1.

Eight best practices for supply chain outsourcing

TOI Tech Sep 7, 2011, 08.02pm IST

(Surviving as a 21st-century)

NEW DELHI: Surviving as a 21st-century supply chain requires operating as a demanddriven value network, according to Gartner, Inc. Orchestrating these value networks means supply chain executives must understand and adopt best practices in selecting, onboarding and managing supply chain outsourcing partners. Therefore, Gartner has identified eight best practices in supply chain outsourcing. "Supply chain executives are starting to apply more comprehensive analysis to outsourcing decisions, such as factoring in agility, responsiveness and cost," said Michael Dominy, research director at Gartner. "Companies must focus on what they can do best and appropriately outsource activities that value chain partners can do better. This often means using one or more logistics, manufacturing or business process outsourcing (BPO) partners, instead of performing these supply chain activities themselves." "Successful supply chain executives must be able to manage outsourcing partners. That's what we hear from our supply chain clients," Mr. Dominy said. "Based on this feedback and other Gartner research, we have identified eight key best practices that companies should leverage when outsourcing logistics, manufacturing or supply chain management business process outsourcing (SCM BPO). These best practices can help companies avoid some of the key pitfalls associated with supply chain outsourcing." The eight best practices in supply chain outsourcing include: Align the outsourcing strategy with the corporate and supply chain strategy Companies that compete by offering personalized, high-touch customer service need outsourcing partners that have flexible and agile service delivery models. Conversely, companies or supply chain segments within companies that compete on price need lean, operationally efficient and low-cost partners. Because most companies operate several supply chains, it's essential to understand each one before selecting an outsourcing partner.

Understand your current capabilities in managing supply chain outsourcing partners Companies should use Gartner's Demand-Driven Maturity Model to determine how stakeholders view and engage with outsourcing providers. Knowing the current level of maturity will help companies understand what type of outsourcing they require as they become more demand-driven. It also provides insight regarding organizational and interorganizational models and governance. Understand your core competencies, the market participants and the points of overlap The major players in the supply chain outsourcing market are expanding their services into each other's turf. Knowing what services are core and which ones are not for each service provider is an important factor to consider when deciding the activities to award to an outsourcing provider. Make outsourcing decisions based on strategic and tangible factors, not just cost Numerous companies that have outsourced a supply chain function such as manufacturing purely based on direct costs have experienced problems later. Some companies found that total costs didn't improve as much as anticipated because customer service suffered and quality problems increased after outsourcing. In addition to a robust cost-service analysis capability that addresses make/retain versus buy/outsource, companies must incorporate quality, responsiveness, past performance and risk as decision criteria. Understand how corruption and intellectual property (IP) risks differ by country in key outsourcing regions, such as Asia. Such data can be factored into outsourcing decisions, and can be useful when defining policies, procedures and governance for doing business in countries where corruption and IP theft are a greater concern

2. Changing Face Of Supply Chain Mgmt

Namrata Singh, TNN Oct 11, 2010, 01.46am IST

Forecasting, they say, is an inherently erroneous business. When a fast-moving consumer goods (FMCG) player plans a new product launch based on its estimation of demand and consumer preference, the company assumes that the product would click with consumers after it travels the length of the supply chain. It then does some number crunching and manufactures the quantity which it feels would easily meet the market demand. However, if marketing experts are to be believed, there has been a dip in the success rate of new product launches. One reason for this could be the fact that the sheer number of product launches has gone up. It could also be due to flawed supply chain management. Whatever be the reason, for a company whose product has not performed in line with its expectation, there's another problem at hand having to deal with inventory across the supply chain. As one lot of the manufactured product is packed off to godowns, the other lot gathers dust somewhere at the retail end. That's not all. There could also be a demandsupply mismatch if demand exceeds supply and the consumer is left craving for more. FMCG companies understand this predicament well. Some have tried to tweak their go-tomarket approach to base it on consumer demand. The solution, according to experts, lies in turning the supply chain on its head, to make it more demand-driven, rather than supplyled. Experts say understanding where demand would peak and in which parts of the country would result in better success rate of product launches. "The supply chain," agrees Nitin Paranjpe, CEO & MD, Hindustan Unilever (HUL), "needs to respond to the market." Paranjpe says that consumer needs keep changing and so does their expectation. "This would be a constant struggle, but the supply chainin future would be far more responsive to signals. It would start becoming leaner and would keep less inventory. It would, therefore, be able to respond to the many dynamic changes which we will see in the market place," says Paranjpe. In order to make its supply chain more responsive to the changes in the market place, HUL has dramatically reduced its total working capital. In some of its detergent factories, HUL is running 'twin track' on single production lines. This enables the company to not only double its production for better customer service but also to improve its operating efficiencies. In addition, most of its production lines have developed the capability of quick changeovers to meet market demand. Another large FMCG company, Godrej Consumer Products (GCPL), on the other hand, has switched to an efficient replenishment mode. The objective, according to R K Sinha, COO (marketing & operations), GCPL, is to replenish the stocks as they move. "The system, in which GCPL operates by design, is much more responsive. As demand for any product picks up, it is automatically met. There is no manual procedure involved," says Sinha.

There has been a rise in demand for household insecticide products in the last few months due to a high incidence of malaria and dengue. GCPL managed to meet the sudden surge in demand, which resulted in a strong double-digit growth in the category. Had it not been in the replenishment mode, the company would have missed out on this opportunity to hike its sales. "By switching to the replenishment mode, we changed the working style to become more agile both in dealing with rise or fall in demand for a particular product. Any change in consumer demand can be captured by being agile," says Sinha. Similarly, the demand for Godrej's liquid detergent Ezee is higher in the northern region during winters. Over the last few seasons, GCPL has been able to meet the demand by ensuring steady supply of Ezee to pockets where demand was high. "All it takes is a feedback loop to understand how products are moving in the system in different parts of the country," says Sinha. The result is visible in Ezee's growth. While the market for liquid detergents grew by 12% last year, Ezee grew by over 30%. As for new product launches, Sinha says GCPL follows the go-to-market approach for a maximum of one month. "We do not keep forecasting. We quickly move to the dynamic system where we are able to estimate demand and meet the requirement." Globally, Procter & Gamble (P&G) measures consumer satisfaction in what it terms as 'moments of truth'. The first moment of truth arrives when the consumer finds the product she is looking for on the shelf; and the second, when she is satisfied with the product. P&G feels that supply chain management continues to grow and evolve as the pressure to adapt to a constantly changing environment increases. "Change in customer channels, consumer tastes, government policy decisions and new product launches, all impact the manner in which the supply chain operates and delivers," says Gurunath Nayak, supply chain head, P&G India. For P&G, says Nayak, the essence of such management, or the centre of focus, has always been the customer. And that has not changed.

3. Huge business in SCM

Dec 16, 2004, 01.22am IST

There's a great deal of business potential for a variety of IT services, software and hardware in companies that provide supply chain management services. Significant business potential exists in data management, ERP, CRM and Internet-based processes. For service providers, all these are but means to an end -- keeping customers satisfied. What are the practices that vendors are using to keep customers satisfied? This was the key question that the ET Intelligence Group posed in a new survey of supply chain service providers conducted across India between September - October 2004. The replies are interesting. Customer relationship management in all its forms is the most adopted IT best practice for customer satisfaction by companies that provide supply chain and logistics services, reveals the survey, soon to be published by the ETIG. The survey contacted over 80 companies that provided road, sea, air, multimodal, consultation and solutions in supply chain management.

4 Mahindra Logistics scouting for overseas buyouts

PTI Jul 19, 2012, 10.59PM IST

MUMBAI: Mahindra Logistics, a part of the diversified Mahindra Group, today said it is open to overseas acquisitions as part of its plan to become a $ 1-billion firm. "To become a $ 1-billion company, which is our objective in the mid-term, we will look at both organic and inorganic growth. So from a strategy perspective, we will keep targeting certain companies and see how we grow further," Mahindra Logistics CEO Pirojshaw Sarkari told reporters here However, he neither put a timeline to become a billion- dollar entity nor disclosed the possible deal size. Mahindra Logistics wants to partner with players, who will support it in key markets like the US, Europe, Southeast Asia, China and Africa he said. The company will soon enter China, Indonesia and Thailand as part of a plan to extend its third-party logistics solution offerings, he added. In the near-term, Sarkari said the company is looking at over 25 per cent revenue growth in FY13 to over Rs 1,700 crore, notwithstanding the prevailing market conditions. "In terms of revenue, we have been growing briskly in the recent past, despite broader economic concerns. We clocked Rs 1,300 crore last year and expect to close this year with a revenue in excess of Rs 1,700 crore," Sarkari said. "The ultimate goal is to become a $ 1-billion firm with a focus on integrated third party logistics solutions." Mahindra Logistics, which claims to be the largest player in the integrated third-party logistics services space, has presence in both supply change management as well as public transport solutions. Stating that use of IT integration into supply chain management among the factors that provide an edge over rivals, Sarkari said the company has invested $ 1 million in Mahindra Integrated Logistics Execution System that seeks to create value for customers and partners. "Besides, Mahindra Logistics recently invested in over 0.5 million sq ft of modern warehousing in Western part of the country," Sarkari added.

5 Hero Honda to invest Rs 10 cr in IT

PTI May 16, 2004, 12.11pm IST

NEW DELHI: Country's largest motorcycle maker Hero Honda will invest Rs 10 crore in 2004-05 on information technology related initiatives to push for speedier decision making process and better supply chain management. "We will invest Rs 10 crore in IT which will include new initiatives including business intelligence (BI), a module of SAP and on supply chain management which will ensure electonic dealing with dealers and vendors," told S R Balasubramanyam, vice president, information systems, Hero Honda Motors. In the SCM also, Hero Honda will use 'mySAP' module of SAP software suite, he said. Supply chain is the key in automobile industry and is the highest priority in the auto sector, he said while adding the sector will also be data-driven. Last fiscal also the company invested equal amount in IT. The company follows strong IT practices to boost its productivity and cut time-to-market through quick coordination between itself and business partners like dealers and vendors. Auto companies have a low priority towards CRM as they do not directly deal with end customers. Hero Honda is a joint venture between the Hero group and Honda Motors of Japan

6 Rising demand in rural economy helps logistics firms grow by 25 per cent
Manu Balachandran, ET Bureau | May 26, 2012, 10.00AM IST MUMBAI: Indian logistics firms grew at over 25 per cent in fiscal 2011-12 led by a largescale outsourcing of logistics services by manufacturing and services sectors and a steady rise in rural consumption. At a time the domestic economy was grappling with slowdown fears, logistics majors like Blue Dart, Arshiya, DTDC and Allcargo Global reported a robust growth. "More and more companies are now looking to outsource services to logistics companies and logistics companies are also realising the importance of cost-effective measures, helping them grow," said Shashi Kiran Shetty, managing director, Allcargo Global. The growth comes at time when the sector has been witnessing a paradigm shift, with many small-scale and large-scale firms looking to improve presence in the 3PL (third-party logistics sector) market. 3PL players are outsourced to provide an integrated end-to-end logistics solutions such as warehousing, transportation and inventory management, ensuring safe delivery and storage of goods. "There are some avenues from where the logistics sector has been benefiting. E-commerce, pharma, auto industry and consumer demand from Tier-II and Tier-III cities have been good. There has been a wider slowdown, but the logistics sector has been doing better," said Anil Khanna, MD, Blue Dart. Rising demand in rural economy has forced many logistics firms to improve their warehousing capacity since various sectors have been looking to tap potential in rural economy. According to McKinsey Global Institute (MGI), spending in India is expected to increase about 2.5 times by 2025. The middle class population in India is going to increase by about 12 times during 2005-25, fueling consumption demand, the report had said. "Every year, more than 11 million jobs are added and this would translate into increased consumption and more products to be sold. It makes more sense to outsource the logistics service to specialised logistics companies and this would mean more business for the sector," said Ajay Mittal of Arshiya International. According to industry experts, the logistics sector has been witnessing a steady growth of 1820 per cent annually and the combined worth of the industry is likely to touch more than Rs. 6,000 crore by 2015. The fast growth in the sector comes at a time when the Indian

economy has been grappling a slowdown, with the Index of industrial production growing by only 2.8 per cent in 2011-12 against 8.2 per cent in 2010-11. According to forecasts by the IMF, India's GDP is expected to grow by 6.9 per cent in 2012. India has one of the highest logistics costs at more than 13 per cent of GDP compared with 8-9 per cent in the developed world. The sector has also seen an increased interest from private equity majors. In recent times, New York-based private equity fund, India Equity Partners, acquired the road operations of Dutch freight major TNT Express in India. In April, Warburg Pincus acquired Chennai-based logistics firm Continental Warehousing Corporation and Ashmore Alchemy Investment Advisors invested more than $10 million in Siesta Logistics Corp.

7 Gati to invest $100 million in expansion

PTI Feb 25, 2008, 04.20pm IST

NEW DELHI: Logistics and supply chain management company Gati Ltd will invest $100 million over the next 18 months to expand operations in the domestic and overseas markets as it expects to become a Rs 1,000 crore firm by 2008-09. The company plans to spend $100 million for expanding warehouses, build up IT capabilities and entering new business areas. "We would complete the planned investment of $100 million by June 2009 to expand our warehouses and other services. The company intends to touch a top line of Rs 1,000 crore by the end of the proposed expansion," Gati Ltd Managing Director Mahendra Agarwal told reporters here. He said the company, which operates a July-June fiscal, closed 2006-07 with revenues of Rs 460 crore. Gati plans to fund the proposed expansion through a mix of internal accruals and debt. The company has already raised $40 million, while the remaining $60 million would come from internal accruals. The company had tied up with Air India to launch AI Gati Zipp service in November last year. It would soon expand its fleet size by adding third aircraft next week. Air freight carriage presently contributes 15 per cent to Gati's turnover. Gati today entered into a strategic alliance with Amsterdam-based parcel service provider General Logistics Systems (GLS), to start its operations in Europe. The company, which covers 594 out of 604 districts in India, would act as the strategic partner of GLS in India. "The alliance with Gati is specially designed to provide both GLS and Gati customers the advantages of size, reach, flexibility along with infrastructure to provide unmatched service levels in India and Europe," GLS Managing Director Saadi Al-Soudani said

8 Deutsche Post DHL buys Lemuir Group's stake in JV

PTI Apr 5, 2012, 08.11PM IST

MUMBAI: Deutsche Post DHL, the world's leading postal and logistics group, today said it has acquired the 24 per cent stake held by Lemuir Group in their joint venture. With this acquisition, the JV, DHL Lemuir Logistics Pvt Ltd, becomes a 100 per cent subsidiary of Deutsche Post DHL, a company release said here. The entity has been renamed as DHL Logistics Pvt Ltd. "DHL and its heritage organisations have shared a long and fruitful association with the Lemuir Group for over 30 years through agency and joint ventures," DHL Global Forwarding CEO (South Asia) Thomas Tieber said. The stake buyout further consolidates Deutsche Post DHL's position as the leader in international freight forwarding, supply chain management and customs brokerage services in India, the release said. Deutsche Post DHL began operating their global forwarding business in India through the earlier joint venture, DHL Danzas Lemuir Pvt Ltd. In 2007, a new JV, DHL Lemuir Logistics Pvt Ltd, was formed following Exel joining Deutsche Post DHL's global fold in December 2005. In India, this consolidated joint venture combined the general cargo businesses of DHL Danzas Lemuir, Exel India Pvt Ltd and Lemuir.

9 Essar Shipping to merge India Shipping with itself

PTI Feb 14, 2008, 01.03am IST

MUMBAI: Ruias-promoted Essar Shipping on Wednesday said it will merge with itself India Shipping, the holding company of Mauritius-based Essar Oilfields Services Ltd. Under the proposal, shareholders would get 32 shares of Essar Shipping for every 100 shares held in India Shipping. The scheme has been approved by the reorganisation committee of Essar Shipping's board of directors, the company said in a filling to the Bombay Stock Exchange. In reaching the swap ratio, the committee considered the value of Essar Shipping's shares at Rs 220 each, representing a premium of Rs 14.05 per share (6.82%). Consequent to the amalgamation, Essar Oilfields Services Ltd will become a wholly-owned subsidiary of Essar Shipping. The scheme also envisages amalgamation of Essar Sisco Ship Management Co Ltd (ESSMC), but since ESSMC is a wholly-owned arm of Essar Shipping, no shares of the company would be issued and allotted upon amalgamation.

10 Tata's DIESL eyes topslot in $ 90 bn logistics space

PTI Jul 17, 2011, 02.54pm IST

NEW DELHI: Tata Group's logistics arm, DIESL today said it has embarked on an expansion drive to emerge as the market leader in USD 90 billion domestic supply-chain industry and would consolidate its presence in the retail segment by 2012. It also plans setting up nine major hubs in the country by 2013 to provide logistics, transportation, warehousing, distribution among other services.

"We are among top four players in the domestic logistic industry and aim to occupy the top slot by 2015. We have added 1 million square feet in 2010 taking the total area of our 176 warehouses to 5.3 million square feet and would set up nine hubs in next 30 months," (DIESL) CEO Ajay Chopra told PTI. Drive India Enterprise Solutions Ltd (DIESL), a joint venture between Tata Industries and Tata International will set up five hubs in Delhi, Mumbai, Chennai, Kolkata and Guwahati in the next 18 months. Remaining four will be set up at other strategic locations by 2013, Chopra said, adding that the company was also focussed on bulk logistics in the eastern and north-eastern region, setting facilities for cement and steel production. Besides consolidating its domestic presence, DIESL may plan looking at overseas markets, especially in the South East Asian countries like Singapore, under Noel Tata who has taken over Chairman of DIESL, Chopra said. Noel Tata, who is considered a possible successor of Ratan Tata for the USD 70 billion salt-to-software Tata empire took over as DIESL Chairman in May this year. Chopra said that under his leadership, the company was planning to strengthen its position in the retail segment, which at present constitutes only 10 per cent of the firm's total revenue of Rs 300 crore. "We are continuously focussing on retail side and plan to gradually take into fold the services from major Tata brands in retail like Westside, Trent Star Bazaar. We are giving stress on technology augmentation, too, to become capable of daily replenishment need of the retail sector," Chopra said. He said that at present company's over 80 per cent of its clientele was outside its fold, including brands like Sony and Philips. Expressing hope that GST regime will boost the domestic sector, he said that with innovative services and technology, DIESL would be well armed to compete with the global players. Indian supply chain is said to be driven more by tax savings reasons than by logistics efficiency, thereby, driving up the logistics cost.

11 Indias 1st dedicated milk train to chug from Amul

Prashant Rupera, TNN Feb 24, 2010, 12.15am IST

VADODARA: In a first of its kind, Gujarat's second largest dairy Dudhsagar Dairy of Mehsana is all set to flag off a dedicated train to transport milk to the country's biggest milk market, Delhi, on a daily basis by the end of this year. Sources in the dairy suggest that Adani group that provides integrated logistics solutions for movement of commodities through its arm Adani Logistics Limited (ALL) has shown interest in the project for which the dairy cooperative union and ALL are expected to sign an MoU soon, turning it into the first such initiative in the country's dairy sector. Mehsana Dairy's chairman Vipul Chaudhary told TOI on Tuesday that although there are dairies in the country that transport milk through wagons which are attached to other parcel or passenger trains, the world's largest dairy co-operative Fonterra group is at present the only one that is known globally for running such milk trains in New Zealand. "We are in talks with a number of players, including GoI undertaking Container Corporation of India Limited (Concor) and Adani group which has already developed Adani Logistics Park at Patli, 15 km away from Mehsana Dairy's satellite dairy at Manesar in Haryana. The latter is pursuing the project more aggressively," Chaudhary added. At present, Mehsana Dairy spends Rs 40 crore annually to transport around 12 lakh litres milk daily via road in tankers from Mehsana to its Dudhmansagar plant in Manesar, where the milk is processed, packaged, transported to Delhi market and sold under 'Amul' brand name. "By sending milk through rail route, we would save 50 per cent of transportation cost," said Chaudhary. "Milk will be carried in insulated tankers of 24,000 litres capacity each (50 bogies for 12 lakh litres)," said manager (sales & logistics) of Mehsana Dairy Pulak Mukherjee, adding that the dairy already has the required land for a railway siding which will come up at the land owned by erstwhile Mehsana Regional Telibiya Utpadak Sahakari Sangh Limited at Jagudan. Recently, north Gujarat-based Banas Dairy had flagged off a train carrying four lakh litres of milk from Palanpur to Kanpur in Uttar Pradesh

12 Reliance may set sail with logistics arm

TNN Oct 23, 2006, 12.42am IST

MUMBAI: Reliance Logistics (RLL), a part of Mukesh Ambani's Reliance group, is in the process of starting its coastal services. The move assumes significance as it may be a precursor for the Reliance group to have its own fleet of ships. With a 30 million tonne refinery at Jamnagar in Gujarat to be doubled by early 2008, Reliance's requirement for ships is set to double. At present, Reliance Industries hires ships to move its captive cargo ranging from crude oil, chemicals, polymers to liquid fuel. The new refining capacity, being built at the cost of Rs 25,000 crore, is being designed for exports by Reliance Industries. RIL imports over 70% of its crude requirement from the Arabian gulf. RLL, that provides end-to-end transportation, is initially looking at partnering a shipping company to run small container ships along the Indian coast. RLL is in talks with 3-4 firms for hiring coastal ships on long-term charter, sources said. Initially, the focus will be to run coastal service along the western coast to cover important ports like Kandla, Kochi, Tuticorin and Mangalore. This part of the Indian coast sees a lot of movement of cargo including iron ore, tiles, marble stone and coal. Later, the company plans to extend the service to the eastern coast. Reliance Logistics has started the trial run of coastal services by transporting pet coke for its parent company. Once the coastal service is established, RLL plans to buy ships, sources said. Looking at the profile of cargo, Reliance Logistics is focusing on container vessels of 3-4,000 TEUs (twenty feet equivalent units) each. These vessels will carry cargo in containers of 20 feet or 40 feet length. Adding coastal services to its already established rail and road operations makes sense at it bring 10-15% freight advantage. However, this benefit will be available for cargo that will be consumed within 50-100 km away from the port. RLL is already preparing the market feasibility report for its coastal services and offering the option to its existing 400-odd customers.

13 India's supply chain chaos will be next hurdle for global retailers

Major cities in India are thousands of miles apart, connected by pot-holed and clogged roads or creaking railways where wagons are in short supply. Reuters | Nov 27, 2011, 06.54PM IST

MUMBAI: Seven years ago, when India's Future Group retail giant sent shipments from Mumbai on the country's west coast to Kolkata in the north-east, the products took 10 nervous days to arrive. "You sent the goods, and until you received them, you just prayed," said Anshuman Singh, managing director and chief executive officer of Future Supply Chains. "There was just a black hole until they finally reached the destination." Since then, he has wrestled with shoddy roads, minimal cold storage capacity and a myriad of state regulations and taxes to cut the journey to 72 hours. That challenge is all to come for foreign retailers eyeing a slice of India's $450 billion market. Major cities in Asia's third-largest economy are thousands of miles apart, connected by potholed and clogged roads or creaking railways where wagons are in short supply. Global giants such as Wal-Mart may be eager to start selling their wares to 1.2 billion people, but a need to first tackle India's logistical headaches will likely mean they will be heavily dependent on local expertise. India's government last week approved 51 percent foreign direct investment in supermarkets, ending years of legislative hand-wringing over a policy seen modernising the industry. To appease those who say it will destroy local shopkeepers, rules mean foreign retailers must source almost a third of their produce from small industries, invest a minimum of $100 million and spend half of that on "back end" supply infrastructure. "Global retailers have expertise from around the world, but in India they will have to develop it," said Singh, who ships 2 million items a day, including 95 percent of the goods sold by Future Group's retail arm, Pantaloon Retail India Ltd.

"They will all have to go through the learning curve on their own." Today, GPS tracking means each of his firm's consignments are monitored every metre, from a vast warehouse outside Mumbai to the bright aisles of an air-conditioned Kolkata supermarket. CHAOTIC SUPPLY At 4 a.m. every day, hundreds of vegetable traders begin to pack the pavements of one of Mumbai's trunk roads. Hours later, milling retail customers and piles of pungent produce bring three lanes of traffic to a halt in the morning sunshine. Mounds of potatoes lie inches from the tyres of trucks and cars trundling past, as traders dodge commuters to carry sacks of coriander and boxes of cabbages on their shoulders through clouds of exhaust fumes and the stench of rotting produce. Around 30 percent of India's vast fruit and vegetable production goes to waste due to a traditional supply network that uses hand-pulled wooden carts more than refrigerated freight wagons and keeps fresh produce highly regionalised. "India cannot be seen as easy," Viney Singh, managing director of Max Hypermarkets, a sixyear old local supermarket chain with a licence from European retailer Spar told Reuters. "There are some players that have been in the retail business for more than 10 years, and til date there is no hypermarket player that has made any money." The chaos of Mumbai's Dadar market is a universe away from Future Supply Chain's chilled 125,000 square foot (11,600 sq metre) warehouse 50 km (30 miles) from the city, where fork-lifts move crates on shelves rising up to the 17 metre-high (53-foot) roof, and 150 workers feed hundreds of metres of computer-controlled conveyor belts. "Retail is all about filling the shelves, on time, every time," said Future Supply Chain's Singh. "In India, the technical know-how, expertise... requires a lot of learning, it is not common knowledge here." His six-month old site in Bhiwandi is one of 50 warehouses across the country that supply the Future Group's outlets in 300 cities -- attracting over 300 million footfalls a year. LOCAL KNOWLEDGE

Some global players with sourcing operations in India, such as London-listed Tesco Plc, have first-hand experience of the country's poor warehouse space, unreliable transport links and chronic lack of cold-chain storage. Without local expertise or a huge amount of investment, domestic retail executives say overseas players could struggle to stack the shelves. "It certainly will not be easy for players coming in," said Max Hypermarket's Singh, whose chain has nine stores in India and plans for five more before March 2012. A race to gain market share in one of the world's largest untapped markets is likely to spur lucrative deals for local players with established supply chains, industry analysts say. That could mean a windfall for firms such as Pantaloon, the Tata Group's Trent Ltd andShopper's Stop Ltd, and make local expertise a valuable currency in getting products to market quickly and cheaply. "If some of them want to throw dollars, burn some cash to build it, they can," said Future Supply Chain's Singh. "We are ready made for them. They can use us. "

14 Tracking success via supply chain management

TNN May 4, 2006, 02.05am IST

LUCKNOW: Supply chain management (SCM) of a country is a real indicator of it's position on the development track. India's current spending of only around fourteen per cent of its GDP on SCM is an important factor for the nation's developing status. If Vision 2020 has to achieved, this trend has to change in quick time. This is how director of IIT, Roorkee Prof Prem Vrat laid emphasis on the importance of having a world class SCM in place. Vrat was delivering the keynote address at 'Technology Conclave' being organised by Tata Consultancy Services in the state capital on Wednesday. While defining the concept of SCM Vrat said,"A supply chain management is essentially an efficient integration of systems affecting suppliers, manufacturers, warehouses and retailers so that merchandise is produced and distributed in quick 'through put' time. In today's glocal world information technology enabled SCM is making it possible to view the complete inflow of raw materials in any system and see the outflow as well". To drive home the point Vrat went to say that basically liberalisation, privatisation and globalisation converge to form LPG which is a gas. 'All the talk about these varied field would prove to revolve in thin air until unless it is having a solid backing of SCM. Now when a decade has passed post liberalisation the main hindrance in decision making pertaining to any kind of development work is age old bureaucracy. This has to be taken care of if we plan to achieve the President's goal of being a developed nation by 2020," he added. Vrat talked in length about the challenges in employing an efficient SCM. He said that even more important than having good information technology backing for adapting SCM, is the need to change the mindset and work culture." Today globalisation has set in. So the company which is selling its product in Mexico might be procuring the raw material from Africa, doing research and development in European Union and finally assembling the product in India. To manage a supply chain of this magnitude not only requires good IT backing but also amalgamation of work cultures", he said. While delivering his speech on 'Managing Technology Led Innovation', Director of IIML Dr. Devi Singh began with a famous saying,"I believe in waste. Waste is an indicator of the underlying creativity". He stressed the need for organisation promoting creativity. Singh quoted the famous chief executive of Time Warner who had said, 'in this company you will get fired for not making mistakes". Chief guest for the occasion chief secretary of state government NC Bajpai gave insight into the futuristic planning of the administration. Terming UP as 'Unlimited Potential' state, Bajpai informed that the Uttar Pradesh Development Council is meeting again on May 12 to strategise for future action. Bajpai also hailed the efforts of state government to come out with pro-industrialisation policies like the recent power policy. Regional manager of TCS Jayant Krishna also emphasised the need for evolving and effectively employing IT backed SCM. He described the future SCM as e-SCM and reiterated that major corporations in India as well are now shifting towards this platform in order to gain edge in the global market.

15 FedEx to acquire AFL to step up India play

ET Bureau Nov 4, 2010, 01.22am IST

MUMBAI: Fedex, the world's largest package delivery company, will acquire Mumbai-based integrated logistics services provider AFL through its subsidiary, FedEx Express, for an undisclosed sum. This is the second acquisition by the US-based company in the past three years, as it looks to increase its presence in the fast-growing Indian air freight sector. Blue Dart is leading the Rs 3,000-crore Indian air cargo market with a market share of nearly 45%. The cargo market is seeing intense competition with the entry of players such as Reliance. "FedEx will now look to provide one-stop logistics solution," said Indraneel Sen, marketing head of FedEx India. FedEx, which acquired Prakash Air Freight Express in 2007 for Rs 132 crore, is now planning to strengthen its domestic network with the acquisition of AFL. But analysts feel that this acquisition has been due. "There is likely to be some consolidation in this sector. With the arrival of Reliance and the increased presence of DHL, it was necessary for FedEx to improve their domestic network. Since GATI was not available for sale, AFL seemed the best," said Sonam Udasi, head of research at IDBI Capital. Cyrus Guzdar-led AFL had earlier severed its tie-up with DHL, following DHL's acquisition of Blue Dart in 2002 and was increasingly becoming a peripheral player. The tie-up had allowed AFL to use the DHL brand name. "AFL will be providing a 20-year old network to FedEx and also a captive business of a decent customer base. In addition, they will also offer the sought-after warehousing facilities which FedEx does not have currently. This is going to give FedEx's penetration in India a flip and increase the reach of FedEx," said Hemanth DP, COO at GMR Airports, and a logistics expert. AFL has been in the Indian domestic freight industry for the past six decades, with 50 warehouses and 23 hubs in India. The company also operates to more than 1,400 destinations in India. FedEx will acquire the logistics, distribution and express businesses of AFL and its affiliate, Unifreight India. The Indian logistics sector often grows at a multiplier rate of two times the GDP growth. And with the infrastructure sector growing at a faster pace, this rate is likely to increase and this is luring large players to invest in the logistics sector. Analysts believe that India will be the fifth-largest country in terms of purchasing power parity (PPP) and this can also add to the growth of the logistics sector. Post the acquisition, Cyrus Guzdar will be appointed as executive advisor to FedEx and the deal is likely to be closed by February 2011.

16 TNT renews talks to buy stake in Gati's express cargo business

MUMBAI/HYDERABAD: Speculation about promoters of Gati Ltd, a leading domestic logistics and supply chain solutions firm, selling stake to a foreign strategic buyer returned this week, even as the name of Dutch express distribution giant TNT emerged as a potential frontrunner. The possibility of promoter shedding stake in Gati has been a long-running rumour with the company, as usual, denying any such development. A top official who did not wish to be named said that his company getting offers from potential suitors was nothing new. But the latest bout of speculation sets in at a time when Gati has engaged one of the top four global consulting firms for a major restructuring of its operations. At least two sources familiar with the development said discussions between Hyderabad-based Gati and TNT are under way, but cautioned that deal making has not reached a definitive stage. One source said that Gati promoters could rope in a strategic partner, who could possibly take a majority stake, in their core express delivery business post-restructuring. This division accounts for over 55% share of Gati's consolidated turnover of nearly Rs 1,000 crore. Gati's other operations such as shipping (GatiShips) and petrol pumps are being hived off as part of the ongoing corporate overhaul. The company's demerger of the shipping business would help it to stay focused on its mainstay express distribution and logistics operations, with a special focus on cold chain. A second source said TNT has had protracted talks with Gati over the last few years for a deal in the express delivery business. The names of another global peer United Parcel Services (UPS) and emerging domestic rivals like Coffee Day Holdings, a diversified plantation to cafe enterprise, which entered the logistics play recently, have been linked to Gati in recent past. TNT's local unit, which is focused on the express delivery, has been on the look out for acquisitions even as its international peers DHL and FedEx effected buyouts in the Indian market. A TNT India spokesperson declined to comment on market speculation. Gati had slipped into the red in FY09 when it was troubled by operational inefficiencies of its aircraft fleet, which it got rid of eventually, as well as losses in its shipping business. The company returned into the black the following year and embarked on a restructuring move. Gati wound up its courier business in November last year, which, company sources pointed out, contributed less than 1% of turnover but was a considerable drain on resources. The Indian logistics space has been on a consolidation drive of late with FedEx's acquisition of Mumbai-based integrated logistics services provider AFL Logistics, logistics firm Transport Corporation of India ( TCI) picking up 51% equity stake in Infinite Logistics Solutions and Tanglin Retail Realty Developments, a group company of Coffee Day

Resorts acquiring a majority control in Sical Logistics from the AC Muthiah family. The biggest acquisition in India's $80-billion logistics industry happened when the German logistics major DHL acquired a majority stake in Blue Dart Express for Rs 732 crore in 2004.

17 Ashok Leyland, Telco to vie for defence orders

Byas Anand, TNN Aug 28, 2003, 11.41pm IST

NEW DELHI: Truck market rivals Telco and Ashok Leyland are now gearing up to slug it out in the battlefield as well. Eyeing an emerging opportunity in the recently liberalised defence equipment market, both the commercial vehicle makers are preparing a foray into this market with their respective light-armoured trucks. Both Tata and Ashok Leyland have sought an industrial license from the industry ministry to move ahead with production of these armoured vehicles. While Tata Engineering is planning to foray into the defence market through a separate wing within the organisation, the Hinduja group flagship will address the market through joint-venture firm Automotive Coaches and Components. "We see a great potential in this market and have decided to seek an industrial license for making armoured vehicles that would be built on our existing vehicle platforms. We may later also look at a tie up with an international partner for the venture...but it's too premature," Telco sources The Times of India. But a company spokesperson, when contacted, refused to comment. But for Ashok Leyland, this is its second attempt at entering the defence market, after its previous proposal was rejected by the industry ministry. The firm has now decided to address the market through its JV with the Tamil Nadu government. Ashok Leyland owns 24.3 per cent stake in Automotive Coaches, which is currently engaged in the business of making after-chassis products and components for commercial vehicles. The company is also in negotiations with leading players globally to source technology for producing these vehicles at its Chennai plant. It is also in the process of developing a high mobility vehicle, field artillery tractor, truck fire fighting Vehicle and mid-range logistics vehicle. Both Telco and Ashok Leyland currently supply logistics vehicles and ambulances to the defence forces

18 Apollo PE in talks for $100 million Gati stake

Boby Kurian & Reeba Zachariah, TNN | Aug 3, 2011, 01.27AM IST

MUMBAI: Private equity giant Apollo Global Management is holding talks with courier and shipping firm Gati for $100 million minority investment, said a source familiar with the development. The deal might involve upfront equity and convertible instruments giving Apollo hold over significant minority interest in the Rs 751-crore company, based in Secundrabad. The promoters, Mahendra Agarwal and family, hold around 50% stake in Gati whose shares on Monday closed at Rs 67.55, marginally down on the BSE. Gati's promoter has explored multiple channels to raise funds in recent past. Apollo was in exclusive discussions with Gati Group, added the source mentioned earlier in the report. Gati's depressed market capitalization makes any investment deal a tough proposition, and would necessarily make it a structured transaction involving convertible equities. "As of now, there are no such plans. We are unable to comment further due to silent period ahead of the results to be announced on August 10," a Gati spokesperson said in response to query on its private equity fund raising and discussions with Apollo. Emailed queries to Apollo's Indian executives remained unanswered. Gati recently said it would sell stake in the shipping division, as the company plans to retire part of its debt estimated at Rs 400 to 500 crore. Apollo manages assets worth $70 billion globally and has struck two deals in India. In June this year, it agreed to invest $500 million into Welspun Group, and prior to that bought $100 million stake in DTH operator Dish TV. Globally, Apollo has done buyout deals in the logistics industry. It purchased the logistics division of TNT-now called Ceva Logistics-for $1.9 billion in 2006. Gati's origins stretches back to 1989, when the Indian express cargo industry barely existed. The concept of door pick up and door delivery was introduced by Gati, according to the company's website. In 2009-10, Gati handled 43 million packages, compared to 33 million packages in the previous year. The Indian logistics industry has been on a consolidation phase, where the big four-DHL,Fedex, UPS and TNT-has snapped up local express distribution companies to gain size and wider coverage of warehouses and distribution points, strengthening their India footprint. On the other hand, Indian business houses like Reliance Industries Group have acquired strategic interest in express cargo companies. An industry source said Gati has been looking for a strategic partner and has had

discussions with MNC rivals in the past. Since most of them have made acquisitions, they are not looking for buyouts in the near horizon, the source added.

19 Hitachi arm buys Flyjac Logistics

Nisha Poddar, ET Now May 1, 2010, 12.48am IST

Hitachi Transport System, an offshoot of Japan's Hitachi, has acquired Flyjac Logistics for nearly Rs 246 crore, giving it a firm footing in India's logistics and warehousing sector. The deal propels Hitachi to the top 10 Indian logistics companies alongside big players such as DHL, Panalpina and Kuehne+Nagel, Flyjac said on Friday. Flyjac Logistics, which is focused on ocean and air freight forwarding facilities, is present in 26 locations and 19 warehouse facilities across India "This deal will trigger consolidation in the unorganised freight forwarding sector in India," Ambit Corporate Finance director Asim Bhuwania told ET NOW. Ambit advised Flyjac on the deal. Japan's Nomura Securities advised Hitachi. Flyjac has 650 employees and is present in 60 countries. The company posted a profit of Rs 14 crore in the year to end-March on revenues of Rs 300 crore. Hitachi Transport, which operates in 285 locations globally, specialises in third-party logistics and warehousing. The company's main focus is heavyweight cargo distribution. Hitachi is the latest in a long line of Japanese companies to enter India. Japan's Nippon Express acquired JI Logistics to enter India in 2007, while Mitsubishi Logistics Corporation is a partner alongside Gateway Distriparks in South Indian cold-chain logistics company Snowman Frozen Foods. NYK, another big player from Japan, too, is present in India.

20 Four Soft in pact with Dubai co to tap Middle East supply chain mgmt market
Swati Bharadwaj Chand, TNN Jul 24, 2012, 07.46PM IST

In a move aimed at strengthening its presence in the Middle East, Hyderabad-based Four Soft Limited, which offers software solutions for logistics, transportation and supply chain management, on Tuesday said it had inked a strategic partnership agreement with Dubaibased supply chain consulting group LaunchPad International LLC. As per the agreement, LaunchPad and Four Soft will work collaboratively to leverage local market knowledge and technology expertise to offer customers in the Middle-East with enhanced solutions that will address growing supply chain challenges, strengthen local market presence and capture potential business opportunities in the region. With this new partnership in place, the BSE and NSE-listed Four Soft, which operates in the logistics and supply chain management domain across North America, Europe and Asia Pacific regions, hopes to now have a wider network to expand its customer base in the Middle East region. "This alliance will be a one-stop shop for complete logistics solutions for our prospective customers in the region and will offer enhanced IT solutions focused on improving efficiency and profitability," said Four Soft's Asia head Bala Krishna Reddy. According to LaunchPad International managing director Ravi Subrahmanyam, the integration of local market knowledge, extended resources of consultants and common business practices the two players would be able to identify and offer the right blend of advanced solutions that would provide rapid business deployment and enhanced flexibility to customers. The Hyderabad-based Four Soft offers software solutions, IT consultancy and BPO services exclusively for the logistics and supply chain management marketplace.