer at a particular time of the year, due to the inability of the company to read the market demand and ensure sufficient stocking with its retailers.

So is there a way for SMEs to get over their logistics woes?

Well, innovation has got to be the key. A new customized approach for SMEs has come in the form of ‘collaborative logistics framework’, or ‘Cluster logistics framework’. Based on Michael Porter’s concept of clustering, this approach articulates the formation of ‘clusters’, geographic concentration of inter-connected companies, e.g. suppliers of inputs, providers of specialized infrastructure.

The idea thus is to have a common transport service provider capability as well as a common warehouse. This concept of shared logistics will help the cluster members to reduce their outward linkages’ costs and also eliminate costs incurred in delayed delivery. Thus, time and cost savings will be possible for SMEs, right from procurement to in-time delivery. Another value-addition in this framework is the ‘common resource person’, who will work on the demand planning, forecasting, supply planning, delivery planning etc, thus allowing SMEs to concentrate on their core businesses.

Third party logistics, 3PL is another way out for SMEs. 3PLs offer services in many areas including warehouse management, shipment consolidation, transport planning and inventory management. The advantages of outsourcing one’s logistics work to a 3PL are multi-fold. First and foremost, it leads to lesser expenditure on investment in infrastructure, such as fleet of trucks, which act as a ‘fixed cost’ overhead for the SME. The company would also benefit from extended reach of the product, decreased delivery times and reduced need for management supervision. To ensure more ROI for their customers, 3PLs today are also giving clients access to latest technology at lower costs, helping them to build more agile supply chains. But while going in for a 3PL vendor, one should look at factors like cost, its field of expertise, scalability, geographic access, information systems capabilities etc