logisticsweek october 16-31, 2011

Four months after the government increased the price of diesel by `3 per liter, supply-chain man-agers at user companies are still coming to terms with the increase in transportation costs. But most of them seem clear that for now any increase in rates will have to be absorbed by the company.

P A Patil, Supply Chain and Business Develop-ment, Lupin, says that companies do factor in a fi ve percent increase in fuel costs when they sign year-ly agreement with service providers. “It is impor-tant to take fuel costs into consideration as they ac-count for 33 percent of the freight costs,” he adds.

The increase in diesel prices is not a new phe-nomenon. From 2005-10, the price of diesel has risen by about 26 percent. This year, in a bid to al-lay protests, the government reduced excise duty on diesel to `2 and abolished the customs duty on petrol and diesel.

Explaining how a sudden increase in fuel pric-es can hit transportation, Devesh Shankar, GM & Head (Logistics and Supply Chain) at Xerox India says, “When we sign contracts with customers and LSPs, the clause of who will bear the onus of in-creased transportation cost in case of rise in fuel prices is thrashed out thoroughly. More often than not, relations between companies and service pro-viders can go sour if one side has to bear the brunt.”

Companies are careful to scrutinize every clause, especially one that makes a mention of the increase in fuel prices. Mr. Shankar adds, “More so, because in the last two years, there have been regular increases in fuel prices and this has shot up transportation costs by 8-18 percent. A few years ago, prices of fuel would be hiked by 6-7 percent.”

Hitting The BrakesFor companies that rely on road transportation, the recent increase in the price of diesel is creat-ing a situation where both, the company as well as the service provider, are unwilling to take the blow. So it is not uncommon for companies

Dear Readers,

Supply-chain heads of manufacturing companies are always elated when they have

managed to cut lead times and excess stock levels, in the bargain improving service offering. But it is no mean task. Recently, during a conversation with a supply-chain head of an auto components manufacturing fi rm, who has partly streamlined vari-ous issues in his supply-chain, he explained how the entire process took almost a year.

Even before touching upon the supply-chain, he had to contend with problems in sourcing and manufacturing. According to him, companies need to follow some austerity measures to achieve certain goals, which he adds is not the case most times.

Transportation is another is-sue that supply-chains must keep a keen eye on. Often, economic circumstances lead transporta-tion companies to play fast and loose with their customers, thus disrupting the supply-chain, not to mention causing agony to the end-users. Most of the supply-chain delays are mainly due to transportation problems and the bureaucracy associated with it. While it is not possible for compa-nies to operate its own transpor-tation network, companies could work out deals with its neighbors (if they have one) and jointly run the logistics thus benefi ting everyone. Believe me, there are success stories.

Your’s truly,Jayashree MendesEditor, LogisticsWeek

Supply-chain departments of user companies are grappling with the in-crease in transportation costs, mainly due to the rise in prices of diesel. So how are they dealing with the problem?

Jayashree Mendes Mumbai

Straights & Bends How Supply ChainTook The Driving WheelMoving from the warehouse fl oor to the boardroom, the rise of the CSCO has changed the way companies compete, says Darryl Judd. PAGE 11

We pick out some choicest quotes that veterans in the supply-chain have to say about the industry.

Trouble In The Middle

PAGE 7

to call in their service providers and work out a middle path that would benefi t both parties. The more generous ones prefer to go with the signed agreement, instead of drawing up a new one. The Sr. Manager (Stores and Logistics) of VE Commercial Vehicles, Rajendra Baheti says, “We have refrained from passing on the hikes to our LSPs. The good news for us is that volumes have gone up and we have increased the vol-ume of business to our transporters.”

The criticality of the goods that compa-nies transport also determines how compa-nies work out deals with transporters. For instance, pharma companies supply life-saving products and need to ensure prompt supply. An industry source close to a large pharma group says, “We have an escalation arrangement and use that mechanism. Im-material of a fuel price hike or a transporta-tion strike, we cannot afford to look at each factor in isolation.”

Those that do not have an escalation agreement are forced to stick to the com-mitment. According to MM Chaphekar, GM (Commercial & Logistics) Endurance Group, a manufacturer of auto components, “Each time with a hike in fuel price, our trans-porters have asked us to compensate them. Since we supply to OEMs (original equip-ment manufacturers), we cannot afford de-lays. According to the SLAs we have signed, there is a clause that states that a price hike of more than 10 percent will call for recon-sideration in rates.”

Mr. Chaphekar adds that most OEMs are not willing to pay more if there are any price hikes during the period of the contract. He adds, “Only when we start a new project with the OEMs can we ask for higher rates. Since we have established relations with our transporters, they have been kind enough to absorb the increase in prices.”

But this is not the case with companies that use air transportation who are usually the worse affected. For instance, Seco Tools uses road and air across the country and in-ternationally. Amul Shinde, Deputy General Manager (Supply Chain) at Seco Tools, says, “We transport about 80 percent of goods by air. Now we are looking at alternatives such as sea route.”

A sea route also implies maintaining a higher inventory, as the turnaround time is longer. The company is now looking at in-creasing the lead times for high priced raw materials and prefers using speed post in Europe, and the local courier in India when the products are not priority. It considers it-self lucky that it gets its transport cost reim-bursed in the USA.

For the future, Seco is planning to be more selective in identifying the high cost items and ship it in advance, so that it does not incur any extra cost. Mr. Shinde adds, “Large courier companies have sterner SLAs in place and charge more. We have now begun moving out business to smaller and regional players that assures quick delivery at a lower price.”

Companies are making several efforts on their part and working out ways so as not to pass on the price burden to consumers. Mr. Shankar says, “For a company that does not manufacture in the country and only distrib-utes (like Xerox), we only have to take into account the cost of employees and transpor-tation. The major component of the logistics cost for us is warehousing and operational costs. With the competition being stiff, we cannot afford to increase costs to customers. It has to be planned.”

Xerox has formed long-term warehouse rental deals and accounts for a 3-5 percent increase in costs. More than that, it sorts it out in a verbal agreement with LSPs.

Editor’s NoteMotorway Blues

success stories.

Your’s truly,

`25logisticsweek.com

October 16–31, 2011

2 October 16—31, 2011 www.logisticsweek.com

nDHL has announced the launch of a Boeing 777F freight-er service between Bangalore and Leipzig. The service will op-erate five times a week. The new freighter will be operated by AeroLogic, a joint venture cargo airline of DHL Express and Luf-thansa Cargo. The B777 freight-er offers more than 100-tonne capacity.

nToyota Kirloskar Motor has begun exports of its “World First, India First”- Toyota Etios & Etios Liva to South Africa. The company plans to begin export by March 2012. The export mod-el of Etios will be built on the same platform as Etios and Etios Liva, manufactured and sold in India. The company will export only the petrol variants of the Etios.

The export model of the Etios will be manufactured at TKM’s second plant located in Bidadi industrial area. The current production capacity in the sec-ond plant is 80,000 units which has been ramped upto 1,20,000 units by 2012 and 2,10,000 units by 2013. The engines and trans-missions are currently being im-ported from Japan.

nApplied Materials, Inc., the world’s leading supplier of manufacturing solutions for the semiconductor, display and solar industries, has appointed Aninda Moitra as Country Presi-dent for Applied Materials In-dia. Mr. Moitra’s responsibilities include overseeing alignment, coordination and execution of Applied’s business, operational and strategic activities in the country.

Mr. Moitra has been with Ap-plied Materials for more than 15 years. Most recently, he was Vice President and Account General Manager in the Sili-con Systems Group. Mr. Moitra earned an MBA from Columbia Business School in New York, and a Bachelor of Science de-gree in chemical engineering from the University of Minne-sota, Twin Cities.

nBrightpoint, Inc., a global leader in providing supply chain solutions to the wireless industry, subsidiary Touchstone Wireless Repair and Logistics,

A quick look at some of the news and other happenings in India and round the world in the last fortnight.

L.P. has entered into a wireless device repair services agree-ment with GoWireless, Inc. Brightpoint will provide a range of repair services to GoWireless to support their more than 300 retail stores, including receiv-ing, triage, refurbishment and Level 1, Level 2 and Level 3 me-chanical repair.

nTwo of the biggest compa-nies in the US will be collecting more information on carbon emissions and other sustainabil-ity data from the largest sources of emissions for most corpora-tions: their supply chains.

Ford will survey 128 suppli-ers, representing 60 percent of its $65 billion in annual pur-chases. Microsoft says that start-ing 2013, it will require a cross section of suppliers to submit reports on their adherence to Microsoft’s Vendor Code of Con-duct, which includes social and environmental policies.

As much as 60 percent of corporate greenhouse gas emis-sions originate in supply chains, according to an analysis pub-lished by McKinsey Quarterly.

nAgility has been awarded a five-year contract by Hen-kel China to be the exclusive logistics partner for its mega HUB project, “Project Dragon.” Project Dragon is designed to streamline Henkel’s manufac-turing in China to cover growth over the next 10 years and to leverage significant economies of scale in manufacturing and supply chain processes.

The contract will start in 2013 and Agility will be provid-ing services ranging from in-bound logistics, warehousing of raw material and finished goods, production supply and clearance and outbound logistics.

nCEVA Logistics’ eco-sustain-able warehouse sited in Dubai has received the prestigious LEED Gold certification. LEED (Leadership in Energy and En-vironmental Design) is an in-ternationally recognized green building certification system, developed by the U.S. Green Building Council (USGBC) and is based on several criteria.

The number four site man-ages an average 40,000 cubic

meters of stock.LEED provides building

owners and operators with a framework for identifying and implementing practical and measurable green building de-sign, construction, operations and maintenance solutions. The certification provides indepen-dent, third-party verification that a building or community is designed and built using strat-egies aimed at achieving high performance in key areas of hu-man and environmental health.

nMercuryGate International Inc., a market leader in Trans-portation Management Soft-ware (TMS), has created the Collegiate SCM program to pro-mote the usage of hi-tech logis-tics tools in classrooms across the country.

MercuryGate’s web-native TMS will be utilized by several of the leading domestic and international universities that feature undergraduate and post graduate SCM & Logistics curri-cula. Faculty members will also use the TMS for special projects including transportation pro-cess re-engineering and value-chain optimization studies.

nIndian Railways is in the process of integrating its vari-ous systems and service compo-nents to play a dominant role in the logistics and supply chain business in the country.

The world’s second largest commercial or utility employ-er has a rolling stock of over 240,000 freight wagons, 60,000 coaches and 9,000 locomotives. The railways also have 4.2 lakh hectares of land, 2,300 goods sheds, dedicated parcel services and freight services. Besides, it has a proven IT infrastructure, including freight operating in-formation system.

It is in the process of integrat-ing. It has come out with three schemes in the recent past. One is for private freight terminals, second for auto logistics hubs and, third for cold chain hubs. For the purpose, it is bringing in the private players to fill in the gap.

nAuto sales, a key barometer of economic buoyancy, may slow down this financial year

three years to build 65 ‘Aadhar Wholesale’ outlets across India. It expects the business to gener-ate revenues of Rs.40bn by the end of 2014.

The chain will initially op-erate in the states of Gujarat, Punjab and Maharashtra. The outlets will stock around 1,500 SKUs, including processed food, personal and home care, general merchandise items and kitchen appliances.

nProduction in the second-ary steel sector of West Bengal has fallen as heavy rains have prevented Coal India Limited (CIL) from supplying enough of the vital raw material. The sec-tor expects to be further hit be-cause there will be no e-auction of coal for it this month. It is on hold to divert the raw material to power stations. These auc-tions are a ‘lifeline’ to the sec-ondary steel sector.

Against the target of 196 MT, largely due to heavy rains the Maharatna company could pro-duce only about 176 MT of coal from April to September.

The decision to put on hold the e-auction for the month of October is expected to aggra-vate the coal crisis for steel pro-ducers as they purchased a bulk of coal through this medium.

nRudra GTL Aviation Ltd is launching private air cargo services between Kolkata and North-Eastern States. The serv-ices for Kolkata-Imphal and Kolkata-Guwahati route will be rolled out within a month. Lucknow-based GTL, a part of Eureka Group of Enterprises, is into logistics and surface trans-port industry. Siliguri-head-quartered Rudra is a ground and cargo handling solution provider.

Rudra GTL has wet leased two ATR 72 aircraft from Dec-can Cargo Express and Logis-tics Ltd. Under the wet lease arrangement, the Deccan pro-vides the aircraft, complete crew, maintenance, and insur-ance (ACMI) to the lessee.

Incidentally, freighters and cargo services introduced by several companies such as Gati, First Flight Couriers and Quickjet in the past have not been very successful in the country.

amid spiraling costs and high interest rates, fear car makers.

Auto companies have dra-matically lowered their growth forecast to 2-4 percent this year from 10-12 percent earlier as sales dropped for the third straight month.

In September, sales slipped 1.8 percent to 165,925 cars, according to data released by Society of Indian Automobile Manufacturers’ (SIAM) early this month. Car sales had actually jumped 30 percent in the fiscal year 2010-11 ended March.

A recovering auto supply chain may have been dealt an-other major blow in the recent weeks, as flooding in Thailand has reached epic levels. The country, which serves as a ma-jor automobile production hub for Asian carmakers, is wit-nessing its worst flooding in 50 years, and logistic problems caused by the flooding could af-fect automobile production.

The automobile supply chain in the region has become a mess, and hundreds of cars that are scheduled for delivery are submerged in water stemming from the Thailand floods.

nEncompass Group Affiliates, Inc., a top provider of replace-ment parts and reverse logis-tics services for a wide range of electronics products, has announced that its subsidiary Encompass Parts Distribution, Inc. has finalized an agreement with Haier, to manage the com-pany’s end-to-end parts supply chain.

Under the agreement, En-compass will procure, ware-house and distribute replace-ment parts for Haier’s full line of consumer electronics, ap-pliance and HVAC products in North America. Encompass has developed a special web portal for Haier servicers and distribu-tors to conveniently search for and order parts, as well as track order status, initiate returns and more.

nThe Future Group has an-nounced plans to launch a rural wholesale and distribution busi-ness under the ‘Aadhar’ brand, under which name it already operates a retail chain. India’s largest retailer said it will spend up to Rs.1 billion over the next

In BrIef

3October 16—31, 2011 www.logisticsweek.com


In this section, LW provides a recap of policy decisions of the last fortnight thatimpact various areas of the industry.

Electronics, Direct Taxes On The Anvil

NEW ELECTRONICS POLICYThe Indian government has announced the draft of a new electronics policy which seeks to build a strong manufactur-ing base and address the issues that are the cause of the current weak manufacturing ecosystem in place.

The draft looks at several long-pending issues, including the creation of a National Elec-tronics Mission that covers the setting up of wafer fabrication facilities, VLSI incubation cen-ters and the development of a so-called “India microprocessor.”

The steps include special and attractive fi nancial incentives for indigenous manufacturing, setting up of wafer fab facilities, giving locally manufactured elec-tronic systems a boost by prefer-ential treatment in purchases, creating a fund for promoting electronics manufacturing in par-ticular, creating scores of clusters for promoting electronics manu-facturing and paying special at-tention to automotive electronics and industrial electronics.

The hope is to grow produc-tion in India from about $20 billion in 2009 to a large but

government would help estab-lish National Manufacturing Investment Zones with world-class infrastructure and invest-ment friendly regulations to boost manufacturing activities.

FIRST IDF EXPECTEDThe Economic Affairs Secretary R Gopalan said he expects In-dia’s fi rst Infrastructure Devel-opment Fund in the next two months and the size of the fund is estimated at $3 billion.

Gopalan said the fund was going through the initial pro-cess of establishment.

The decision to set up IDFs follows an announcement by Fi-nance Minister Pranab Mukher-jee for 2011-12, with a view to accelerating and enhancing fl ow of long-term debt for funding the ambitious program of infrastruc-ture development in the country.

The IDFs could be in the form of a mutual fund or non-banking fi nancial company (NBFC). While the IDF-Mutual Fund would be regulated by the Securities and Exchange Board of India (Sebi), the RBI will be in-charge of the IDF-NBFC.

Gopalan said once the fi rst

unspecifi ed target that includes growing chip design in India to $55 billion and growing tech ex-ports to $80 billion. India’s cur-rent chip design export revenue is about $7.5 billion.

According to the new draft announced by Kapil Sibal, feder-al minister for communications and information technology, the plan is to rename the Depart-ment of Information Technology as the Department of Electronics and Information Technology.

MANUFACTURING POLICYThe union cabinet has given its nod to the national manufac-turing policy that aims to cre-ate 100 million additional jobs by 2025 and develop mega in-dustrial zones with world-class infrastructure facilities and fl exible labor and environment regulations.

The Cabinet Committee on Economic Affairs has approved the policy that also aims to in-crease the share of manufactur-ing in the economy to 25 per-cent from the current around 16 percent.

According to the policy, the

fund is established with Indian investors’ participation, other similar funds would be followed on with participation from for-eign investors.

EXPORTERS GET SOPSThe government has announced `900-crore package for exporters giving a total Diwali bonanza of Rs 1,700 crore, as a pre-emptive move to cushion Indian exports from slowdown in western economies.

The Reserve Bank has al-ready notifi ed interest subsidy of two per cent for handicrafts, handlooms, carpets and small and medium exporters.

The benefi ts will largely ac-crue to exporters of engineer-ing goods, pharmaceuticals and chemicals. Those scouting for markets in Latin America, Africa and CIS (Commonwealth of Inde-pendent States) will be rewarded.

These measures have been incorporated in the annual sup-plement of the Foreign Trade Policy (2009-2014).

Fifty products in engineer-ing, pharmaceuticals and chem-icals would get special bonus of additional one percent of ex-

port value between October and March this fi scal.

DIRECT TAXES CODE SOON There seems to be some hope for the Direct Taxes Code (DTC) to be implemented.

The standing committee on fi nance is likely to meet on No-vember 11 and is likely to table its report towards the end of the winter session of Parliament.

DTC is proposed to come to effect on April 1, 2012.

Among other things the DTC bill proposes zero income tax for income up to Rs 2 lakh, 10 per cent tax on income exceed-ing Rs 2 lakh and up to Rs 5 lakh, 20 per cent for income of more than Rs 5 lakh and up to Rs 10 lakh and 30 per cent for income over Rs 10 lakh a year.

Unlike the direct tax reform, the fate of GST does not seem to be that rosy, since the panel is not in a hurry to amend the bill for indirect tax reform.

The constitution amendment bill sought to keep crude, high-speed diesel, petrol, natural gas, aviation turbine fuel and alco-holic liquor outside GST.

PolIcy uPdates

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Posted by Bob FerrariIt is a Monday morning and I’m facing a six hour plane ride enroute to the Kinaxis Kinexions conference. Not-ing that my carrier is Southwest Airlines, I was com-pelled to not only bring my own food and snacks but to bring lots of reading material to compensate for zero entertainment and creature comfort amenities. One of the best companions, I have found for a long plane ride are unread copies of Economist magazine where there is ample time to read from cover-to-cover. The October 8 issue provided an insightful but stark com-mentary on the business implications of current eco-nomic events occurring across Europe which I suspect will have many potential implications for global supply chain strategy and preparedness.

The article is titled: Under the volcano- how compa-nies are preparing for various scenarios, (paid subscrip-tion or metered view requirement) and it provided some stark reminders that European businesses remain high-ly concerned about current events surrounding Europe’s ongoing sovereign debt crisis and how these events will unfold in fi nancial and economic terms. Some business forecasters believe that the Eurozone could fracture or possibly break apart completely. That would imply implications for credit, infl ation, currency and cross-border trade. Reading of the various scenarios and con-tingencies that some European manufacturers are un-dertaking should cause supply chain executives to also refl ect on contingency planning.

Supply Chain Matters believes that senior supply chain executives, if they have not done so thus far, should be initiating and contemplating scenario plans and contingencies in three potential areas of supply chain impact. These three areas are to buffer overall

business impacts, but in the perspective of crisis bring-ing opportunity, there may be some opportunistic con-siderations to consider as well.

The three contingency areas should include:An impact to B2B, P2P and E-Commerce fulfi llment

strategies involving suppliers and customers located within Eurozone countries. These processes are cur-rently predicated on a single Euro-based currency. If the Eurozone were to split into two-zones, strong and weak, or to split altogether, the implications for sys-tems supporting B2B commerce would be rather fl uid, and potentially complex. There would be implications in supplier contracts in adjusting or re-negotiating fi -nancial exposures, invoicing and currency collection. While contracts may have contingencies already iden-tifi ed, it would be wise to begin a contingency focused analysis of areas of potential impact or exposure. Simi-larly, IT support teams should be thinking about poten-tial systems impacts and response strategies.

Another area could be supply chain shocks in logis-tics/transportation and customs requirements. Today, Europe and global-based manufacturers can assume a seamless physical fl ow of component and fi nished goods across Eurozone countries. Hopefully that will continue, but then again, sudden shocks could occur if certain countries are jettisoned out from the Euro-zone or forced to fall back on independent customs and transport regulations. Severe fi nancial crisis could bring motivation t0 add more import tariff revenues to depleted treasuries or weakened economies.

The third contingency area would be fi nancing of inventory and working capital. Similar to what imme-diately occurred during the 2008-2009 fi nancial melt-down, some European manufacturers, especially those

residing in fi nancially weakened banking sectors such as Greece, Ireland, Italy, Portugal or Spain are already experiencing diffi culty in acquiring affordable access to credit and loans. A worsening of bank fragility or more outright bank failures would cause an additional credit crisis for these companies, and this would im-pact supply chain working capital, production and in-ventory deployment strategies. Mid-market fi rms are especially vulnerable. Financial supply chain, suppler health checks, inventory and tooling investment impli-cations should be considered.

The Economist article additionally notes that many European fi rms are now accelerating efforts to buffer exposure to a potential Europe fi nancial crisis, and are thus are aggressively accelerating plans to market and sell their products within the emerging market econo-mies of China, India and Latin America. That makes lots of sense. But at the same time, non-European com-panies may be afforded added opportunities to com-pete for additional business in these emerging markets by virtue of the existence of a more stable currency, banking or fi nancial system that provides affordable access to fi nancing product innovation, services or add-ed inventory pipeline.

The intent of our commentary is not to raise im-mediate alarms but to begin prudent planning for pos-sible supply chain disruption scenarios. Just like last year’s volcanic ash incident that shutdown Europe’s air traffi c, high uncertainty should motivate active contin-gency planning.

Readers and supply chain focused consultants are welcomed to share their perspectives for contingency plan considerations.http://bit.ly/qbKzzH

Prepare Supply Chain Contingency Plans Concerning Europe BLOGS, JOURNALS, BOOK RELEASES

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From the stables of LOG.INDIA, the country’s most respected logistics and supply-chain magazine, comes the LogisticsWeek Director 2012, a much-awaited reckoner that will list India’s 3PLs, 4PLs, transporters, solutions and service providers in the material handling and warehousing space, freight forwarders, shippers, cold chain service providers and all the stakeholders of the industry. Do not miss the chance to reach out to the decision-makers of the industry.Avail of huge early-bird discounts, NOW

Bridging The Gaps

ONGC Tripura Power Company (OTPC) is setting up a 726 MW gas based thermal power project located at Palatana in Tripura, ap-proximately 60 km from Agartala in North East India. The Engineer-ing, Procurement and Construc-tion (EPC) contract for this project has been given to Bharat Heavy Electricals Limited (BHEL), which has, in turn, contracted with ABC India to transport heavy machin-ery to the project site from BHEL manufacturing units in Trichy, Haridwar, Hyderabad and Bhopal in India and from General Elec-tric in Texas.

Charting Rough TerrainGiven the significant size of these project cargoes and the hilly terrain of India’s north eastern region, the assignment involved multiple challenges:

*Safe handling and transpor-tation of huge machines weigh-ing up to 300 tons through the conventional land route via As-sam was challenging, given the poor road infrastructure in As-sam and Tripura especially the several bridges en route, incapa-ble of handling this weight.

*The other route quite inno-

Ashish AgarwalMD, ABC India

ABC India had a challenge before them. They had to transport heavy machinery from several locations to the project site. Here’s how they did it.

case study

vative in itself, involving the use flat top barges plying on inland waterways via Bangladesh to suitable discharge points in Indi-an territory for further trucking to the site, was not considered feasible since the heaviest cargo taken via this route to Tripura in the past weighed 100 tons only. The road portion of this route passed via hilly terrain, not suit-able for a 300 ton package.

*Air transport was ruled out as the heaviest package of the cargoes weighing 300 tons was more than double the capacity of the largest commercial heavy lift aircraft globally.

Building BridgesABC India developed a multi-modal, multi-national logistics solution that was planned and executed over the course of sev-en years (2004-11). The integrat-ed effort involved the following key developments spearheaded by the concerned agencies with support from the Governments of India and Bangladesh:nAn amendment was made to the Inland Water Transit and Trade (IWTT) protocol between India and Bangladesh to allow the use of Ashuganj Port in Bangladesh as a “Port of Call” from which Indian cargo sent by

barge to Ashuganj can transit by road to Agartala in India.nClose follow up and coordina-tion was ensured with various Government agencies in Bangla-desh such as Immigration, Cus-toms, Roads and Highways, Com-munications, Border Security Forces and local District Adminis-tration authorities to secure per-missions for use of ABC’s Indian trailers and crew within Bangla-desh for the road transportation from Ashuganj to India.*Construction of 25 bypasses to weak bridges, 3 riverine jet-ties, and reconstruction/widen-ing of 16 Kms of roads between Ashuganj and Palatana.nFor the heaviest consignment from Hyderabad weighing 300 tons, end-to-end distance was about 2,500 Kms (against about 4,000 Kms for normal road freight), which was covered in the following 3 stages:nFrom Hyderabad to Machil-ipatnam port by road, (requir-ing the development of six by-passes to weak bridges and a jetty at the port)

– From Machilipatnam to Ashuganj in Bangladesh by a coastal-cum-riverine barge

– From Ashuganj to Palatana in Tripura by road.

The other complex consign-

ments totaling 77 were trans-ported from Trichy. End-to-end distance from Trichi to Palatana was about 3,000 Kms (against about 4,500 Kms for normal road freight), split as follows:n Trichi to Karaikal Port by road ~ 170 KmsnKaraikal Port to Kolkata Port by coastal shipping ~ 1,700 KmsnKolkata Port to Ashuganj Port by river barges Inland Waterways Transportation (IWT) through rivers such as Hoogli, Raimangal and Meghna ~ 1,000 KmsnAshuganj Port to Palantana by road ~ 130 KmsnTotal transit time was about 45 days without counting halts at transshipment points.

Outcome and ImpactAgainst the background of sev-eral challenges inherent to the transportation of project car-goes amplified by the North Eastern terrain, the innovative idea around the use of multiple modes of transportation pivoted around waterways brought the following positive impact:nThe project was made possible as a pure road transport approach was neither feasible nor safe.nThe discovery of the multi-modal route between Kolkata and Agartala involving roads

and waterways is expected to re-duce the transit time and cost for general cargo transport between West Bengal and Tripura by 65 percent, thereby directly benefit-ing the entire state of Tripura and other parts of North Eastern In-dia. Share of road-based transpor-tation was reduced to a low per-centage (for instance, 5 percent for cargo transported from Trichi to Palatana) in the multimodal approach compared to pure road-based trucking. This resulted in following crucial advantages:nEnd-to-end transit time was 50-60 percent of the time taken with road-based movementnTransportation cost is estimat-ed to be 40-50 percent of that by roadways, primarily due to shorter distances and lower fuel consumptionn In-transit safety of shipments, given their extra-ordinary di-mensions and weight, was sig-nificantly high on waterways than that on roads.nComplete road-based transpor-tation would have involved many more inter-state border crossings than those in waterways, thus increasing the in-transit delays, apart from coordination with multiple agencies including rail-way authorities while transiting through rail infrastructure such as crossings or bridges.


Start with seeing where the waste is in the organiza-tion. Focus on the low hanging fruit (such as lower

energy lighting) so you can see an immediate cost sav-ings with little to no investment. There is tons of mon-ey being wasted in any warehouse. If you can show this stuff doesn’t have to cost a lot of money to do, you can get the momentum going and use the initial savings to drive longer-term projects. At the end of the day if you don’t want to call this green, call it variable cost management.

Brett Wills, a senior sustainability coach of HPS Inc. speaking at “Focus forward: Enhancing supply chain value with green logistics and transportation,” an event that also served as the launch of the SCL-RBC Royal Bank report.

Sustainability is emerging as a market driver that presents opportunities for value creation and profi t.

For instance, Coca-Cola which had integrated its water conservation efforts into its supply chain is pledging to be “water neutral” by 2012. For every drop of water it uses to produce beverages, the company will compen-sate through conservation and recycling programs. Marks and Spencer produces polyester clothing from recycled plastic bottles instead of oil, and uses fair trade cotton for cotton garments.

S. Iswaran, Minister in the Prime Minister’s Offi ce and Second Minis-ter for Trade and Industry, speaking at the Asia Pacifi c Sustainability Forum at the Resorts World Sentosa, Singapore.

I think the Indian market just chugs on; it’s like a beast or a machine. What will be interesting in the

Indian markets is how categories evolve – social media is the easy and obvious illustration of that, because of the smartphone uptake, café culture, burgeoning mid-dle class, more developed cities and their population, rural migration.

Michael Wall, CEO, Lowe + Partners

Right now, the environment is not conducive. The government should not only relax FDI limits, but

also bring down customs duty and countervailing duty on luxury goods. Only then a lot of European and Ital-ian brands will enter India in a big way.

Armando Branchini, Executive Director, Fondazione Altagamma

Part of the future of Dubai is tied up with what hap-pens in India. India is a sleeping giant from a fi nan-

cial perspective with massive, longstanding stock mar-kets. The question is: do they want to internationalize? Their fi nancial system is still very inward-looking,

Julian Mayo, Portfolio Manager at Charlemagne Capital.

A survey indicates the logistics industry has largely adjusted to the new economic realities and is now

investing in growth. Companies are leaner and more adaptive than just a few years ago. Today, logistics com-panies are better positioned to help serve their custom-ers as catalysts for supply chain transformation and innovation, which ultimately drives their own growth prospects.

Joe Gallick, Sr VP of Sales, Penske Logistics

FDI is must for expansion. Even then GST will be a much bigger game changer than the FDI. Currently

retailers need funds and technology to improve logistics and back end systems.

Kishore Biyani, Founder and Group CEO, Future Group

Most companies, until fairly recently, did not con-sider inventory plans and targets to support a giv-

en supply and demand plan in their S&OP. It was usually left for middle managers to determine those inventory targets – with major cash and customer service impli-cations. However, tactical inventory planning needs to be included as part of the S&OP, because this includes major decisions that can impact supply chain networks and capacity designs.

Neil Cormack, Supply Chain Director, Softworx

With a plant in Sri Lanka, the freight costs for shipping juices to South India would be much

cheaper and would give the company greater penetra-tion and presence in this market. There would be tax advantages as well.

Sunil Duggal, Chief Executive Offi cer, Dabur India on its

decision to invest `70 crore on a new unit in Sri Lanka

The share of modern retail in India is expected to grow at

over 30 percent to `2.1 trillion this fi scal.

Indian Railways decision to hike freight rates by 15 percent implies

an additional burden of `6,000-7,000 crore on the industry.

Straights And Bends


Containing The CompetitionPorts uPdates

In this section, LW will provide the latest in ports and shipping news and a status on how the major ports have fared this fortnight.

dubai-india trade grows to 123 bnn Oct 14: Trade between India and Dubai is expanding at an unprecedented pace. DP World is deemed as one of the largest marine terminal operators in the Gulf region. Trade between Dubai and India soared to 123.1 billion dirhams in the fi rst six months of 2011, compared to 182.76 billion dirhams in the whole of 2010. Dubai Ports World operates fi ve marine terminals in India and is developing a new terminal at Kulpi, in WestBengal.

possible Merger between tag-sparklen Oct 14: There have been talks over a possible merger

between Tag Offshore, the Mumbai-based marine sup-port service provider and Hy-derabad-based Ocean Sparkle. It is said that Tag Offshore has initiated the talks. Sparkle is engaged in providing services such as offshore, drilling, ma-rine construction and port and terminal support. Tag Off-shore, incorporated in 2003, acquired the offshore business of Essar Shipping Ports and Logistics.

ipg goes privaten Oct 8: Indian Ports Global (IPG), the proposed special pur-pose vehicle for foreign port ac-quisitions, is likely to be set up as a private company. Major ports could hold up to 50 percent equi-

ty in the company and fi nancial institutions, and other investors the rest. Though the structure is yet to be fi nalized, the shipping ministry wants 50 percent eq-uity to be non-government. The government could also consider private companies as partners later. Indian Ports Global will eye both national and international opportunities.

Ennore seeks other Cargo nOct 6: A joint venture be-tween Sical Logistics Ltd and MMTC Ltd, which built India’s biggest iron ore loading ter-minal with an investment of Rs.500 crore at Union govern-ment-controlled Ennore port in Tamil Nadu, is seeking to handle other cargo. After the

government imposed a ban on mining of coal in Karnataka’s Bellary-Hospet region, it has dried up exports apart from rendering the iron ore termi-nal at Ennore port useless. The party has asked for port’s per-mission to handle other cargo.

Luka Eases indian Exports nOct 12: Shipping companies Sermar Line Srl and Shipping Corp. of India have established a container line from India to the northern Adriatic Sea ports to ease transport of Indian ex-ports to Central and Eastern Europe as reported by Luka Ko-per (LKPG), Slovenia’s only port operator. Regular container ships will link Koper, Venice and Ravenna with Indian ports

of Nava Sheva and Mundra.

Vizhinjam as Major port n Oct 5: Vizhinjam, south of Vallarpadam terminal, is India’s fi rst transshipment port and Kerala government wants the port to be designated as a major port to attract more traffi c. The Vizhinjam Port boasts of hav-ing the deepest natural draft among all ports in India with water depth of 18-22 metres, which does not require mainte-nance or capital dredging. The shipping ministry’s Maritime Agenda 2020 says the govern-ment will commission two ma-jor ports, one each on the east and west coast, taking the total number of major ports in the country to 15.

Port Traffi c This FortnightPort of ChennaiThe port handled an average of 160250 ton of car-go and an average of 4249 TEU of container per day in the last fortnight. Comparatively there has been a drop in the quantity of cargo handled by 13 percent, but there was a miniscule rise in the quantity of container handled this fortnight.

Port of CochinThe port handled an average of 23692 ton of cargo per day and 985 TEU of container per day, this fort-night. Comparatively, there was a drop in the per-centage of cargo handled by 45 percent.

Port of Ennore:The port handled an average of 286194 ton of cargo per day this fortnight. Comparing to the last time, there was a rise in the quantity of cargo handled by 19 percent.

Port of JNPTThe port handled an average of 11842 TEU of container per day, this fortnight. Comparatively, there is a rise in the quantity of container handled by two percent this fortnight.

Port of MumbaiThe port handled an average cargo of 17,381 ton and 30 TEU of container per day, this fortnight. In comparison to last fortnight, there has been a drop in the percentage of cargo handled by 38 percent while there has been a severe drop in the quantity of container handled by 71 percent.

Port of ParadipThe port handled an average of 175651 ton of car-go per day this fortnight compared to an average 88449 ton of cargo per day, last time, indicting a steep rise in the quantity of cargo handled by near-ly 50 percent.

Port of TuticorinThe port handled an average of 53147.5 ton of cargo per day, this fortnight. Comparing to last fortnight, where the port handled an average of 60926.5 ton of cargo per day, there has been a slight decline in the port traffi c by

PORT OF CHENNAI

Total Cargo Handled 835,000 T

Total Container Handled 25,711 TEU

PORT OF ENNORE

Total Cargo Handled 1,717,164 T

PORT OF JNPT


PORT OF PARADIP


PORT OF TUTICORIN


PORT OF MUMBAI


Total Container Handled 275 TEU

(Data is relevant to days when information was updated on port website)

PORT OF COCHIN



*Disclaimer: Due to public holidays, server breakdown, failure in updating website and such related issues, traffi c data for the following ports Ennore, Tuticorin, Chennai were extrapolated from six days’ data and numbers for Cochin, JNPT ports were extrapolated from fi ve days’ data.


India and China have agreed to work towards signing of a Memorandum of Understanding (MoU) in the areas of Road Transport and High-ways, said an Indian government press release is-sued on September 16. Under the proposed MoU, both sides would seek to enhance cooperation in highway construction, exchange of technology and investments in the sector. According to the release, this was agreed to during the meeting between Kamal Nath, Minister for Road Trans-port and Highways and Li Shenglin, Minister of Transport, China at Beijing on September 15.

Nath was quoted in the note as saying that India has embarked on a massive national high-way development program under which it is proposed to construct 7,000 km of national high-ways every year over the next few years. The ambitious targets set in the program provided huge opportunities to the Chinese construction companies as also the Chinese financial institu-tions to enhance their engagement with India, said the note. Nath also said that the preferred mode of highway development in India is Public Private Partnership. 60 perceent of the national highways would be developed under the BOT (Built-Operate-Transfer) Toll mode, while anoth-er 25 percent would be taken up on BOT (Annu-ity) basis. Already, several Chinese companies are participating in the National Highway Develop-ment Project of India.

China has over the past decade made rapid progress in the infrastructure sector, particularly highway development. Li Shenglin said that pres-ently, around 35,000 km of national highways is under construction in China of which 10,000 km is likely to be completed this year.

Earlier in the course of the interactions with China’s government representatives, Nath met Lou Jiwei, Chairman, China Investment Corpora-tion (CIC) and Dai Xianglong, Chairman of Nation-al Social Security Fund (NSSF) and apprised them

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Jacob Joseph [email protected]

The two emerging super-economies have agreed to explore ar-eas of cooporation in the road transport and highways sector

News DeskMumbai

UPS Connects Air and Ocean New Ocean Freight

InterviewEnvisaging India as Asia Auto Hub R Dinesh, JMD, TVS & Sons says India stands at the threshold of an aftermarket revolution

PAGE 4

In APAC, ME, USA and Europe

August 16–31, 2011

`25logisticsweek.com

India And China Looking to Be On The Same Road

PAGE 2

of the opportunities of investing in the highways sector of India and of the high re-turns that the sector promises to offer.

Xianglong mooted the idea of the set-ting up of an India-China Highways Invest-

ment Forum for investors, developers and construction companies which will provide a platform for the policy makers, financial experts and the business leaders to work closely towards enhancing project.

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According to the fi fth annual edition of the Global Retail Theft Barometer, India report-ed the highest shrink percent-age in the world. India’s shrink rate (as percentage of sales) is 2.38 percent, costing the lo-cal retail industry a whopping Rs 34.70 billion. However, the shrinkage has decreased by 12.5 percent compared to last year. During the period India registered the world’s highest shrink rate for the fi fth year running. The Asia-Pacifi c aver-age of increase is 0.8 percent.

The biggest contributor to shrinkage in the Indian retail industry was customer theft accounting for 47.6 percent, employee theft contributed to 25.5 percent of total “shrink-age”, which refers to invento-ry loss from customer, employ-ee or supplier/vendor theft as well as administrative errors.

After reading the report, it’s not surprising to learn why India’s retail industry is fi nding it hard to break even.

India Has Highest Shrink Rate: Study

The Asia-Pacifi c average em-ployee theft as percentage of total shrinkage is 22.7 percent.

Indian consumers and their families compensated for the retail losses by paying an “hon-esty tax”, or increased prices, at an average of Rs 411.68 per head, or Rs 2,201.55 per family.

Making A KillingThe study, conducted by

Checkpoint Systems, moni-tored the costs of shrinkage in the global retail industry be-tween July 2010 and June 2011. The research found that In-dian loss prevention spending remained at 0.23 percent in a rapidly-growing retail sector.

Dharmesh Lamba, General Manager, Customer Manage-ment, South Asia, Checkpoint Systems India Pvt Ltd., said, “Shrink has been a major cause of worry for the rapidly-

growing retail sector in India. Shrinkage is a direct loss to re-tailers thereby directly affect-ing their profi tability. Every piece of merchandise stolen has a direct effect on the bot-tom line of the retailer. Check-point Systems is dedicated towards addressing shrink management, implement-ing cutting-edge technology with a view to improving the shopper’s experience, and ul-timately resulting in increased revenues for retailers.”

Across the 10 markets stud-ied in Asia-Pacifi c, the average shrink rate was 1.22 percent of total retail sales, represent-ing the smallest percentage by continent (compared to North America, South America, Eu-rope and Africa). However, the cost of Rs 815.77 billion is the third-highest next to Europe (Rs 2,168.55 billion) and North

America (Rs 2,021.36).The 2011 study also found

that while retailers increased their spending on loss preven-tion and security by 5.6 per-cent over 2010 to Rs 1.263 tril-lion globally, loss prevention equipment’s share of total loss prevention expenditures actu-ally declined slightly. This may be why fewer thieves were ap-prehended globally.

Started in 2001 in Europe and expanded in 2007 glob-ally, the Global Retail Theft Barometer (GRTB) is an an-nual survey conducted by the Centre for Retail Research in Nottingham, UK, underwritten through an independent grant from Checkpoint Systems. This study is the largest and most comprehensive survey of retail theft and crime in the world.

The highest average rates (as percentage of sales) of shrinkage were found among:nCosmetics/perfumes/health

& beauty/pharmacy (1.75 percent)nApparel/clothing and

fashion/accessories (1.74 percent); and

nVideo/music/gaming (1.64 percent)

Small but expensive “mo-bile” items tend to have the highest risk for theft. The most-stolen items were from the cosmetics category, including:nShaving products (2.64

percent)nPerfumes/fragrances (2.60

percent)nLipsticks/glosses (2.50

percent)nScissors/nail clippers/twee-

zers (1.30 percent)


A low-down on developments in surface transport last fortnight.

nEw MEMbEr traFFiCn K. K. Srivastava has taken over as new Member Traffi c, Railway Board and ex-offi cio Secretary to Government of India here today. Prior to this, he served as General Manager, East Central Railway, Hajipur. However, he will continue to hold the post of GM, East Central Railway in ad-dition to his present post until further orders.

An offi cer of the 1975 batch of Indian Railway Traffi c Service (IRTS), Mr. Srivastava held vari-ous key positions on different Zonal Railways.

He has experience in work-ing on different departments of Indian Railways and his spe-cialization includes Planning, Commercial and Safety besides General Management. rLy rEVEnuE Earnings up nThe total approximate earn-ings of Indian Railways on origi-nating basis during April 1 –September 30, 2011 was `48,947 crore compared to `44337 crore during the same period last year, registering an increase of 10.40 percent.

Total goods earnings have gone up from `29448 crore during April 1-Sept 30, 2010 to `32,439 crore during April 1 – September 30, 2011, an increase of 10.15 percent.

The total passenger revenue earnings during fi rst six months

One-Track Bind

of the fi nancial year 2011-12 was `14,017 crore compared to `12,688 crore during the same period last year, registering an increase of 10.47 percent.

The revenue earnings from other coaching amounted to `1,377 crore during April-Sep-tember 2011 compared to ̀ 1,234 crore during the same period last year, an increase of 11.60 percent.

East-wEst MEtro: koLkatan Indian Railways is all set to take over the East-West Metro project with the urban devel-opment ministry and the state government forsaking their 25 percent and 30 percent stakes, respectively, in Kolkata Metro Rail Corporation (KMRC) to the Railways.

With the change in owner-ship, the Railways will now bear `5,165 crore of the project cost. Japan International Cooperation Agency (JICA) will invest the rest, which sums up to 29,839 million yen (approximately Rs 1,649 crore). It will also relieve the cash-strapped state of its burden of a 30 percent share in the project cost.

nagpur bEnCH sErVEs notiCEn The Nagpur bench of the Bom-bay High Court served notices to the state government, transport secretary, transport commis-

sioner and union ministry of surface transport on Saturday, October 15, for charging green tax on old vehicles.

Responding to a public inter-est litigation (PIL), fi led by the noted academician and former law college principal, Dr Thirty Patel, a division bench of the court, comprising Justice Shar-ad Bobde and Justice MN Gilani, directed the state government and the other concerned depart-ments to fi le reply in next two weeks.

The Maharashtra govern-ment had imposed an environ-ment tax, ranging from Rs 750 to `3,500 on old vehicles which are more than 15 years old; and, an additional green tax on commercial vehicles over eight years old.

HigHways MaintEnanCE: onus on Mpn The Center has put the blame on the state government for the poor condition of national high-ways passing through the state.

In a letter to the state, Union minister for surface transport C.P. Joshi alleged that the state has failed to get works on high-ways executed under the ‘defect liability period’.

Joshi in the letter said that ac-cording to the National Highway Authority of India, the roads

THE LW CrOSSWOrD

across:3. Business functions of purchasing (11)6. A storage device for the handling material in pallets (4)7. Data before it has been encrypted or after it has been decrypted (9)8. The Key Performance Indicators (KPIs)/metrics of a company (9)9. Combination of two or more carriers into one company (6)10. Moving shipments through regular channels at an accelerated rate (10)14. A request for goods or services such as a purchase order (5)17. Operations involved in pulling products from storage areas to complete a customer order (7)18. Where ships anchor (4)19. Platform on which cartons are stacked (6)21. A grant of authority to operate as a contract carrier (6)22. Utilizing an outsourcing service provider (8)23. Combining shipment from multiple shippers into a truckload (7) 24. Estimate of future demand (8)25. Push technology that allows users to subscribe to a website (7)

down:1. Affi rmative Indication that a product has met relevant specifi cations (11)2. Series of time-based activities that are linked to complete a specifi c output (7)3. End result of analyzing the sales data to determine the best arrangement of products on store shelf (9)4. Exchange of electronic information between companies (11)5. Characters used to separate data elements within a data stream (10)7. Act of selling a product at a reduced price (9)10. Transformation of readable text into coded text (10)11. Something that has been or is being produced (7)12. Business that does not manufacture its own products (11)13. Fixed point in a fi rm’s logistics system where goods come to rest (4)15. Containing a code from a list of approved codes (6)20. Place from where a shipment begins its movement (6)

AnswersAcross: 3. Procurement, 6. Rack, 7. Plaintext, 8. Dashboard, 9. Merger, 10. Expediting, 14. Order, 17. Picking, 18. Port, 19. Pallet, 21. Permit, 22. Off shore, 23. Pooling, 24. Forecast, 25. Channel Down: 1. Conformance, 2. Process, 3. Planogram, 4. Interchange, 5. Delimiters, 7. Promotion, 10. Encryption, 11. Product, 12. Distributor, 13. Node, 15. Qualifi er, 16. Option , 20. Origin

TRUCK FREIGHT RATES*Following are the truck freight rates (in `per tonne) from metros to metros

ORIGIN DESTINATIONS

New Delhi Kolkata Mumbai Chennai Bangalore

New Delhi -- 2,400 2,000 3,850 3,600

Kolkata 1,950 -- 2,450 1,950 2,100

Mumbai 2,600 3,600 -- 2,500 2,050

Chennai 3,800 3,700 2,200 -- 900

Bangalore 3,300 3,450 1,600 850 --*Rates are indicative Source: Trimurti Cargo Movers Pvt. Ltd.

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surface transPort uPdates

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CONTINUED ON PAGE 11

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CONTINUED frOm PAGE 10

which were maintained by the state Public Works Department had gone into disrepair during the ‘defect liability period.’

He stated that the state gov-ernment should also share the responsibility.

ExprEss Link For industry Hubsn Arjun Munda announced his plans for two new super-high-

How Supply Chain Took The Driving Wheel

Supply Chain as an industry has gone through a massive

revolution. In the past the role of the supply chain professional was to provide the grunt work in getting the goods manufactured and delivered in full and on time. Preferably in the most efficient way possible! Strategy was left to the finance or executive team.

According to Kim Winter, Group CEO of Logistics Execu-tive, one of a few search firms dedicated to supply chain and lo-gistics recruitment with a global footprint – this is no longer a trend that is being touted exclu-sively in academic circles. “Today CEO’s and Board of Directors are including SCM on their strategic agendas and turning to their sup-ply chain as a way to differentiate themselves from their competi-tors. This progression has been accompanied by a transforma-tion of the role of the Senior Operations Officer into that of the Chief Supply Chain Officer (CSCO), a role we have been in-creasingly recruiting for.”

It seems that Kim and his team have had front row seats to this silent revolution. “We used to walk through company opera-tions and warehouses a lot until a few years ago. These days we find our meetings are predominately with the CEO, Boards of Direc-tors and Senior Supply Chain Ex-ecutives discussing performance strategies, people change and business re-engineering to en-compass the supply chain strat-egy and how to positively impact the business”.

So how did this insidious revo-lution take hold?

Operations management has always been recognized as the backbone of many companies.

column

The importance in the link be-tween an efficient supply chain and successful business strategy to ensure business health is still a new concept and yet to be ac-knowledged in my quarters. Ac-cording to Kim, “The easiest way to gain the support of most busi-ness leaders outside of the sup-ply chain function is to point out how supply chain can be applied as a business tool to effectively integrate both internal and exter-nal operations to form a key driv-er that will provide them with an edge on their competitors”. The designing, refining and imple-menting of new processes are key supply chain activities, which already emulate this process so it was almost inevitable for supply chain to find its place amongst the executive team in meeting this integrative leadership re-quirement within companies.

Increasingly it is the CSCO’s role to manage the process. In-stead of internal business func-tions running as separate silos with functions such as finance and sales taking precedence,

supply chain has created a direct linkage between different func-tions to form a strategic align-ment that drives revenue, cost savings and performance. It is now the responsibility of supply chain to strategically negotiate and manage a company’s destiny in rapidly volatile markets.

This redefinition is evident in companies all over the world, from Apple to Tesco, Coca Cola to Woolworths. In these companies, supply chain is seen as providing the competitive edge that differ-entiates success from their com-petitors. Supply chain analytics provides the ability to predict market forces, company effec-tiveness and the agility required to respond quickly and flexibly. This is important in today’s mar-kets in which competition is in-creasingly about whom has the better supply chain as opposed to who has the best product.

This comprehensive, inte-grated approach has changed the behavior of supply chain profes-sionals. Whilst previously they focused on costs, they now also focus on “value” and “driving out waste”. Supply chain as a whole, is now seen by CEO’s has a key area where investment can be used to best exploit market op-portunities and gain valuable competitive advantages.

For instance according to Reu-ben Slone, Executive VP of Supply Chain at OfficeMax, supply chain executives must speak the lan-guage of the CEO, CFO, and the board. Slone says, “Every supply chain initiative we have is judged on economic profit. We look at how we can reduce working capi-tal and cost while making sus-tained improvements in product availability. All of our initiatives

must have a return greater than the weighted average cost of capi-tal for our firm.” Slone and other top performing supply chain lead-ers know that to be a part of driv-ing company strategy they have to relate all of their actions and re-sults to what matters to the CEO.

One thing that has not changed, in fact has become even more entrenched, is the critical shortage of supply chain talent. It goes without saying that the Chief Supply Chain Operating Officer plays a critical role in this process. As Supply Chain devel-ops strategically and commercial-ly, it is critical that Supply Chain leaders continue to broaden their commercial, strategic and lead-ership competencies and build high performance talent teams. Somewhat of challenge and func-tion that is not seen as attractive to management graduates.

Attracting, developing and re-taining top supply chain talent has been proven to have a sig-nificant positive effect on a com-pany’s bottom line. Supply chain personnel must be experts in lo-gistics, legal terms, negotiations, inventory control, risk manage-ment and corporate governance. Employers are now starting to acknowledge the change that is occurring as Supply Chain shifts to more of a strategic business management tool, rather than a functional business response. All of which places more pressure on to ensure as an industry we grow the available pool of talent in or-der to remain competitive.

As Logistics Executive’s 2011-2012 Global Employment Report demonstrated “competitive pay” and parity with other business functions has resulted in signifi-cant increases in salaries paid

to supply chain personnel and poaching talent from your com-petitor will only come back to bite you in the long term.

In summary, the old catch cry known, as “the war for talent” is truer than ever before as Supply Chain goes through a revolution that has given it a more promi-nent business face.

Talented supply chain prac-titioners have stepped up to the mark but are seeking greater recognition or leaving to pursue greater career opportunities.

This shortage is not going to cease anytime soon. For business leaders this means ensuring sup-ply chain is understood within the business, particularly HR and that the job design is aligned to what the business requires. It also means recognizing the value that can be generated through ‘best in class’ supply chain practices and hiring accordingly.

Finding the right specialist HR partner to work with, who under-stands your business and more critically than ever before who understands and has a well-de-veloped response to the markets they work in. For professionals this is a well-deserved moment and recognition that has come after a lot hard work taking the back seat but the fun no doubt has only just begun.

Moving from the warehouse floor to the boardroom, the rise of the Chief Supply Chain Officer (CSCO) has changed the way companies compete in these turbulent times, says Darryl Judd.

Darryl JuddCOO, Logistics Executive

The author can be reached at [email protected]

Darryl Judd, COO, Logistics Executive, has 20+ years of executive experience in aviation, supply chain and logistics transport industry, and held executive positions within the airline & aircraft leasing/charter industry. He is regularly called upon to manage key human resources consulting projects and supporting business to drive changes, particularly around M&A activity and international executive management.

ways with R.C. Sinha, the archi-tect of the world-class Mumbai-Pune Expressway as his advisor.

On the Mumbai-Pune road, motorists driving at 80kmph are able to do the 110km stretch within 85 minutes.

The 135km distance between Ranchi and Jamshedpur takes three to three-and-a-half hours on NH-33, provided there are no traffic jams.

Similarly, the 110km to Bo-karo via NH-33 to Ramgarh and

then a state highway, takes two to two-and-a-half-hours.

Six-lane expressways will cut down travel time between Ran-chi and Bokaro to one hour and between the capital and Jam-shedpur to one-and-a-half hours.

india’s LongEst raiLway tunnEL n The Northern Railways has opened India’s longest railway tunnel through the Pir Panjal range in Jammu & Kashmir.

The tunnel is part of the ambitious Udhampur-Srinagar -Baramulla rail link project of Northern Railways. At 10.96km long, the Pir Panjal Railway Tun-nel is India’s longest and Asia’s 2nd longest tunnel, aimed at reducing the travel distance be-tween Quazigund and Banihal to only 11 km.

The tunnel is 100 percent water-proof and is also equipped with fire fighting system throughout its entire length.

raiLway’s rEquEst For Funds turnEd downn The Railway Ministry’s request for a loan of `2,100 crore to cov-er development expenses was re-jected. The ministry made the re-quest saying it was falling short by that sum to meet its planned expenditure.

In 2009-10, Railways was left with a paltry revenue surplus of `75 lakh, the CAG said in a re-port in August. In 2008-09, the figure stood at ̀ 13,431 crore.

logisticsweek october 16-31, 2011

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