4C79 01 00 00 00

Strategic Analysis of 3PL Markets in the Indian
FMCG Sector
4C79-18
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Table of Contents
Chapter 1
Executive Summary
Introduction and Overview
1-1
Introduction to FMCG Sector in India
1-1
Introduction to Logistics Industry in India
1-2
Introduction to Third Party Logistics (3PL) Industry in India
1-3
Overview of 3PL Usage in the Indian FMCG Sector
1-3
Market Overview and Research Findings
1-4
Total 3PL Market in the Indian FMCG Sector Size and Forecasts
1-4
End-user 3PL Usage and Practices
1-4
Opportunities for the 3PL Service Providers in the Indian FMCG Sector
1-5
Competitive Analysis of 3PL Service Providers in the Indian FMCG Sector
1-6
Challenges for the 3PL Industry in the Indian FMCG Sector
1-6
Market Drivers for the 3PL Market in the Indian FMCG Sector
1-7
Intense Competition in FMCG Sector Transforms Logistics into a Critical Function
1-7
Government's Favorable Attitude Toward 3PLs Helps in their Growth
1-7
VAT and its Implications on Indian FMCG and thereby on 3PL in FMCG Sector
1-7
Strategic Conclusions
1-8
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Chapter 2
Strategic Analysis of Total 3PL Market in the Indian FMCG Sector
Introduction
2-1
Introduction and Overview of the Indian FMCG sector
2-1
Introduction to Logistics in the Indian FMCG Sector
2-2
Evolution of 3PL Market in the Indian FMCG Sector
2-6
Awareness and Perception about 3PL in the Indian FMCG Sector
2-6
Scope of the Study
2-6
Key Assumptions
2-7
3PL Scenario in the Indian FMCG Sector
2-8
Overall 3PL Usage in the Logistics Functions
2-8
3PL Usage in Different Logistics Functions
2-9
3PL Usage in Warehousing
2-9
3PL Usage in Transportation
2-10
3PL Usage in Freight Forwarding
2-10
3PL Usage in MIS and Other Value Added Logistics Operations
2-10
3PL Solutions Offered for the Indian FMCG Sector
2-10
Range and Scope of Solutions Offered by 3PL Providers for the Indian FMCG Sector
2-10
Business Models of 3PL Providers for the Indian FMCG Sector
2-11
Awareness and Attitudes about 3PL in the Indian FMCG Sector
2-11
Awareness about 3PL in the Indian FMCG Sector
2-11
Perceptions about 3PL in the Indian FMCG Sector
2-12
Attitudes towards 3PL in the Indian FMCG Sector
2-13
Expectations from 3PL in the Indian FMCG Sector
2-13
Preferences Regarding 3PL in the Overall Indian FMCG Sector
2-13
Concerns about 3PL in the Indian FMCG Sector
2-13
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Market Size and Revenue Forecasts
2-14
The Total Logistics Market in Indian FMCG Sector
2-14
Current Size of the 3PL Market in the Indian FMCG Sector
2-15
Estimated Share of 3PL Market in the Entire FMCG Logistics Market
2-17
Revenue Forecasts for the 3PL Market in the Indian FMCG Sector
2-18
Revenue Forecasts Breakdown by Different Logistics Functions
2-20
3PL in Warehousing
2-20
3PL in Transportation
2-22
3PL in Freight Forwarding
2-23
3PL in MIS/Other Value Added Logistics Services
2-25
Competitive Analysis and Industry Structure
2-27
Competitive Scenario of the Indian 3PL Market
2-27
3PL Industry Structure
2-28
Major 3PL Providers in the Overall Indian FMCG Sector
2-28
Market Share Breakup by Type of 3PL Company
2-28
Industry Challenges and Market Drivers and Restraints
2-29
Challenges for the 3PL Providers in the Indian FMCG Sector
2-29
Fear and Inhibitions of FMCG Companies to Outsource Logistics due to Lack of Trust
2-30
Geographic Diversity of India Needing Varied Logistics Expertise for Each Region
2-30
Limited Capability of Majority 3PL Companies to Offer Complete Logistics Services
2-31
Lack of Skilled Professionals in 3PL Industry to Provide Required Solution
2-31
High Concentration of Transportation Market with Individual Truckers
2-31
Lack of a Customized Business Model and Service Package for FMCG Sector
2-32
Market Drivers of the 3PL Market in the Indian FMCG Sector
2-32
Increasing Realization of 3PL Benefits in FMCG Sector with

Multinational Companies (MNCs) Leading the Way
2-33
Expanding Basket of Customized Services for FMCG Sector from 3PL Companies
2-33
Government's Initiatives to Improve Infrastructure
2-33
High Potential for 3PL as a Result of VAT
2-33
Increasing FMCG Exports of India Needing Professional Supply Chain Management (SCM)
2-34
Government's Favorable Attitude Toward 3PLs as Part of BPO Industry Promotion
2-34
Increasing Competition among FMCG Companies Needing Good Logistics
2-34
Market Restraints for the 3PL Market in the Indian FMCG Sector
2-35
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Poor Infrastructure of India in All forms of Transportation Limits 3PL Growth
2-35
Indian Bureaucratic System Affects Logistics Growth
2-36
The Service Tax Applicable to 3PLs, which is Growing each Year has Deterrent Effect on the Market
2-36
Partial VAT Making FMCG Companies Wary of Changing their Supply Chain Practices
2-36
Lack of an Integrated Transport Policy in India Affecting 3PL Services
2-37
Implications of VAT on 3PL in the Indian FMCG Sector
2-37
Introduction to VAT's Importance and Impact on Indian FMCG Sector
2-37
Significance of VAT's Impact on FMCG Sector for Logistics Service Providers
2-38
Opportunities for 3PL Service Providers due to VAT's Impact on FMCG Sector
2-39
Challenges for 3PL Service Providers in Benefitting from VAT's Impact on FMCG Sector
2-40
Conclusions and Recommendations
2-41
Conclusions about the 3PL Market in the Indian

FMCG Sector and Recommendations to 3PL Providers
2-41
Chapter 3
End-User AnalysisOverview of 3PL Needs and Practices in the Indian FMCG Sector
Introduction
3-1
Introduction to Indian FMCG Sector
3-1
Various Segments in the Indian FMCG Sector
3-2
Industry Overview and Current Size in Terms of Revenues
3-4
Number of Industry Participants and Segmentation of Participants
3-5
Annual Production Volume of the Indian FMCG Sector
3-6
3PL Practices in the Overall Indian FMCG Sector
3-7
Evolution of Logistics in FMCG Sector and Current Scenario Measurement
3-7
Introduction to 3PL Status in the Overall Indian FMCG Sector
3-8
Breakup of Share of Logistics Functions Managed In-house Versus 3PL
3-9
Reasons for Outsourcing Various Logistics Functions to 3PL
3-9
Needs and Preferences for 3PL Services in Various Logistics Functions of Indian FMCG Sector
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3PL Status Industry Average Metrics in the Indian FMCG Sector
3-12
Warehouse Infrastructure and Geographic Coverage Metrics
3-12
Transportation Infrastructure Metrics
3-13
Goods Flow Model in the Indian FMCG Sector from Manufacturer to Retailer
3-13
Logistics Cost and Efficiency Metrics
3-14
Factors Considered by the Overall Indian FMCG Sector for Choosing 3PL Providers
3-22
Hindustan Lever Limited3PL Status, Practices, Needs and Metrics
3-23
Overview of Logistics Status of HLL
3-23
3-23
Reasons for Outsourcing Various Logistics Functions to 3PL Companies
3-24
Needs and Preferences for 3PL Services in Various Logistics Functions
3-24
Warehouse Infrastructure and Geographic Coverage Metrics of HLL
3-25
Transportation Infrastructure Metrics of HLL
3-27
Major 3PL Service Providers Used by HLL
3-27
Frost & Sullivan's Analysis about the Company
3-27
Procter & Gamble Health and Hygiene (P&G)3PL Status, Practices, Needs and Metrics
3-28
Overview of Logistics Status of P&G
3-28
3-28
3-29
3-30
Warehouse Infrastructure and Geographic Coverage Metrics of P&G
3-31
Transportation Infrastructure Metrics of P&G
3-32
Major 3PL Service Providers Used by P&G
3-32
3-32
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Nestl India Limited3PL Status, Practices, Needs and Metrics
3-33
Overview of Logistics Status of Nestle
3-33
3-33
3-34
3-34
Warehouse Infrastructure and Geographic Coverage Metrics of Nestle
3-35
Transportation Infrastructure Metrics of Nestle
3-37
Major 3PL Service Providers Used by Nestle
3-37
3-37
Nirma Limited3PL Status, Practices, Needs and Metrics
3-38
Overview of Logistics Status of Nirma
3-38
3-38
3-39
3-39
Warehouse Infrastructure and Geographic Coverage Metrics of Nirma
3-40
Transportation Infrastructure Metrics of Nirma
3-42
Major 3PL Service Providers Used by Nirma
3-42
3-42
Godrej Consumer Products Limited3PL Status, Practices, Needs and Metrics
3-43
Overview of Logistics Status of Godrej
3-43
3-43
3-44
3-44
Warehouse Infrastructure and Geographic Coverage Metrics of Godrej
3-45
Transportation Infrastructure Metrics of Godrej
3-47
Major 3PL Service Providers Used by Godrej
3-47
3-47
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Henkel India Limited3PL Status, Practices, Needs and Metrics
3-48
Overview of Logistics Status of Henkel
3-48
3-48
3-49
3-50
Warehouse Infrastructure and Geographic Coverage Metrics of Henkel
3-50
Transportation Infrastructure Metrics of Henkel
3-52
Major 3PL Service Providers Used by Henkel
3-52
3-52
WIPRO Consumer Care and Lighting (WCCL)-3PL Status, Practices, Needs and Metrics
3-53
Overview of Logistics Status of Wipro
3-53
3-53
3-54
3-55
Warehouse Infrastructure and Geographic Coverage Metrics of Wipro
3-56
Transportation Infrastructure Metrics of Wipro
3-57
Major 3PL Service Providers Used by Wipro
3-57
3-57
Glaxo SmithKline Consumer Healthcare India 3PL Status, Practices, Needs and Metrics
3-58
Overview of Logistics Status of Glaxo SmithKline
3-58
3-58
3-59
3-59
Warehouse Infrastructure and Geographic Coverage Metrics of Glaxo SmithKline
3-60
Transportation Infrastructure Metrics of Glaxo SmithKline
3-62
Major 3PL Service Providers Used by Glaxo SmithKline
3-62
3-62
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Amul (Gujarat Cooperative Milk Marketing Federation Limited)3PL Status,

Practices, Needs and Metrics
3-63
Overview of Logistics Status of Amul
3-63
3-63
3-64
Needs and Preferences for 3PL Services in various Logistics Functions
3-64
Warehouse Infrastructure and Geographic Coverage Metrics of Amul
3-65
Transportation Infrastructure Metrics of Amul
3-67
Major 3PL Service Providers Used by Amul
3-67
3-67
Tata Tea Limited3PL Status, Practices, Needs and Metrics
3-68
Overview of Logistics Status of Tata Tea
3-68
3-68
3-69
3-69
Warehouse Infrastructure and Geographic Coverage Metrics of Tata Tea
3-70
Transportation Infrastructure Metrics of Tata Tea
3-72
Major 3PL Service Providers Used by Tata Tea
3-72
3-72
Jyothi Laboratories Limited3PL Status, Practices, Needs and Metrics
3-73
Overview of Logistics Status of Jyothi Laboratories
3-73
3-73
3-74
3-75
Warehouse Infrastructure and Geographic Coverage Metrics of Jyothi Laboratories
3-75
Transportation Infrastructure Metrics of Jyothi Laboratories
3-77
Major 3PL Service Providers Used by Jyothi Laboratories
3-77
3-77
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Anchor Health and Beauty Care Private Limited3PL Status, Practices, Needs and Metrics
3-78
Overview of Logistics Status of Anchor Health and Beauty Care
3-78
3-78
3-79
3-79
Warehouse Infrastructure and Geographic Coverage Metrics of Anchor Health and Beauty Care
3-80
Transportation Infrastructure Metrics of Anchor Health and Beauty Care
3-82
Major 3PL Service Providers Used by Anchor Health and Beauty Care
3-82
3-82
United Breweries (Holding) Limited3PL Status, Practices, Needs and Metrics
3-83
Overview of Logistics Status of United Breweries
3-83
3-83
3-84
3-84
Warehouse Infrastructure and Geographic Coverage Metrics of United Breweries
3-85
Transportation Infrastructure Metrics of United Breweries
3-87
Major 3PL Service Providers Used by United Breweries
3-87
3-87
Priya Foods3PL Status, Practices, Needs and Metrics
3-88
Overview of Logistics Status of Priya Foods
3-88
3-88
3-89
3-89
Warehouse Infrastructure and Geographic Coverage Metrics of Priya Foods
3-90
Transportation Infrastructure Metrics of Priya Foods
3-91
Major 3PL Service Providers Used by Priya Foods
3-91
3-92
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Colgate-Palmolive (India) Limited3PL Status, Practices, Needs and Metrics
3-92
Overview of Logistics Status of Colgate-Palmolive
3-92
3-93
3-93
3-94
Warehouse Infrastructure and Geographic Coverage Metrics of Colgate-Palmolive
3-95
Transportation Infrastructure Metrics of Colgate-Palmolive
3-96
Major 3PL Service Providers Used by Colgate-Palmolive
3-96
3-97
L'Oral India Private Limited3PL Status, Practices, Needs and Metrics
3-97
Overview of Logistics Status of L'Oral
3-97
3-98
3-99
3-99
Warehouse Infrastructure and Geographic Coverage Metrics of L'Oral
3-100
Transportation Infrastructure Metrics of L'Oral
3-102
Major 3PL Service Providers Used by L'Oral
3-102
3-102
Reckitt & Colman of India Limited3PL Status, Practices, Needs and Metrics
3-103
Overview of Logistics Status of Reckitt & Colman
3-103
3-103
3-104
3-104
Warehouse Infrastructure and Geographic Coverage Metrics of Reckitt & Colman
3-105
Transportation Infrastructure Metrics of Reckitt & Colman
3-107
Major 3PL Service Providers used by Reckitt & Colman
3-107
3-107
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Dabur India Limited3PL Status, Practices, Needs and Metrics
3-108
Overview of Logistics Status of Dabur
3-108
3-108
3-109
3-109
Warehouse Infrastructure and Geographic Coverage Metrics of Dabur
3-110
Transportation Infrastructure Metrics of Dabur
3-112
Major 3PL Service Providers Used by Dabur
3-112
3-112
Marico Limited3PL Status, Practices, Needs and Metrics
3-113
Overview of Logistics Status of Marico
3-113
3-113
3-114
3-115
Warehouse Infrastructure and Geographic Coverage Metrics of Marico
3-115
Transportation Infrastructure Metrics of Marico
3-117
Major 3PL Service Providers Used by Marico
3-117
3-117
Himalaya Health and Pharmaceuticals3PL Status, Practices, Needs and Metrics
3-118
Overview of Logistics Status of Himalaya
3-118
3-118
3-119
3-120
Warehouse Infrastructure and Geographic Coverage Metrics of Himalaya
3-120
Transportation Infrastructure Metrics of Himalaya
3-122
Major 3PL Service Providers Used by Himalaya
3-122
3-122
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Chapter 4
Competitive Analysis of the 3PL Providers in the Indian FMCG Sector
3PL Industry Size
4-1
Industry Size in terms of Value and Number of Participants
4-1
4-1
Industry Structure and Tiers of Competition
4-1
3PL Industry Life Cycle
4-2
Indian 3PL Industry's Life Cycle during the Period 2000-2015
4-2
3PL Market in the Indian FMCG Sector Life Cycle
4-3
Life Cycle of 3PL Market in the Indian FMCG Sector during the Period 2000-2015
4-3
Market Share Comparison and Breakup
4-4
Market Share Breakup by Category of 3PL Providers
4-4
Market Share Comparison of Top 10 3PL Providers in the Indian FMCG Sector
4-5
Services Comparison of Major 3PL Service Providers
4-6
Services Comparison by Logistic Function
4-6
Profiles of the 10 Major 3PL Providers in the Indian FMCG Sector
4-9
DHL-Exel Supply Chain
4-9
Overview of the Company
4-9
Frost & Sullivan Analysis About the Company
4-9
SembCorp Logistics
4-9
4-9
4-10
Reliance Logistics
4-10
4-10
4-10
TCI Supply Chain Solutions (TCISCS)
4-11
4-11
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4-11
Gati
4-11
4-11
4-12
Om Logistics
4-12
4-12
4-12
AFL Logistics
4-13
4-13
4-13
Safexpress
4-13
4-13
4-14
Patel Logistics
4-14
4-14
4-14
Dynamic Logistics
4-15
4-15
4-15
Chapter 5
Recommendations and Growth Strategies for 3PL Providers in the Indian FMCG
Sector
Opportunities for the 3PL in the Indian FMCG Sector
5-1
Market Potential of Various Types of 3PL Services
5-1
Market Potential of Various Types of 3PL Services in Short Medium and Long-Term
5-2
Business Model
5-3
Suggested Business Model
5-3
Pricing and Positioning
5-4
Suggested Pricing Strategy
5-4
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Suggested Positioning Strategy
5-4
Acquisitions and Mergers
5-5
Suggested Strategy for Acquisitions and Mergers
5-5
Strategic Alliances Joint Ventures and Partnerships
5-5
Suggested Strategy for Forming Alliances Joint Ventures and Partnerships
5-5
Recommendations
5-6
Recommendations for 3PL Service Providers
5-6
Chapter 6
Database of Key Industry Participants
Market ParticipantsEnd users
6-1
Major Participants in the Indian FMCG Sector
6-1
Market Participants3PL Service Providers
6-5
Major 3PL Service Providers to the Indian FMCG Sector
6-5
Chapter 7
Decision Support Database
Tabulation of India's Economic Growth, Infrastructure, FMCG Industry Structure and Trade Figures
7-1
Tabulation of India's Economic Growth and Infrastructure Figures
7-1
Tabulation of Indian FMCG Industry Structure by Company Type and Product Segment
7-3
Tabulation of the Indian FMCG Sector International Trade and Transportation Figures
7-4
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List of Figures
Chapter 1
Executive Summary
1-1
3PL Markets in the Indian FMCG Sector:

Level of 3PL Usage by Logistics Function in Total FMCG Sector (India), 2005
1-5
Chapter 2
2-1

Revenue Forecasts for Total 3PL Market in the FMCG Sector (India), 2002-2012
2-2

Revenue Forecasts for 3PL Warehousing Market in the FMCG Sector (India), 2002-2012
2-3
2-22

Revenue Forecasts for 3PL Freight Forwarding Market in the FMCG Sector (India), 2002-2012
2-5
2-21

Revenue Forecasts for 3PL Transportation Market in the FMCG Sector (India), 2002-2012
2-4
2-18
2-24

Revenue Forecasts for 3PL MIS and Other Value
Added Logistics Services Market in the FMCG Sector (India), 2002-2012
2-6
2-25

Impact of Top Industry Challenges on Total
3PL Market in the FMCG Sector (India), 2006-2012
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2-7

Market Drivers for Total 3PL Market in the
FMCG SectorRanked in Order of Impact (India), 2006-2012
2-8
2-32

Market Restraints for Total 3PL Market in the
2-35
Chapter 3
End-User AnalysisOverview of 3PL Needs and Practices in the Indian FMCG
Sector
3-1

Segmentation of FMCG Sector by Product Category (India), 2005
3-2

Revenue Forecasts for FMCG Sector (India), 2002-2012
3-3
3-6

Annual Production Volume of FMCG Sector by Product Segment (India), 2005
3-5
3-4

Size and Structure of FMCG Sector by Type of Participant (India), 2005
3-4
3-3
3-6

Comparison of Share of Logistics Functions Managed
In-house by FMCG Sector Versus the Shares Outsourced to 3PL and Others (India), 2005
3-6
3-9

Top Reasons Mentioned by FMCG Sector for Outsourcing
Various Logistics Functions to 3PL Companies (India), 2005
3-7
3-10

Needs and Preferences of FMCG Sector Regarding
Logistics Functions Outsourced to 3PL Companies (India), 2005
3-8
3-11

Metrics for Warehouse Infrastructure and Geographic
CoverageIndustry Average of Major FMCG Companies (India), 2005
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3-9

Metrics for Transportation InfrastructureIndustry
Average of Major FMCG Companies (India), 2005
3-13
3-10 3PL Markets in the Indian FMCG Sector:

Broad Metrics for 3PL and Logistics Cost-Comparison of
FMCG Industry Average Versus Major FMCG Companies (India), 2005
3-15

Metrics for Inbound Logistics Efficiency-Comparison of
3-17

Metrics for Outbound Logistics Efficiency-Comparison of
3-18

Metrics for Reverse Logistics EfficiencyIndustry Average of
Major FMCG Companies (India), 2005
3-20

Metrics for Logistics Function Process Automation-Comparison of
FMCG Industry Average Vs Major FMCG Companies (India), 2005
3-21

Top Factors Considered by FMCG Sector for Choosing a 3PL Provider (India), 2005
3-22

In-house by HLL Versus the Shares Outsourced to 3PL and Others (India), 2005
3-23

Top Reasons Mentioned by HLL for Outsourcing Various
Logistics Functions to 3PL Companies (India), 2005
3-24

Needs and Preferences of HLL Regarding Logistics Functions
Outsourced to 3PL Companies (India), 2005
3-25

Metrics for Warehouse Infrastructure and Geographic Coverage of HLL (India), 2005
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Metrics for Transportation Infrastructure of HLL (India), 2005
3-27

In-house by P&G Versus the Shares Outsourced to 3PL and Others (India), 2005
3-29

Top Reasons Mentioned by P&G for Outsourcing
3-29

Needs and Preferences of P&G Regarding Logistics
Functions Outsourced to 3PL Companies (India), 2005
3-30

Metrics for Warehouse Infrastructure and Geographic Coverage of P&G (India), 2005
3-31

Metrics for Transportation Infrastructure of P&G (India), 2005
3-32

Comparison of Share of Logistics Functions Managed I
n-house by Nestle Versus the Shares Outsourced to 3PL and Others (India), 2005
3-33

Top Reasons Mentioned by Nestle for Outsourcing
3-34

Needs and Preferences of Nestle Regarding Logistics
3-35

Metrics for Warehouse Infrastructure and Geographic Coverage of Nestle (India), 2005
3-36

Metrics for Transportation Infrastructure of Nestle (India), 2005
3-37

In-house by Nirma Versus the Shares Outsourced to 3PL and Others (India), 2005
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Top Reasons Mentioned by Nirma for Outsourcing
3-39

Needs and Preferences of Nirma Regarding Logistics
3-40

Metrics for Warehouse Infrastructure and Geographic Coverage of Nirma (India), 2005
3-41

Metrics for Transportation Infrastructure of Nirma (India), 2005
3-42

In-house by Godrej Versus the Shares Outsourced to 3PL and Others (India), 2005
3-43

Top Reasons Mentioned by Godrej for Outsourcing
3-44

Needs and Preferences of Godrej Regarding Logistics
3-45

Metrics for Warehouse Infrastructure and Geographic Coverage of Godrej (India), 2005
3-46

Metrics for Transportation Infrastructure of Godrej (India), 2005
3-47

In-house by Henkel Versus the Shares Outsourced to 3PL and Others (India), 2005
3-49

Top Reasons Mentioned by Henkel for Outsourcing
3-49

Needs and Preferences of Henkel Regarding Logistics
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Metrics for Warehouse Infrastructure and Geographic Coverage of Henkel (India), 2005
3-51

Metrics for Transportation Infrastructure of Henkel (India), 2005
3-52

In-house by Wipro Versus the Shares Outsourced to 3PL and Others (India), 2005
3-54

Top Reasons Mentioned by Wipro for Outsourcing
3-54

Needs and Preferences of Wipro Regarding Logistics
3-55

Metrics for Warehouse Infrastructure and Geographic Coverage of Wipro (India), 2005
3-56

Metrics for Transportation Infrastructure of Wipro (India), 2005
3-57

In-house by GSK Versus the Shares Outsourced to 3PL and Others (India), 2005
3-58

Top Reasons Mentioned by GSK for Outsourcing
3-59

Needs and Preferences of GSK Regarding Logistics
3-60

Metrics for Warehouse Infrastructure and Geographic Coverage of GSK (India), 2005
3-61

Metrics for Transportation Infrastructure of GSK (India), 2005
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In-house by Amul Versus the Shares Outsourced to 3PL and Others (India), 2005
3-63

Top Reasons Mentioned by Amul for Outsourcing
3-64

Needs and Preferences of Amul Regarding Logistics
3-65

Metrics for Warehouse Infrastructure and Geographic Coverage of Amul (India), 2005
3-66

Metrics for Transportation Infrastructure of Amul (India), 2005
3-67

In-house by Tata Tea Versus the Shares Outsourced to 3PL and Others (India), 2005
3-68

Top Reasons Mentioned by Tata Tea for Outsourcing
3-69

Needs and Preferences of Tata Tea Regarding Logistics
3-70

Metrics for Warehouse Infrastructure and Geographic Coverage of Tata Tea (India), 2005
3-71

Metrics for Transportation Infrastructure of Tata Tea (India), 2005
3-72

In-house by Jyothi Laboratories Versus the Shares Outsourced to 3PL and Others (India), 2005
3-74

Top Reasons Mentioned by Jyothi Laboratories for
Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
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Needs and Preferences of Jyothi Laboratories Regarding
3-75

Coverage of Jyothi Laboratories (India), 2005
3-76

Metrics for Transportation Infrastructure of Jyothi Laboratories (India), 2005
3-77

In-house by Anchor Versus the Shares Outsourced to 3PL and Others (India), 2005
3-78

Top Reasons Mentioned by Anchor for Outsourcing
3-79

Needs and Preferences of Anchor Regarding Logistics
3-80

Metrics for Warehouse Infrastructure and Geographic Coverage of Anchor (India), 2005
3-81

Metrics for Transportation Infrastructure of Anchor (India), 2005
3-82

In-house by UB Group Versus the Shares Outsourced to 3PL and Others (India), 2005
3-83

Top Reasons Mentioned by UB Group for Outsourcing
3-84

Needs and Preferences of UB Group Regarding
3-85

Metrics for Warehouse Infrastructure and Geographic Coverage of UB Group (India), 2005
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Metrics for Transportation Infrastructure of UB Group (India), 2005
3-87

In-house by Priya Foods Versus the Shares Outsourced to 3PL and Others (India), 2005
3-88

Top Reasons Mentioned by Priya Foods for Outsourcing
3-89

Needs and Preferences of Priya Foods Regarding
3-89

Metrics for Warehouse Infrastructure and Geographic Coverage of Priya Foods (India), 2005
3-90

Metrics for Transportation Infrastructure of Priya Foods (India), 2005
3-91

In-house by Colgate-Palmolive Versus the Shares Outsourced to 3PL and Others (India), 2005
3-93

Top Reasons Mentioned by Colgate-Palmolive (C-P) for
3-94

Needs and Preferences of Colgate-Palmolive Regarding
3-94

Coverage of Colgate-Palmolive (India), 2005
3-95

Metrics for Transportation Infrastructure of Colgate-Palmolive (India), 2005
3-96

In-house by L'Oreal Versus the Shares Outsourced to 3PL and Others (India), 2005
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Top Reasons Mentioned by L'Oreal for Outsourcing
3-99

Top Reasons Mentioned by L'Oreal for Outsourcing
3-100

Metrics for Warehouse Infrastructure and Geographic Coverage of L'Oreal (India), 2005
3-101

Metrics for Transportation Infrastructure of L'Oreal (India), 2005
3-102

In-house by Reckitt & Colman Versus the Shares Outsourced to 3PL and Others (India), 2005
3-103

Top Reasons Mentioned by Reckitt & Colman (R&C) for
3-104

Needs and Preferences of Reckitt & Colman Regarding
3-105

Coverage of Reckitt & Colman (India), 2005
3-106

Metrics for Transportation Infrastructure of Reckitt & Colman (India), 2005
3-107

In-house by Dabur Versus the Shares Outsourced to 3PL and Others (India), 2005
3-108

Top Reasons Mentioned by Dabur for Outsourcing
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Needs and Preferences of Dabur Regarding Logistics
3-110

Metrics for Warehouse Infrastructure and Geographic Coverage of Dabur (India), 2005
3-111

Metrics for Transportation Infrastructure of Dabur (India), 2005
3-112

In-house by Marico Versus the Shares Outsourced to 3PL and Others (India), 2005
3-114

Top Reasons Mentioned by Marico for Outsourcing
3-114

Needs and Preferences of Marico Regarding Logistics
3-115

Metrics for Warehouse Infrastructure and Geographic Coverage of Marico (India), 2005
3-116

Metrics for Transportation Infrastructure of Marico (India), 2005
3-117

In-house by Himalaya Versus the Shares Outsourced to 3PL and Others (India), 2005
3-119

Top Reasons Mentioned by Himalaya for Outsourcing
3-119

Needs and Preferences of Himalaya Regarding Logistics
3-120

Metrics for Warehouse Infrastructure and Geographic Coverage of Himalaya (India), 2005
3-121

Metrics for Transportation Infrastructure of Himalaya (India), 2005
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Chapter 4
4-1

Market Share Breakup of 3PL Market Segment
Owned by National Major 3PL Companies (India), 2005
4-2
4-5

Services Comparison of Top 10 National Major 3PL Companies (India), 2005
4-7
Chapter 5
Recommendations and Growth Strategies for 3PL Providers in the Indian FMCG
Sector
5-1

Top 10 3PL Services Ranked in the Order of their Market Potential (India), 2005
5-2
5-2

Top 10 3PL Services with High Market Potential (India), 2006-2012
5-3
Chapter 7
7-1
Decision Support Database:

Tabulation of Economic Growth and Infrastructural Figures (India), 2005
7-2

Tabulation of the Indian FMCG Industry Structure (India), 2005
7-3
7-2
7-4

Tabulation of Indian FMCG Trade and Transportation Figures (India), 2005
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List of Charts
Chapter 1
Executive Summary
1.1

Measure of 3PL Usage in Total FMCG Sector (India), 2005
1-4
Chapter 2
2.1

Standard Model of Goods Flow in FMCG Sector (India), 2005
2.2

Breakup of FMCG Sector's Logistics Spend by Function (India), 2005
2.3
2-2
2-3

FMCG Logistics Cost BreakupInbound Logistics
Cost Versus Outbound Logistics Cost (India), 2005
2.4

Comparison of FMCG Logistics Cost as Percent of SalesIndia Versus USA, 2005 and 2012
2.5
2-8

Level of 3PL Usage by Logistic Function in FMCG Sector (India), 2005
2.7
2-5

Level of 3PL Usage by FMCG Company Type (India), 2005
2.6
2-4
2-9

Level of 3PL Awareness by FMCG Company Type (India), 2005
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2.8

Perception about 3PL in Various Segments of FMCG Sector (India), 2005
2.9
2-12

FMCG Logistics Market Revenues by Functional Segment (India), 2005
2-14
2.10 3PL Markets in the Indian FMCG Sector:

Breakup of FMCG 3PL Market by Logistics Functional Segment (India), 2005
2-15

3PL Revenues Generated by Each Logistics Function Segment (India), 2005
2-16

Comparison of 3PLs Share in the Entire FMCG Logistics
MarketIndia Versus USA, in 2005 and 2012
2-17

Revenue Forecasts for the Total 3PL Market in the FMCG Sector (India), 2002-2012
2-19

Breakup of Revenue Forecasts for the Total 3PL Market
in the FMCG Sector by Functional Segment (India), 2002-2012
2-20

Revenue Forecasts for 3PL Warehousing Market Segment (India), 2002-2012
2-21

Revenue Forecasts for 3PL Transportation Market Segment (India), 2002-2012
2-23

Revenue Forecasts for 3PL Freight Forwarding Market Segment (India), 2002-2012
2-24

Revenue Forecasts for 3PL MIS/Other Value Added
Logistics Services Market Segment (India), 2002-2012
2-26
2.19 3PL Markets in Indian FMCG Sector:

Competitive AnalysisMarket Share Breakup by 3PL Company Type (India), 2005
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xxx
Chapter 3
End-User AnalysisOverview of 3PL Needs and Practices in the Indian FMCG Sector
3.1

Revenue Forecasts for Total FMCG Sector (India), 2002-2012
3.2

3PL Awareness Level Versus 3PL Usage Level in FMCG Sector (India), 2005
3.3
3-5
3-8

Standard and 3PL Model of Goods Flow in FMCG Sector (India), 2005
3-14
Chapter 4
4.1

Industry Life CycleGrowth of Number of 3PL Service Provider Companies (India), 2000-2015
4.2

Market Life CycleGrowth in Number of 3PL Service End-user Companies (India), 2000-2015
4.3
4-3

Market Share Breakup by 3PL Company Type (India), 2005
4.4
4-2
4-5

Market Share Breakup of 3PL Market Segment Owned
by National Major 3PL Companies (India), 2005
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1
Executive Summary
Introduction
and
Overview
Introduction to FMCG Sector in India

Estimated at about Rs.65,000 crore in 2005, (approximately US$14.5 billion), the Fast
Moving Consumer Goods (FMCG) sector in India is the fourth largest industrial sector in the
county's economy. Major product segments offered by this sector include,
Personal care products (such as bath soaps, shampoos, perfumes, cosmetics and
toiletries)
Household care products (such as detergent soaps and powders, floor cleaners,
insecticides, and mosquito repellants)
Packaged food and beverages (such as processed foods, cereals, edible oils, snack foods,
soft drinks, bottled water, and dairy products)
Spirits and tobacco products (such as alcoholic beverages, cigarettes, and chewable
tobacco products)
As most of these products are consumed daily by the entire population, the Indian FMCG
sector has been steadily prospering with the rise of population. Also, the growth in the
income of middle class population in India is driving ahead the consumption of personal care
and packaged food products at a significant rate. The sector is estimated to grow at a
Compound Annual Growth Rate (CAGR) of 5.1 percent from 2005 to 2012, and reach a
value of US$19.2 Billion by 2012.
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Traditionally, Indian FMCG sector had been dominated by multinational companies such as
Hindustan Lever Limited. (HLL), Colgate-Palmolive (India) Limited, Procter and Gamble
Health and Hygiene (P&G) and Nestle India Limited, which have a very long and successful
presence in the country. However, since 1980s, few Indian companies have also emerged as
major participants in this sector. Domestic companies such as Nirma Limited, Godrej
Consumer Products Limited, Dabur India Limited, and Wipro Consumer Care and Lighting
have been steadily expanding their product range to give a tough competition to the multinationals. The intense competition among all the industry participants resulted in necessitating
strong distribution networks to increase their presence across the country.
The huge diversity in geographic conditions, consumer habits, and infrastructure conditions
across the country make it a major challenge for FMCG companies to efficiently manage
their supply chain to reach all parts of the country. Additionally, India's retail network is
very vast, estimated at about 3.3 million outlets in 2005. The highest priority of all the
FMCG companies in India is to achieve a consistent presence of their products across
maximum possible section of this vast retail network.
Introduction to Logistics Industry in India

India spends about 13.0 percent of its total Gross Domestic Product (GDP) on logistics, as
per 2005 estimates. The major logistics functions for the Indian industries include Transportation, Warehousing, Freight Forwarding, and other Value Added Operations including
Management of Information Systems (MIS). Of these functions, transportation and freight
forwarding have been traditionally outsourced to external service providers with relevant
expertise and infrastructure. The warehousing and MIS functions have been mostly managed
in-house by industries.
Nevertheless, the logistics industry, providing services to fulfill these major logistics needs of
the Indian industries is highly fragmented. The transportation service provider segment is
completely dominated by small trucking companies and individual truckers. The freight
forwarding service provider segment is also represented by thousands of small customs
brokers. Similarly, there are a huge number of participants in the warehousing service
segment and MIS service segment also.
FMCG sector being a major sector in economy, is actively targeted by majority participants
of the logistics industry. However, Indian FMCG sector's supply chain is quite long with as
many as five intermediaries between the manufacturer and the consumer. Further, the sector
is characterized by the high volume-low valuehigh movement of its products, making the
logistics needs of this sector quite unique, and requiring specialized capability to manage
each logistic function.
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Introduction to Third Party Logistics (3PL) Industry in India

3PL industry's origin in India can be traced back to mid 1990s. The industry was pioneered
by global logistics majors as a part of extending these services from parent companies to the
Indian subsidiaries of multinational companies in automobile and electronics sectors. FMCG
sector was also one of the early adopters of 3PL, as multinational companies in this sector
took cue from their parent companies and began to outsource a share of their logistics functions to these specialist service providers. Though insignificant in the first few years, Indian
3PL industry is experiencing a rapid growth after year 2000. The number of participants in
this industry had grown to be more than 400 by year 2005.
The fragmented Indian 3PL industry can be divided into three distinct tiers National Major
3PL companies with nationwide presence, Regional 3PL companies with strong presence in
one or two regions, and Small Remote 3PL companies.
Overview of 3PL Usage in the Indian FMCG Sector

3PL usage in the Indian FMCG sector started with multinational FMCG companies following
the footsteps of their parent companies abroad, and outsourcing warehousing function to
3PL companies in the late 1990s. Realizing significant cost reductions and several other
benefits, these companies started using 3PL in other logistic functions also. As of 2005,
multinational FMCG companies were using 3PL services for all major logistics functions,
including transportation.
On the contrary, most of the domestic FMCG companies are still wary to adopt the 3PL services due to various factors including the fear of losing control over their supply chain.
However, a few leading domestic FMCG companies have begun to follow their multinational
counterparts, and currently use 3PL services in warehousing and freight forwarding
functions.
Chart 1.1 shows the measure of 3PL users and usage in the Indian FMCG sector, as of 2005.
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Chart 1.1
3PL Markets in the Indian FMCG Sector: Measure of 3PL Usage in Total FMCG Sector
(India), 2005
13.0
14
Measure %
12
8.0
10
8
6
4
2
0
3PL Users in Overall FM CG Companies 3PL Usage in Overall FM CG Logistics
Parameter
Note: All figures are rounded. Source: Frost & Sullivan
Market
Overview
and
Research
Findings
Total 3PL Market in the Indian FMCG Sector Size and Forecasts
The size of the total 3PL market in the Indian FMCG sector is estimated at about
US$58 million in 2005. The market is expected to grow at a CAGR of 17.6 percent and reach
US$180.9 million by 2012. The growth rate of the market is expected to accelerate over this
period.
End-user 3PL Usage and Practices

There is a high level of awareness about 3PL in the Indian FMCG sector, but the usage is only
about 10 percent of the awareness level. Observation of 3PL usage penetration levels among
different types of FMCG companies in India shows that it varies from as high as 30 percent
in the multinational FMCG companies to as low as 1 percent in local regional FMCG companies. The usage of 3PL is also quite varied in each logistic function.
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Figure 1-1 shows the level of 3PL usage in the total Indian FMCG sector by each logistic
function in 2005.
Figure 1-1
3PL Markets in the Indian FMCG Sector: Level of 3PL Usage by Logistics Function in Total
FMCG Sector (India), 2005
Logistics Function
Level of 3PL Usage (%)
Warehousing
15
Transportation
International freight forwarding
20
MIS/other logistics operations
15
Note: All figures are rounded; the base year is 2005. Source: Frost & Sullivan
The significantly low level of 3PL penetration in the transportation function is attributed to
the fact that Indian FMCG sector concentrates on small trucking companies and individual
truckers for all its transportation operations. The synergy in the usage levels in warehousing
and MIS is partially attributed to the combined outsourcing of these two functions by most
FMCG companies.
Opportunities for the 3PL Service Providers in the Indian FMCG Sector
Significant opportunities exist for the growth of 3PL usage in the basic logistic functions of
the Indian FMCG sector for the next 5-7 years. Considering the low level of 3PL usage in the
most important logistics functions such as transportation and warehousing, a higher level of
growth opportunity exists in these functions, suggesting huge potential revenues for the 3PL
providers.
The opportunities for growth of 3PL usage could be varied among different types of FMCG
companies. The multinational FMCG companies that are already using 3PL in basic logistic
functions might graduate to outsourcing value-added advanced services such as customer
support, inbound logistics, and reverse logistics. Whereas, the domestic major FMCG companies might increase their 3PL usage in the basic logistic functions and occasionally
experiment with the value-added advanced services. On the contrary, the domestic regional
FMCG companies and the small FMCG companies could just begin to use 3PL services for
their basic logistic functions.
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Competitive Analysis of 3PL Service Providers in the Indian FMCG

Sector
Despite the presence of all multinational 3PL companies in the market and several homegrown 3PL majors, the 3PL market in the Indian FMCG sector is dominated largely by the
small local participants. The overall market is highly fragmented, with numerous logistics
service providers with varying capabilities operating across the country. The industry is
highly concentrated with the smaller participants in the transportation service segment,
whereas it is vice versa in the MIS and value-added services segment.
As of 2005, a lion's share of total 3PL companies operating in India are observed to use
traditional technologies and provide mostly stand-alone services, such as transportation,
warehousing, clearing, and forwarding for the FMCG sector. The national major 3PL companies, that have capabilities of higher technology and service range are proving to be a
mismatch when the FMCG companies require the advanced services across the country,
because all these 3PL companies have their operations currently focused only on major cities
of the country. Whereas, most of the FMCG companies' logistics are increasingly coming
from rural areas and this trend is expected to increase further in the coming years.
As a result of this lack of presence of national major 3PLs in rural areas, the growing logistics needs of FMCG sector in rural areas are fulfilled by smaller regional 3PL companies and
sometimes even those operating only in those remote areas.
Challenges for the 3PL Industry in the Indian FMCG Sector

The prospective growth of 3PL industry's revenues from the Indian FMCG sector could be
disturbed as a result of the hurdles posed by some critical factors, called challenges.
Mentioned below are a couple of challenges among the several challenges that area likely to
be faced by the 3PL industry in serving the Indian FMCG sector:
Geographic Diversity of India needs Varied Logistics Expertise for Each Region
India is a mix of several diverse geographical areas with varying infrastructure conditions. To
be successful, 3PL companies should gain expertise in efficient logistics for each of these
regions, which is quite a challenge.
High Concentration of Transportation Market with Individual Truckers
The Indian FMCG companies have decades long associations with small trucking companies,
and it is very difficult to persuade them to use transportation service from 3PL, because of
several other fringe benefits apart from low cost. This is a major challenge for 3PL companies
to expand their share in transportation service.
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Market Drivers for the 3PL Market in the Indian FMCG Sector
The steady growth of 3PL market in the Indian FMCG sector is a result of the positive impact
of some critical factors, called drivers. Mentioned below are a couple of factors among
several factors that have been driving the growth of 3PL market in the Indian FMCG sector:
I n t e n s e C o m p e t i t i o n i n F M C G S e c t o r Tr a n s f o r m s
Logistics into a Critical Function
Indian FMCG sector is undergoing intense competition due to the increased number participants and also aggressive market penetration strategies of the existing participants. A
successful growth in this situation is possible only through efficient logistics, which could be
provided only by 3PL
G o v e r n m e n t ' s F a v o r a b l e A t t i t u d e To w a r d 3 P L s H e l p s i n
their Growth
The Indian Government considers 3PL industry also as a part of BPO, and hence offers
special tax concessions. These are passed on by the 3PLs to their clients, resulting in
increased usage of these services.
VAT and its Implications on Indian FMCG and thereby on 3PL in

FMCG Sector
Value Added Tax (VAT) is the Indian Government's proposed uniform tax regime introduced
partially in 2005. A full implementation of this regime is expected to necessitate having
centralized large warehouses in regional hub cities.
Since building such large warehouses requires huge investments, most FMCG companies are
likely to outsource the warehousing function, creating immense potential market for 3PL
companies.
Leading FMCG companies have already started planning for the new scenario and the
required warehousing capacity to be outsourced. However there are a few challenges for the
3PL service providers in this lucrative path, which need to be addressed to gain maximum
benefit from VAT related opportunities.
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Strategic Conclusions
Several strategic conclusions have been arrived through the observation and analysis of the
facts and figures about 3PL market in the Indian FMCG sector. A few are mentioned below:
The currently offered 3PL service package for the Indian FMCG companies was observed
to be a generic package given to all industries based on weight. Since the FMCG products
are low value and high volume goods, this package is proving to be beyond affordable
level of majority FMCG companies.
3PL service providers should analyze their own network, infrastructure, and technical
capabilities to decide the most suitable category of target customers that could be
effectively served by them. Such an approach is likely to increase the winning rate of
customers.
All major Indian FMCG companies are gaining good revenues from exports to Asian
countries. This trend is expected to grow significantly if the plans of all multinational
FMCG companies to make India their manufacturing hub for Asia materializes. It would
result in a high level of freight forwarding business for the 3PLs.
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2
Strategic Analysis of Total 3PL Market in the
Indian FMCG Sector
Introduction
Introduction and Overview of the Indian FMCG sector

India is the seventh largest country in the world in terms of geographical area, and the second
most populous country with varied traditions and cultures spread across the country. The
country's one billion plus population (1.08 billion as of 2005) forms a huge market for
consumer goods, specifically Fast Moving Consumer Goods (FMCG). India's middle-class
consumer segment estimated at above 300 million people is touted as the world's largest
potential market for any consumer product.
The FMCG sector is the fourth largest sector in the Indian economy estimated at about Rs.
65,000 crore in 2005, (approximately US$14.5 billion). This industry produces Consumer
Nondurable (CND) products useful for the everyday needs of the population.
The industry is comprised of many multinational companies, which have a very long and
successful presence in the country, as well as several domestically grown companies. While
multinational companies such as Hindustan Lever and Procter and Gamble have wide presence in the market, domestic companies such as Nirma and Godrej also have an equally wide
presence. The competition is very intense among all the industry participants to increase their
presence across the country.
With varied geographic conditions, consumer habits, and infrastructure conditions, efficiently managing the supply chain to reach all parts of the country is a major challenge for
the FMCG companies. The country has an estimated 3.3 million FMCG retail outlets as of
2005. Attaining a direct reach and consistent presence at a maximum number of these outlets
remains one of the highest priorities for all companies.
Also, since there is a very low brand loyalty for FMCG products, customers easily switch for
an alternative or another competitive product if a particular company's product is not available while shopping. Hence the FMCG companies strive hard to improve their logistics and
supply chain efficiency to place their goods in the right place at the right time.
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Furthermore, 70 percent of India's population still lives in rural areas, and they contribute to
about 60 percent of FMCG consumption. There are over 600,000 villages in India and most
FMCG products have relatively very low per capita usage in these villages. Realizing the
higher growth potential of the rural market than urban market, all major FMCG companies
have initiated serious efforts to expand their distribution network to reach the rural areas,
but with lack of sufficient transportation and warehousing infrastructure, the efforts have
only been partially fruitful.
Considering such diversities and complexities of the Indian market, FMCG companies need a
very strong distribution network supported by a very well laid out supply chain, and
controlled through efficient logistics.
Introduction to Logistics in the Indian FMCG Sector

In the Indian FMCG sector, the supply chain of products is considerably long involving as
many as five levels of intermediaries, clearing and forwarding (C&F) agents, distributors,
wholesalers, stockists, retailers. Goods travel from a manufacturer's factory to the end
consumer, passing through all these intermediaries, thereby consuming significant amount of
time and resources.
Chart 2.1 shows the standard model of goods flow from manufacturer to retailer in the
Indian FMCG sector, as of 2005.
Chart 2.1
3PL Markets in the Indian FMCG Sector: Standard Model of Goods Flow in FMCG Sector
(India), 2005
M anufacturing
Unit
Owned by
Com pany
Central
W arehouse
Owned by
Com pany
State/Regional
W arehouse
Owned by C& F
Agent
District
Level Stock
Point
Owned by
Distributor
Town Level
Stock Point
Retailer
Owned by
W holesaler
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The major logistics functions associated with this movement include transportation (mostly
by road), warehousing, freight forwarding (in case of exports) and information management.
Also several FMCG companies import raw materials and a few also import and market
finished goods. This import activity also involves freight forwarding.
In the overall cost of logistics for the Indian FMCG sector, transportation accounts for a
lions share followed by warehousing. Freight forwarding accounts for the lowest share of the
costs. The higher share of transportation in the overall cost is attributed to the large level of
transportation needed between the multiple intermediaries of the Indian FMCG sector.
Chart 2.2 shows the percent breakup of logistics spend by function in the Indian FMCG
sector, during 2005.
Chart 2.2
3PL Markets in the Indian FMCG Sector: Breakup of FMCG Sector's Logistics Spend by
Function (India), 2005
10%
5%
25%
60%
Transportation
W arehousing
Freight Forwarding
M IS/Other Value Added Services
Interestingly, when the logistics cost is broken down as inbound logistics cost (cost of
procurement of raw materials from suppliers) and outbound logistics cost (cost of distribution of finished goods), the inbound logistics cost was found to be very low for the Indian
FMCG sector.
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Chart 2.3 shows the break up of inbound logistics cost and outbound logistics cost for the
Indian FMCG sector in 2005.
Chart 2.3
3PL Markets in the Indian FMCG Sector: FMCG Logistics Cost BreakupInbound Logistics
Cost Versus Outbound Logistics Cost (India), 2005
5%
95%
Inbound Logistics Cost
Outbound Logistics Cost
FMCG by its characteristics is a high-volume and low-value goods industry, which needs a
different kind of logistics setup. Above this, most of the products have low shelf life and have
to be manufactured and supplied regularly in optimum quantities to avoid excess stocks.
Considering the need of a continuous presence of products at all places at all times in right
quantity, FMCG logistics needs to be very volatile and dynamic. Several products are
supplied on a daily basis and most others are supplied on a weekly basis. This results in a
significantly high cost of logistics for Indian FMCG sector, estimated at about 5 percent of
overall sales value. Compared to this, in the developed countries, the logistics cost of FMCG
is estimated to be only about two to three percent. This cost difference is attributed to the
primitive stage of Indian FMCG logistics practices and 3PL usage in developed countries.
However, the logistics cost of Indian FMCG sector is expected reduce at a faster rate than
that of developed countries in future resulting in significant savings for the entire sector.
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Chart 2.4 shows the FMCG logistics cost comparison for India and the United States in
2005 and 2012.
Chart 2.4
3PL Markets in the Indian FMCG Sector: Comparison of FMCG Logistics Cost as Percent of
SalesIndia Versus USA, 2005 and 2012
2005
Logistics Cost as Percent of Sales (%)
6.0
2012
5.0
5.0
4.5
4.0
3.0
1.9
2.0
2.0
1.0
0.0
India
USA
India
USA
Country
Traditionally, Indian FMCG companies have managed majority of logistics functions by

themselves, except for transportation, but the transportation industry in India is completely
dominated by individual truckers or small trucking companies (representing more than
85 percent). These are highly unorganized in operations resulting in higher transportation
costs and longer transportation times. Due to this, delivery schedules of FMCG companies
are affected leading to a higher inventory level management.
In warehousing, Indian FMCG companies use the second-party logistics model. The warehousing function is managed by the company's own C&F agents. So the inventory holding
cost at C&F level also adds up to the company's logistics cost. As a result, the overall logistics cost escalates.
However, of late a few FMCG companies (specifically the multinational companies) have
started utilizing the services of 3PL providers for functions such as warehousing, and have
been reaping the benefits. Other companies are also expected to follow suit after realizing the
advantages.
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Evolution of 3PL Market in the Indian FMCG Sector

Evolution of 3PL market in the Indian FMCG sector can be traced back to late-1990s, when
multinational FMCG companies operating in India started following their parent companies
abroad. The parent companies had realized benefits of using 3PL services, such as increased
efficiency and reduced costs. This encouraged their Indian units to use 3PL services as well,
although initially the share of logistics outsourced to 3PL was very less and done in parts.
However, the increasing competition in the Indian FMCG sector led to a decline in profits
while demanding greater and efficient distribution, driving the companies to increasingly
outsource their logistics functions to 3PL.
Since year 2001, the adoption of 3PL had been steadily growing in the Indian FMCG sector
at a rate of about 12 percent. This is expected to further increase as a result of positive developments favoring the market, such as growing realization of 3PL benefits by FMCG
companies and expanding range of services by 3PL companies.
At present, all multinational FMCG companies are outsourcing most of their basic logistics
functions and also demanding various advanced functions such as Management of Information Systems (MIS), order processing and customer service. Major local FMCG companies
have also started using 3PL services for part of their warehousing and transportation needs.
In the next five to ten years, these local companies are also expected to be equally using 3PL
services as their multinational competitors.
This scenario is encouraging 3PL service providers to consider the Indian FMCG sector as
one of the high potential markets, and offer the complete logistics functions to the desired
companies.
Awareness and Perception about 3PL in the Indian FMCG Sector

Strong presence of multinationals led to a faster growth of awareness about 3PL in the Indian
FMCG sector. All the organized FMCG industry participants are aware of 3PL services, but
the perception about 3PL is largely negative among majority of the FMCG companies except
for the multinational FMCG companies operating in India. This is attributed to the lack of
complete understanding of the 3PL model of operation and the possible benefits.
Scope of the Study

This research service provides analysis of the logistics practices among the Indian FMCG
companies, and their major logistics functions.
The research service also provides a detailed analysis of the level of usage of 3PL services in
various logistics functions by the Indian FMCG companies and the reasons for using 3PL.
The total market size for 3PL in the Indian FMCG sector and the market breakup by each
function is provided. The forecast for these markets up to 2012 is also provided.
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The study provides details of the drivers and restraints affecting the 3PL market in the Indian
FMCG sector, the challenges affecting the 3PL industry, and their impact on the market in
short, medium, and long term of the forecast period.
A detailed analysis of various logistics functions related metrics of major Indian FMCG
companies is given. The average industry values for the same metrics are also provided.
A detailed competitive analysis of major 3PL service providers in the Indian FMCG Sector
has been provided. The range of services offered and the business model used by these service
providers for the Indian FMCG sector are also provided.
This research service has been developed based on Frost & Sullivan's patented Market Engineering model and is based on desk and primary research using a bottom up approach. A
large number of interviews were carried out with multinational and local FMCG companies
in India. Interviews were also carried out with 3PL service providers currently operating or
planning to set up operations in India.
Key Assumptions
This study is based upon the following assumptions:
The data and figures mentioned by the respondents (who were all top management
executives) during interviews is a true representation of the market scenario
The sample set of companies considered for primaries is an optimum representation of

the entire industry
The forecast is done based on certain average figures arrived from the entire interviews,
which could vary in reality in future considering the volatile and dynamic status of the
market, but this study assumes them to remain consistent
All the external factors that could indirectly affect the end user and service providers
mentioned in this research service have been estimated to remain steady or without change
for the entire duration of forecast period.
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3PL
Scenario
in
the
Indian
FMCG
Sector
Overall 3PL Usage in the Logistics Functions

Although Indian FMCG companies have traditionally outsourced all major functions of their
supply chain in discrete parts such as transportation to truckers, warehousing to C&F
agents, manufacturing and packaging to smaller contract manufacturers in different states,
and so on, the companies retained the control of managing these functions fully in-house.
Majority of companies have continued to use the same model of logistics management despite
the increasing availability of professional services from 3PLs.
The overall level of 3PL usage in logistics functions in the entire Indian FMCG Sector is estimated to be just about 8.0 percent. The usage level varies from as high as 30.0 percent for the
multinational FMCG companies to as low as 1.0 percent for local regional FMCG
companies.
Chart 2.5 shows the Level of 3PL Usage by Company Type in the Indian FMCG Sector, as of
2005.
Chart 2.5
3PL Markets in the Indian FMCG Sector: Level of 3PL Usage by FMCG Company Type
(India), 2005
35.0
30.0
3PL Usage Level (%)
30.0
25.0
25.0
20.0
15.0
8.0
10.0
5.0
1.0
0.0
M ultination
al
Domestic M ajor
Companies
Domestic Regional
Companies
0.0
Unorganized
Companies
Overal
Sector
Type of FM CG Company
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Various factors were seen to have an impact on the usage of 3PL by the Indian FMCG
companies, such as the product mix and complexity of their distribution network, government rules and taxes, and others.
3PL Usage in Different Logistics Functions

In the Indian FMCG sector, level of usage of 3PL varies by logistics function. Among the four
major logistics functions, it is high in freight forwarding, warehousing and MIS but negligible in transportation.
Chart 2.6 shows the level of 3PL usage by each logistic function in the Indian FMCG sector
in 2005.
Chart 2.6
3PL Markets in the Indian FMCG Sector: Level of 3PL Usage by Logistic Function in FMCG
Sector (India), 2005
Level of 3PL Usage (%)
25.0
20.0
20.0
15.0
15.0
15.0
13.0
10.0
5.0
3.0
Overall
Logistics
MIS/Other
Value Added
Operations
Freight
Forwarding
Transportation
Warehousing
0.0
Logistic Function
3 P L U sa g e i n Wa r e h o u s i n g
The Indian FMCG sector outsources 70.0 percent of its warehousing function (through C&F
agents), but the level of 3PL usage is only 15.0 percent of the entire warehousing function.
This difference is attributed to the proprietary concerns of losing control over stock management and also the strategic benefits associated with holding assets in key distribution centers.
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3 P L U s a g e i n Tr a n s p o r t a t i o n
The Indian FMCG sector outsources 100 percent of its transportation function (through
truckers), but the level of 3PL usage is only 3.0 percent of the entire transportation. This
significantly low level of 3PL usage in transportation is attributed to the traditional dominance of truckers in the transportation sector, the decades long relationships of FMCG
companies with them, the low pricing offered by individual truckers or small trucking
companies, and also the lack of network reach of 3PLs beyond major cities.
3PL Usage in Freight Forwarding
The Indian FMCG sector outsources 100 percent of its freight forwarding function (through
customs brokers), but the level of 3PL usage is only 20.0 percent of the entire freight
forwarding needs. This low 3PL usage is attributed to the decades long association between
FMCG companies and custom brokers, low price charged by them, and also their experience
in dealing effectively with Indian bureaucratic procedures.
3 P L U s a g e i n M I S a n d O t h e r Va l u e A d d e d L o g i s t i c s
Operations
The Indian FMCG sector outsources 50 percent of its other value-added logistics function
(through IT and consulting companies), but the level of 3PL usage is only 15.0 percent of the
entire value-added logistics. The low level of 3PL usage is attributed to the proprietary
concerns over sharing information with outsiders and also the fear of loss of control over
critical information.
3PL
Solutions
Offered
for
the
Indian
FMCG
Sector
Range and Scope of Solutions Offered by 3PL Providers for the Indian
FMCG Sector
Currently the 3PL providers in India are offering all the basic logistics services like warehousing, transportation, freight forwarding and information management to the FMCG
sector. Value added services like customer support, order processing, packing and consolidation, are also being offered to interested companies (multinational FMCG companies are
using them).
But the scope of 3PL services offered to the FMCG sector is not yet able to meet their
complete logistics needs efficiently at an affordable cost. A lot is desired to be done by the
3PL providers to enhance their service basket to improve the 3PL usage by FMCG sector.
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Business Models of 3PL Providers for the Indian FMCG Sector

Currently, there is no specific business model applied by the 3PL providers for the Indian
FMCG sector. The standard quantity oriented model used for automotive and electronics
industries is also applied for the FMCG industry, but considering the high-volume low-value
high-movement characteristic of the FMCG industry, this is proving to be a mismatch. The
prices charged are beyond the affordability level of majority of the Indian FMCG companies.
Also, the current 3PL infrastructure is not able to meet the high movement needs of FMCG
through several intermediaries in its supply chain.
Awa r e n e s s
Indian
and
FMCG
Attitudes
about
3PL
in
the
Sector
Awareness about 3PL in the Indian FMCG Sector

The level of awareness about 3PL is varied among the different segments of the Indian FMCG
sector.
Chart 2.7 shows the level of awareness about 3PL by Company Type in the Indian FMCG
sector, as of 2005.
Chart 2.7
3PL Markets in the Indian FMCG Sector: Level of 3PL Awareness by FMCG Company Type
(India), 2005
120
3PL Awareness Level (%)
100
100
100
80
50
60
40
10
20
0
M ultinational
Companies
Domestic M ajor
Companies
Domestic Regional
Companies
Unorganized
Companies
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All the multinational FMCG companies and domestic major companies are fully aware of the
3PL services. But only half of the domestic regional companies are aware of 3PL services and
unorganized companies have very low awareness about these services. This difference could
be attributed to the varying levels of exposure of different types of FMCG companies to the
technology and competitive trends in the global and domestic markets. Multinational FMCG
companies, gaining knowledge and support from their parent concerns have complete awareness about 3PL. Similarly, the local majors, which have head-on competition with
multinationals and track their competitive moves, also have gained full awareness about 3PL.
The regional companies, which operate in niche markets and try to emulate the local majors
also have gained a decent awareness about 3PL. Nevertheless, the unorganized companies,
which operate in remote markets, are largely aloof of the developments in the FMCG
industry as well as about the 3PL concept.
Perceptions about 3PL in the Indian FMCG Sector

Perceptions about 3PL are also varied in different segments of the Indian FMCG sector. On
an overall level the perception is still largely negative, except for the multinational FMCG
companies.
Chart 2.8 shows the Perception about 3PL by Company Type in the Indian FMCG Sector, as
of 2005.
Chart 2.8
3PL Markets in the Indian FMCG Sector: Perception about 3PL in Various Segments of
Positive
Negative
Perception Breakup (%)
120
100
10
60
80
90
60
40
99
90
80
20
40
0
M ultinational
Companies
10
Domestic M ajor Domestic Regional

Companies
Companies
1
Unorganized
Companies
20
Overall
Sector
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The overall perception about 3PL in the Indian FMCG Sector is largely negative reflecting the
reason for the low level of 3PL usage. A lion's share of local regional companies apart from
the local majors have negative perception about 3PL. The negative perception of local
regional companies could be attributed to their low awareness, but the negative perception
among the local majors should be considered as a major cause of concern by the 3PL companies. It also signifies the urgent need for the 3PL companies to initiate efforts to educate the
FMCG companies more about the value-addition brought in by the 3PL services and prove
their claims through sustained results.
Attitudes towards 3PL in the Indian FMCG Sector

The attitudes towards 3PL in the Indian FMCG sector are a direct reflection of their perceptions, hence the levels of the positive versus negative attitude in the overall sector, as well as
in various segments of the sector, are exactly the same as the respective levels of perception.
Expectations from 3PL in the Indian FMCG Sector

Currently, on an overall level, Indian FMCG sector has high expectations from the 3PL
providers in terms of a customized service package suitable and affordable for the sector.
Also, wider network reach and infrastructure improvements of 3PLs are desired by FMCG
companies to reach all parts of the country effectively. Multinational FMCG companies are
also expecting 3PLs to provide a complete solution to fulfill their entire logistics needs,
including advanced services such as production planning, delivery schedule planning,
marketing campaigns, and rate negotiation.
Preferences Regarding 3PL in the Overall Indian FMCG Sector

For a higher level of outsourcing to 3PLs, Indian FMCG companies are preferring a partnership based dealing with them rather than a normal supplier client type dealing. They also
prefer this partnership to involve long term association and risk sharing clauses. FMCG
companies believe that such clauses would enhance the mutual trust, greater understanding
of each other's needs and capabilities, and ultimately lead toward a higher level of 3PL usage.
Concerns about 3PL in the Indian FMCG Sector

Indian FMCG sector has major concerns regarding the infrastructure and capability levels of
3PL providers. In several cases, the 3PL providers were found to lack the capability to offer a
customized solution to the desired FMCG company. Also, in several cases, the 3PL providers
were found to lack the required infrastructure and network reach to suit the FMCG requirements. In some cases, the 3PL provider providing similar services to a competitor by
leveraging the experience gained with one company, has also been seen as a serious concern
and competitive threat. However, some companies have included clauses to avoid that
scenario in their renewed contracts.
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Lack of professional management personnel and skills among the 3PL companies for efficiently managing the FMCG supply chain, is found to be another major concern for Indian
FMCG sector.
Also, lack of sufficient exposure among 3PLs to deal with Indian bureaucratic procedures
associated with the FMCG supply chain, is a major concern for the Indian FMCG sector.
Market
Size
and
Revenue
Forecasts
The Total Logistics Market in Indian FMCG Sector

Indian FMCG sector is one of the top five contributors toward the entire Indian logistics
market. The sector spends about 5.0 percent of its revenues on logistics. In terms of value,
this figure was about US$720 million in 2005. Of this market, transportation function forms
the largest segment followed by warehousing. MIS and other value added logistics services
forms a small segment and freight forwarding forms the lowest segment.
Chart 2.9 shows the market revenues for each logistic function in the total logistics market in
the Indian FMCG sector in 2005.
Chart 2.9
3PL Markets in the Indian FMCG Sector: FMCG Logistics Market Revenues by Functional
Segment (India), 2005
720
700
600
500
432
400
300
200
180
Total Market
72
MIS/Other
Value Added
Services
Warehousing
Freight
Forwarding
36
100
0
Transportation
Revenues (US$ Million)
800
Logistics Function wise M arket Segment
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Current Size of the 3PL Market in the Indian FMCG Sector

The contribution of FMCG sector toward the Indian logistics market is estimated at around
12.0 percent of total market, but in the 3PL market, FMCG lags well behind other sectors
such as automotive and electronics, and contributes to less than 10.0 percent.
The total 3PL market in the Indian FMCG sector was about US$58.0 million in 2005. Of
this, warehousing contributes to the largest share, followed by transportation and MIS/Other
value added services respectively. Freight forwarding contributes to the smallest share.
Chart 2.10 shows the market share breakup by logistic function segment in the total 3PL
market in the Indian FMCG sector, in 2005.
Chart 2.10
3PL Markets in the Indian FMCG Sector: Breakup of FMCG 3PL Market by Logistics
Functional Segment (India), 2005
18.6%
22.4%
12.4%
46.6%
Transportation
W arehousing
Freight Forwarding
M IS/Other Value Added Services
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Chart 2.11 shows the revenues generated by each of the logistics function segment of the
total 3PL market in Indian FMCG sector, in 2005.
Chart 2.11
3PL Markets in the Indian FMCG Sector: 3PL Revenues Generated by Each Logistics
Revenue (US$ Million)
Function Segment (India), 2005
70.0
58.0
60.0
50.0
40.0
27.0
30.0
20.0
13.0
7.2
10.8
10.0
Total
Logistics
MIS/Other
Value Added
Services
Freight
Forwarding
Warehousing
Transportation
0.0
Logistics Function wise M arket Segment
The higher contribution of warehousing to the total 3PL market in the Indian FMCG sector
is attributed to the usage of 3PL services in warehousing by all the market leading multinational FMCG companies. Since freight forwarding is outsourced mostly to the custom
brokers and MIS operations are managed in-house, the 3PL revenues in these segments are
low. Similarly, although transportation is the largest cost component in logistics since the
business is tapped by the individual truckers, 3PL's share and hence the transportation
segment revenues in the total 3PL market in the Indian FMCG sector is low.
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Estimated Share of 3PL Market in the Entire FMCG Logistics Market

The share of 3PL in the entire logistics market is quite low in Indian FMCG sector, as
compared to developed markets such as the United States.
Chart 2.12 shows the Comparison of 3PL's Percent Share in the Entire FMCG Logistics
MarketIndia Versus USA, in 2005 and 2012.
Chart 2.12
3PL Markets in the Indian FMCG Sector: Comparison of 3PLs Share in the Entire FMCG
Logistics MarketIndia Versus USA, in 2005 and 2012
2005
2012
75.0
80.0
Share of 3PL in Entire FMCG
Logistics Market (%)
70.0
70.0
60.0
50.0
40.0
30.0
20.9
20.0
8.0
10.0
0.0
USA
India
USA
India
Country
Of the entire FMCG logistics market in India, 3PL's share was approximately 8.0 percent in
2005. Whereas this figure was about 70.0 percent in USA. The high share in the USA. is
attributed to the highly sophisticated FMCG supply chain practices prevalent in the country
due to superior infrastructure, the capabilities of 3PLs to provide affordable and efficient
solutions for complete supply chain, and a positive attitude toward 3PLs.
However, with the fast growing rate of adoption of 3PL services in the Indian FMCG sector,
3PL's share in the Entire FMCG Logistics Market in India is expected to increase by more
than 160 percent and account for about 20.9 percent share by 2012. In contrast, the comparative growth of 3PL's percent share in USA is expected to be only about 7.1 percent. This
huge growth indicates a highly potential market for the 3PL services in the Indian FMCG
sector in the next seven years.
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Revenue Forecasts for the 3PL Market in the Indian FMCG Sector
Usage of 3PL in the Indian FMCG sector started in late 1990s and became a sizable market
by the start of 21st century. Since 2002, the 3PL market in the FMCG sector has been
growing at an estimated CAGR of 12.1 percent. This fast growth was a result of increased
outsourcing of logistics functions to 3PL by the multinational FMCG companies. The trend is
expected to pickup pace in future, making FMCG sector a good potential market for the
3PLs.
Figure 2-1 and Chart 2.13 show the revenue forecasts for the total 3PL market in the Indian
FMCG sector from 2002 to 2012.
Figure 2-1
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for Total 3PL Market in the
FMCG Sector (India), 2002-2012
Revenue
Revenues
Growth Rate
Year
(US$ Million)
(%)
2002
41.2
---
2003
45.9
11.4
2004
51.5
12.2
2005
58.0
12.6
2006
65.8
13.4
2007
75.4
14.6
2008
88.1
16.9
2009
104.2
18.2
2010
124.0
19.0
2011
149.1
20.2
2012
180.9
21.4
Compound Annual Growth Rate (2005-2012): 17.6%

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Chart 2.13
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for the Total 3PL Market in the
FMCG Sector (India), 2002-2012
Revenues ($ M illion)
200
Growth Rate (% )
25
180
20
140
120
15
100
80
10
60
40
Growth Rate (%)
160
20
0
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
The revenue generated by 3PL services in the Indian FMCG sector, was US$58.0 million in
2005, and it is expected to grow at a CAGR of 17.6 percent and reach US$180.9 million by
2012. This represents a growth of 211.8 percent from 2005 to 2012, demonstrating the huge
potential of the market for 3PL services in the Indian FMCG sector.
The growth of the market, which is expected to be moderate during 2006 to 2007, is
expected to pickup pace from 2008 as result of the opportunities emerging out of the full
VAT implementation, improved inclination towards 3PL, and increased expertise of 3PL
companies to offer customized services.
The surge in market growth initiated by the effect of VAT is expected to slow down by 2010.
However, an improved infrastructure and regularization of transportation industry and
increased assets and expertise of 3PL companies in domestic multi-modal transportation are
expected to continue further surge in the growth of the 3PL market in the Indian FMCG
sector.
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Revenue Forecasts Breakdown by Different Logistics Functions

The revenue contribution of different function segments to the total 3PL market in the Indian
FMCG sector is expected to change over the years.
Chart 2.14 shows the breakup of revenue forecasts for the total 3PL market in the Indian
FMCG sector by functional segment, from 2002 to 2012
Chart 2.14
3PL Markets in the Indian FMCG Sector: Breakup of Revenue Forecasts for the Total 3PL
Revenue Share by Market Segment (%)
Market in the FMCG Sector by Functional Segment (India), 2002-2012
100%
80%
60%
40%
20%
0%
2002
2003
2004
Transportati
2005
2006
W arehousi
2007
2008
Year
Freight
d
2009
2010
2011
2012
M IS/Other Value Added
3 P L i n Wa r e h o u s i n g
Figure 2-2 and Chart 2.15 show the revenue forecasts for the 3PL warehousing market in the
Indian FMCG sector from 2002 to 2012.
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Figure 2-2
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Warehousing Market in
the FMCG Sector (India), 2002-2012
Revenue
Revenues
Growth Rate
Year
(US $ Million)
(%)
2002
18.1
----
2003
20.5
13.3
2004
23.6
15.1
2005
27.0
14.4
2006
31.4
16.3
2007
37.4
19.1
2008
45.8
22.4
2009
56.9
24.2
2010
70.2
23.4
2011
87.3
24.3
2012
107.4
23.0

Chart 2.15
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Warehousing Market
Segment (India), 2002-2012
30
Growth Rate (% )
100
25
80
20
60
15
40
10
20
Growth Rate (%)
120
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
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Warehousing is already the largest contributor in terms of value and share (46.6 percent) in
the total 3PL market in the Indian FMCG sector. This market is expected to increase its share
further with a sharp growth after the total VAT system is implemented in India, changing the
warehousing model of FMCG companies and driving them toward 3PL adoption. Warehousing is expected to account for almost 60.0 percent of the total 3PL market in the Indian
FMCG sector by 2012. The revenues for this market were about US$27.0 million in 2005,
and are expected to grow at a CAGR of 21.8 percent and reach US$107.4 million by 2012
3 P L i n Tr a n s p o r t a t i o n
Figure 2-3 and Chart 2.16 show the revenue forecasts for the 3PL transportation market in
the Indian FMCG sector from 2002 to 2012.
Figure 2-3
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Transportation Market
in the FMCG Sector (India), 2002-2012
Revenue
Revenues
Growth Rate
Year
(US $ Million)
(%)
2002
10.4
----
2003
11.1
6.7
2004
11.9
7.2
2005
13.0
9.2
2006
14.3
10.0
2007
15.6
9.0
2008
17.1
9.6
2009
18.7
9.4
2010
20.5
9.6
2011
23.2
13.2
2012
26.4
13.8

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Chart 2.16
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Transportation Market
Segment (India), 2002-2012
30
16
Growth Rate (% )
14
12
20
10
15
8
6
10
Growth Rate (%)
25
4
5
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
Transportation, the second largest contributing segment for the 3PL market in the Indian
FMCG sector, is expected to have a slower growth during 2006 to 2010 due to the infrastructure bottlenecks. This is expected to pickup pace after the completion of major infrastructure
projects that are scheduled to become operational by 2010. The revenues for this market
were about US$13.0 million in 2005, and are expected to grow at a CAGR of 10.6 percent
and reach US$26.4 million by 2012. However, this segment's share in the total 3PL market in
the Indian FMCG sector is expected to reduce from 22.4 percent in 2005 to 14.5 percent by
2012.
3PL in Freight Forwarding
Figure 2-4 and Chart 2.17 show the revenue forecasts for the 3PL freight forwarding market
in the Indian FMCG sector from 2002 to 2012.
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Figure 2-4
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Freight Forwarding
Market in the FMCG Sector (India), 2002-2012
Revenue
Revenues
Growth Rate
Year
(US $ Million)
(%)
2002
4.9
----
2003
5.7
16.3
2004
6.3
10.5
2005
7.2
14.3
2006
8.4
16.7
2007
9.5
13.1
2008
11.0
15.8
2009
13.1
19.1
2010
15.9
21.4
2011
19.1
20.1
2012
24.9
30.4

Chart 2.17
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL Freight Forwarding
Market Segment (India), 2002-2012
30
Growth Rate (% )
35
25
20
20
15
15
10
Growth Rate (%)
30
25
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
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Freight forwarding is the lowest contributing segment to the total 3PL market in the Indian
FMCG sector as of 2005, representing only about 12.4 percent of the market, and
US$7.2 million in value. However, this segment is expected to grow at a CAGR of
19.4 percent to reach US$24.9 million in revenues and represent about 13.9 percent of the
total market by 2012. The market is expected to have a high growth rate after 2010, whereby
India's road and port infrastructure are expected to significantly improve resulting in a high
level of FMCG exports and thereby the related freight forwarding business.
3 P L i n M I S / O t h e r Va l u e A d d e d L o g i s t i c s S e r v i c e s
Figure 2-5 and Chart 2.18 show the revenue forecasts for the 3PL MIS/Other value added
logistics services market in the Indian FMCG sector from 2002 to 2012.
Figure 2-5
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL MIS and Other Value
Added Logistics Services Market in the FMCG Sector (India), 2002-2012
Revenue
Revenues
Growth Rate
Year
(US $ Million)
(%)
2002
7.8
----
2003
8.6
10.3
2004
9.7
12.8
2005
10.8
14.3
2006
11.9
11.3
2007
12.9
8.3
2008
14.2
10.2
2009
15.5
9.1
2010
17.4
12.2
2011
19.5
12.1
2012
22.2
13.9

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Chart 2.18
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for 3PL MIS/Other Value Added
Logistics Services Market Segment (India), 2002-2012
25
16
Growth Rate (% )
14
12
10
15
8
10
Growth Rate (%)
20
4
5
2
0
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
MIS/Other valued added logistics services market segment accounts for about 18.6 percent of
the total 3PL market in the Indian FMCG sector and was valued at about US$10.8 million as
of 2005. This market is expected to grow at a CAGR of 10.8 percent and reach
US$22.2 million by 2012. However, this segment is expected to become the lowest contributing sector to the total market, representing only about 11.9 percent by 2012. This is
attributed to the likely slow down in outsourcing of MIS related activities individually by
2012. This is because, by 2012 all the FMCG companies are either expected to have an integrated information management system and an in-house department to manage it, or
outsource this activity bundled as an integral part of the warehousing activity.
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Competitive
Analysis
and
Industry
Structure
Competitive Scenario of the Indian 3PL Market

3PL market in the Indian FMCG sector is highly fragmented among the 3PL service
providers, with small local participants controlling the larger share of the market. There are
numerous logistics service providers with varying capabilities across the country. Particularly,
the transportation service segment is firmly in the hands of small trucking companies and
individual truck owners, who control more than 75 percent of the total transportation
market.
This competitive scenario is also a result of the discrete outsourcing deals practiced by the
Indian FMCG companies. Any major FMCG company uses not less than 10 service providers
to fulfill its logistics needs across the country. The number is as high as 50 providers for some
companies with strong nationwide presence. Even the multinational FMCG companies use
similar approach compelled by the varied logistics needs in different parts of the country
coupled with the lack of nationwide presence of any 3PL.
At present, 3PL companies in India use traditional technologies and provide mostly standalone services such as transportation, warehousing, clearing, and freight forwarding. Also,
all the popular 3PL companies have focused or concentrated their operations only in major
cities of the country, making it difficult for FMCG companies to use their services in rural
areas. Due to this, the logistics needs in rural areas are fulfilled by smaller regional 3PL
companies, and sometimes even those operating in remote areas of the country.
In a majority of cases, due to the lack of a 3PL provider in the desired geographic region,
logistics functions are outsourced to small trucking companies or even individual truckers.
Hence, there is a great scope for 3PL companies for a deeper penetration into regional logistics markets by expanding the network and infrastructure, and providing an integrated
supply chain solutions for the Indian FMCG sector. A few major 3PL companies have initiated steps in this direction, but it could take atleast five years before they gain considerable
presence in regional markets.
However, a majority of logistics providers are vary of investing in 3PL related infrastructure
to expand their service basket due to the lack of required capital and non-favorable legal
environment.
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The total 3PL industry in India can be broadly segmented into 3 distinct tiersNational
Major 3PLs, Regional Major 3PLs, and Small Remote 3PLs. In 2005, the total number of
3PL companies operating in India were more than 400, of which only about 30 have good
national presence, and hence considered to be national major 3PLs. Of the rest, about
80 companies are estimated to have good regional presence and are considered to be regional
major 3PLs, The rest of 3PL companies have small presence in remote areas. Hence these are
considered to be small remote 3PLs.
Major 3PL Providers in the Overall Indian FMCG Sector

Nearly half of the companies out of the total 3PL companies operating in India, actively serve
the FMCG sector in some form and in some part of the country. And rest of the participants
are estimated to be occasional service providers.
Despite the presence of multinational 3PL companies and the usage of their services by multinational FMCG companies, the overall 3PL market in Indian FMCG sector is dominated by
the domestically grown national major, regional major and small remote 3PLs.
Among the national major 3PLs, the 10 major 3PL providers in the overall Indian FMCG
sector are DHL-Exel, Sembcorp, Reliance Logistics, Gati, TCI, Om Logistics, AFL Logistics,
Safexpress, Patel Logistics, and Dynamic Logistics.
Market Share Breakup by Type of 3PL Company

Among the three types of 3PL companies serving in the Indian FMCG sector, the small
remote 3PLs control half of the market, followed by regional 3PLs. The national major 3PLs
account for the lowest share of the market. This dominance of small and regional 3PLs is
attributed to the diverse region specific logistics needs of the Indian FMCG companies, which
are more effectively fulfilled by the domestically growth regional and small remote 3PLs
having greater familiarity and experience of operation in those regions.
Chart 2.19 shows the market shares owned by the different types of 3PL companies in the
total 3PL market in the Indian FMCG sector in 2005.
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Chart 2.19
3PL Markets in Indian FMCG Sector: Competitive AnalysisMarket Share Breakup by 3PL
Company Type (India), 2005
20%
50%
30%
National M ajor 3PLs
Regional 3PLs
Small Remote 3PLs
Industry Challenges and Market Drivers and

Restraints
Challenges for the 3PL Providers in the Indian FMCG Sector

Figure 2-6 shows the list of key industry challenges ranked in order of their impact on the
3PL market in the Indian FMCG sector from 2006 to 2012.
Figure 2-6
3PL Markets in the Indian FMCG Sector: Impact of Top Industry Challenges on Total 3PL
Market in the FMCG Sector (India), 2006-2012
Challenge
1-2 Years
3-4 years
5-7 years
Fears and inhibitions of FMCG companies to outsource logistics due to

lack of trust
High
Medium
Low
Geographic diversity of India needing varied Logistics expertise for each

region
Medium
Medium
Medium
Limited capability of majority 3PLs to offer complete logistics services
High
Medium
Low
Lack of skilled professionals in 3PL industry to provide required solution High
Medium
Low
High concentration of transportation market with individual truckers
High
Medium
Low
Lack of a customized business model and service package for FMCG sector
Medium
Medium
Low
Source: Frost & Sullivan
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Fear and Inhibitions of FMCG Companies to Outsource

L o g i s t i c s d u e t o L a c k o f Tr u s t
Indian FMCG companies have traditionally controlled their complete supply chain on their
own and outsourced different functions in small and discrete parts to individual service
providers in different regions. The management of supply chain was not outsourced due to
the fear of loss of proprietary control over the process and also due to the risk of losing
control over critical competitive information. They have shied away from sharing their information even with specific solution providers in several cases. A majority of companies still
continue to nurture the same fears and inhibitions, due to which they are not adopting the
3PL services, which requires the complete sharing of information and management.
This scenario is changing slowly owing to the competitive pressures and also the realization
of benefits derived from 3PL usage, and would take a few years before all the FMCG companies adopt a positive approach toward this, but the onus to eliminate this is more on 3PL
service companies, which should strive to gain more trust through a continued success in
delivering the promised results and commitment.
G e o g r a p h i c D i v e r s i t y o f I n d i a N e e d i n g Va r i e d L o g i s t i c s
Expertise for Each Region
India has a diverse geographic scenario coupled with a diverse consumer habit scenario in
each state. This scenario is starkly visible in case of FMCG sector. Logistics operation in each
state requires a suitable model that facilitates the effective storage and transportation of
goods mostly sold in that state, making it very difficult for adopting a uniform logistics
model. 3PL service companies interested in serving a particular company would have to offer
multiple solutions to fulfill the nationwide logistics needs of that company. This turns out to
be a major challenge for the 3PL service companies and results in using different service
providers for each state. Since India's diversity would continue to exist, the problem would
also persist for 3PLs.
The problem can be partially addressed by each 3PL company by building strategic alliances
with other 3PL companies having expertise in the states it does not have good experience, or
a direct contract sharing could also be tried in case of equally capable partner.
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Limited Capability of Majority 3PL Companies to Offer

Complete Logistics Services
Despite the considerable growth of 3PL industry and presence of multinational 3PL companies, a majority of the 3PL companies in India do not possess the capability to provide
complete solutions to fulfill all logistic needs of any industry. The scenario is worse for
FMCG industry, which needs a broader range of services than other industries. Apart from
the basic services, the existing 3PLs are not able to offer any significant value-added services,
which is making FMCG companies to opt for unorganized service providers or retain logistics in-house.
The situation could be changed with 3PLs gaining the required capabilities from their counterparts or parent companies in developed countries, but would require at least a few years to
bear results.
Lack of Skilled Professionals in 3PL Industry to
Provide Required Solution
The lack of skilled professionals in the Indian 3PL industry is a cause of major concern for
the Indian FMCG sector, which is not ready to entrust its logistics functions with the low
skilled or incapable personnel representing the 3PL industry. To provide a suitable logistics
solution for a particular company, the executives at the 3PL should be fully conversant with
the supply chain needs, technology and consumer market trends, and competitive trends
related to that company. The requirement is more for FMCG sector, which has a dynamic
consumer and competitive nature. A majority of Indian 3PLs do not possess the skilled
professionals to fulfill the dynamic needs of this sector, resulting in low preference for 3PL
services in this sector.
The situation should be collectively addressed by all the 3PL companies by encouraging and
striving toward professional education in logistics in the country.
H i g h C o n c e n t r a t i o n o f Tr a n s p o r t a t i o n M a r k e t w i t h
I n d i v i d u a l Tr u c k e r s
The traditional concentration of transportation market with the individual truckers, and
their long standing relationships with even the leading companies in all sectors, is a major
challenge for the 3PL industry in India. In FMCG sector, due to the high level of movement
of goods, the relationships between FMCG companies and individual truckers are even
stronger and decades old. Owing to the familiarity, low cost, and flexible payment options
provided by the truckers, Indian FMCG companies continue to favor dealing with them
despite availability of professional services from 3PLs.
The situation could change if 3PLs also can offer such flexible options and cost efficiencies to
the FMCG sector, while providing consistently reliable services.
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Lack of a Customized Business Model and Service

Pac k ag e f o r F M C G S e c to r
Currently, the Indian 3PL service providers are using the standard business model for entire
set of industries, and offering the standard service package to all of them. The model had
been proved successful for high-valuelow-volume product industries such as automotive,
information technology products, and electronics. However, FMCG being a high-volume
low-value high-movement industry by nature, this business model and service package are
proving to be highly premium and unaffordable to majority companies, limiting widespread
adoption of the 3PL services. There is a universal appeal from the entire FMCG sector to the
3PL service providers, to offer a customized and integrated service package for the sector.
Hence the onus is now upon the 3PL service providers to design a customized business model
and effective service package for the Indian FMCG sector. Considering the efforts already in
place by a few major 3PL companies, the situation is expected to turn favorable in the next
three to four years.
Market Drivers of the 3PL Market in the Indian FMCG Sector

The 3PL market in the Indian FMCG sector is poised for a significant growth, as is visible
from the trends and factors favoring its expansion. However, there are a few challenges to be
addressed by the participants to enable this growth. There are also a couple of factors that
could restrain the market growth due to their negative impact.
Figure 2-7 shows the market drivers ranked in order of their impact on the 3PL market in
Figure 2-7
3PL Markets in the Indian FMCG Sector: Market Drivers for Total 3PL Market in the FMCG
SectorRanked in Order of Impact (India), 2006-2012
Rank
Driver
1-2 Years
3-4 years
5-7 years
Increasing realization of 3PL benefits with MNCs

leading way
High
Medium
Low/Medium
Expanding basket of customized services for FMCG

sector from 3PLs
Medium
Medium/High
Medium/High
Government's initiatives to improve infrastructure
Medium
Medium
Medium/High
High potential for 3PL as a result of VAT
Medium
Medium/High
Medium/High
Increasing FMCG exports of India needing professional SCM
Low/Medium
Medium
Medium
Government's favorable attitude towards 3PLs as

part of BPO Industry Promotion
Medium
Low/Medium
Low
Increasing competition among FMCGs needing good

logistics
Low/Medium
Medium
Medium
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Increasing Realization of 3PL Benefits in FMCG Sector

w i t h M u l t i n a t i o n a l C o m pa n i e s ( M N C s ) L e a d i n g t h e Way
Multinational FMCG companies were the pioneers in adopting 3PL services in the Indian
FMCG sector, and these companies have already realized the benefits of using 3PL. A few
local majors have also begun to follow their foot steps and they too are finding the model to
be beneficial. This trend is expected to encourage more companies to adopt 3PL services
while steadily driving the market growth over the next five to seven years.
Expanding Basket of Customized Services for FMCG
Sector from 3PL Companies
Currently, majority of the 3PL companies in India are offering standard service package for
all industries, including FMCG sector. However, realizing the unique requirements of FMCG
sector, some 3PL companies have started offering customized service package for this sector,
which is proving to be successful and driving the adoption rate of 3PL services. This is still in
nascent stages and is expected to require few years before all FMCG companies switch to
such a package.
Government's Initiatives to Improve Infrastructure
The Indian government has realized the importance of logistics and transportation in
economy and has initiated several projects, such as several ports modernization, building
state-of-the-art national highways under The Golden Quadrilateral Project', building and
modernization of international airports in a few major cities. Since these projects require a
time frame of atleast five years to complete, their impact would be felt slowly. Indian FMCG
logistics, which is dependent more on the road transport and sea ports, is expected to benefit
from these developments. With this better infrastructure, the 3PL companies are also
expected to offer more efficient and affordable services, driving the market growth.
H i g h P o t e n t i a l f o r 3 P L a s a R e s u l t o f VAT
The recently introduced Value Added Tax (VAT) system in India is expected to enforce
FMCG companies to streamline their supply chains starting with automation of the process
and later on to changing their warehousing model in the long term. These developments are
expected to lead to an increasing adoption of 3PL services, which would be slow in the initial
one to two years, but would pick pace in the next three to 5 years.
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Increasing FMCG Exports of India Needing

Professional Supply Chain Management (SCM)
India's FMCG exports are steadily rising as it is emerging as an outsourcing hub for all major
multinational FMCG companies. Also Indian local major FMCG companies are also having a
steady growth in their exports. Packaged foods and processed foods, which require special
storage and transportation infrastructure are major contributors in these exports. This
export related logistics activity is mostly outsourced to 3PLs and with increasing exports, the
revenues of 3PLs are expected to rise steadily.
G o v e r n m e n t ' s F a v o r a b l e A t t i t u d e To w a r d 3 P L s a s P a r t
of BPO Industry Promotion
In India, 3PL services are considered as a part of BPO industry, which enjoys a favorable attitude from the government. Due to this reason, the tax sops applicable to the BPOs are
provided even to 3PLs. Taking advantage of these favorable policies, 3PLs in India are trying
to expand their infrastructure and scale of operations to achieve economies of scale. The
benefits gained are passed on to end users in the form of affordable and efficient services,
which is driving the adoption level of 3PL services. FMCG sector, which is a major sector in
the Indian economy, is also trying to make full use of these passed on benefits by steadily
expanding its outsourcing to 3PL companies.
Increasing Competition among FMCG Companies Needing
Good Logistics
Until 1990s, Indian FMCG sector had been largely dominated by a few multinational companies and a couple of local major companies, but a sudden transformation of several regional
companies into major competitors and a proliferation of competition in fast growing
segments, such as packaged food and beverages changed the industry scenario. The regional
and emerging companies have several cost advantages compared to the major companies and
to compete effectively with them, major companies needed to significantly improve their
logistics functions and setup. A major part of this responsibility has been entrusted with
3PLs, resulting in a steady growth of the 3PL market.
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Market Restraints for the 3PL Market in the Indian FMCG Sector
Figure 2-8 shows the market restraints ranked in order of their impact on the 3PL market in
Figure 2-8
3PL Markets in the Indian FMCG Sector: Market Restraints for Total 3PL Market in the
Rank Restraint
1-2 Years
3-4 years
5-7 years
Poor infrastructure of India in all forms of transportation limits 3PL growth
Medium
Medium/High
High
Indian Bureaucratic System affects Logistics Growth
Medium
Low/Medium
Low
The service tax applicable to 3PLs which is growing each Medium/High

year has deterrent effect on the market
Medium/High
Medium
Partial VAT making FMCG companies wary of changing their supply chain practices
High
Medium/High
Medium
Lack of an integrated transport policy in India affecting

3PL Services
Medium
Medium/High
High
Poor Infrastructure of India in All forms of

Tr a n s p o r t a t i o n L i m i t s 3 P L G r ow t h
India's transportation infrastructure had been largely underdeveloped to meet the sophisticated needs of current logistics. Despite having a large road network, world's largest railway
network, several sea ports and international airports, their standards and efficiency had been
much lower than global standards, resulting in a failure of realizing full benefits of even
professional logistics services such as 3PLs. Indian FMCG sector, which depends largely on
road and rail infrastructure for its transportation needs is bearing the brunt of this loss. The
situation is also discouraging the sector from adopting 3PL services since there is no major
improvement in the performance due to the infrastructure limitations. Even though several
projects have been initiated by government to address this problem, they are expected to take
a considerable duration of time before being operational. Until the ongoing infrastructure
development projects are totally completed and become useful for the logistics operations,
the usage of 3PL services is expected to remain affected.
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Indian Bureaucratic System Affects Logistics Growth

India's infamous bureaucratic system is known to be affecting all types of formal dealings
related to each industry in India. For the FMCG sector with multiple levels of intermediaries
in its complex supply chain, this setup has even more negative effect. Clearances at ports for
both imports and exports take weeks instead of days and the supply chain activities are stagnated due to several permission that are to be secured manually by the company. 3PL service
providers, whose operational capability is more in the professional management of the logistics, would not be of any help to the FMCG companies in the bureaucracy matters. Due to
this a major number of FMCG companies are outsourcing only minor parts of their entire
logistics needs to 3PLs, thus limiting the market growth. With government's promises to
largely eliminate bureaucratic procedures related to business and trade in the coming few
years, the situation might change.
Th e S e r v i c e Ta x A p p l i c a b l e t o 3 P L s , w h i c h i s G r o w i n g
e a c h Ye a r h a s D e t e r r e n t E f f e c t o n t h e M a r k e t
In India, the services provided by 3PLs attract service tax, which had been increased regularly by government over the past few years. This is proving to be a major deterrent for the
growth of 3PL service usage by all industries including FMCG. This is driving FMCG companies to either outsource their logistics functions to unorganized truckers or opt for a 2nd
party logistics model. Thus it is proving to be a major restraint for the 3PL market in the
Indian FMCG sector. The 3PL service providers are urging the government for the elimination of this tax and repeated appeals could yield results in the coming years.
Pa r t i a l VAT M a k i n g F M C G C o m p a n i e s Wa ry o f C h a n g i n g
their Supply Chain Practices
The VAT system, which is proposed to be a uniform taxation system across India, has been
implemented only partially as state level taxation system, with coexistence of a Central Sales
Tax. This is deterring the FMCG companies from changing the status quo of their varied
supply chain practices for different states. As a result, 3PL companies are unable to gain the
potential market such as warehousing services from the FMCG sector, which is limiting the
market growth. The situation is expected to change after 2008 when government plans to
implement full VAT.
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L a c k o f a n I n t e g r a t e d Tr a n s p o r t P o l i c y i n I n d i a
Affecting 3PL Services
Until recently, transportation was not considered as an industry by the Indian Government,
and hence lacked the support and governance to regulate the industry. This resulted in a
completely fragmented and unregulated market. Though government has announced its
intentions in 2005 to award industry status for the transportation sector, no visible developments have happened in that direction. Lack of such determined progress is affecting the
growth of professional transport services generally provided by the 3PL companies. Since the
significant investments needed to improve vehicle systems and technologies are not available
easily due to the non-industry status of transportation, the overall service levels and thereby
the market growth is being hampered. Indian FMCG sector, which is primarily dependent on
the road transportation is not able to adopt the 3PL services for transportation activity,
restraining the 3PL market growth in this sector.
Implications of
FMCG Sector
VAT
on
3PL
in
the
Indian
Introduction to VAT's Importance and Impact on Indian FMCG Sector

Until 2005, sales tax model for business sales in India was a system of double taxation that
included two components, a central sales tax (CST) and a state sales tax (SST). The SST
varied for each state and had a cascading effect on final sales prices of the products. For the
FMCG sector, tax rates were ridiculously high, with CST as high has 30 percent and SST
ranging from 15 percent to 18 percent.
Value Added Tax' (VAT), a single taxation system, was introduced in 2005 as a replacement
for the existing double taxation model. This is considered as a major fiscal reform in India. It
is a sales tax collected by government of the state, in which the final consumer is located and
defined as the tax on the estimated market value added to a product or material at each
stage of its manufacture or distribution' until reaching the final customer. The mechanism of
VAT is such that, for goods that are either manufactured and consumed, or imported and
consumed in a particular state, the first seller pays the first point tax and the next seller pays
tax only on the value-addition done, leading to a total tax burden exactly equal to the last
point tax. It is touted as an effective form of sales tax by the government and its defining
feature is the Input Tax Credit (ITC). ITC means that the taxes paid by enterprises on their
material inputs are credited against the taxes levied on their own sales. In common terms this
means that under the VAT system no exemptions will be given to any participant in an
industry's supply chain and a tax will be levied at each stage of manufacture of a product. At
each stage of value-addition, the tax levied on the inputs can be claimed back from the tax
authorities.
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Initially, VAT has been partially implemented, coexisting with a CST. The CST would be
phased out completely by 2007 or 2008 to have a uniform VAT across the country for a
particular product category.
In the earlier system of differential sales taxes across states, FMCG companies were forced to
set up warehousing facilities in a number of states in an effort to avoid double taxation.
Companies directly shipped the goods from manufacturing units to their own warehouses in
different states through a C&F agent to avoid taxes. In several cases, companies set up their
own C&F agencies or large warehousing facilities in states, which had lower SST, and billed
the goods sold in another state from these warehouses. This was an unwanted scenario and
resulted in a complex supply chain as well as huge inventory cost and transportation cost for
FMCG companies. The cost inefficiencies in such an arrangement are very high as companies
need to plan warehousing space, deploy manpower, ensure IT connectivity, and maintain
stocks at each location, escalating the overall logistics cost.
Once a uniform VAT comes into effect, companies would not have to invest in C&F and
unwanted warehouses to avoid paying taxes. This is expected to drastically alter the supply
chain and warehousing practices in the FMCG sector.
Significance of VAT's Impact on FMCG Sector for Logistics Service

Providers
In the earlier tax system, the logistics service providers were also effected by double taxation,
which forced them to quote higher prices for their services. This also restrained the them
from investing in infrastructure in several states where the tax rates were higher. As a net
result of this situation, even the major logistics service providers in India could not develop a
nation wide presence, which is must for serving the FMCG sector, and hence lost a major
share of this business to the individual trucking companies.
Post VAT implementation, FMCG goods were brought under a uniform tax rate of
12.5 percent at the state level. However, a CST of 4 percent is still coexisting, and several
major states have not yet implemented VAT, leading to uncertainty among both FMCG
companies as well as the logistics service provider, and preventing them from making any
changes to their existing supply chain models.
Once a uniform VAT is implemented, all the companies including FMCGs would have to
streamline their supply chain, thereby their logistics functions, to achieve maximum savings
from the new tax system. These new logistics demands of the FMCG sector are expected to
provide significant growth opportunities for logistics service providers.
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Opportunities for 3PL Service Providers due to VAT's Impact on FMCG

Sector
The uniform VAT regime is expected to offer a lot of opportunities for 3PL service providers,
specifically in the FMCG sector.
Since VAT requires complete visibility of the entire supply chain for each participant to pay
the least possible tax, supply chain automation and professional management of information
is expected to be a major demand from the FMCG sector, which could be fulfilled by 3PLs.
Since the automation would also result in lower operational costs, FMCG companies are
expected to opt for it in a big way, offering a huge potential market for 3PLs in the next
3 years.
The leading FMCG companies have already initiated efforts in this direction and the entire
industry is expected to follow suit very soon.
Also, since a uniform nation wide VAT would eliminate the need for having warehouses and
C&F agents for each state, FMCG companies are expected to completely restructure their
warehousing setup by opting for large integrated warehouses in the centrally located hubs for
each zone of the country. Since establishing such large scale warehouses would require
massive investments, FMCG companies are expected to source the warehousing services from
professional service providers, making it a highly lucrative business opportunity for 3PLs.
This kind of setup is also expected to bring professionalism to inbound logistics, which is
largely overlooked by FMCG companies, hence resulting in additional revenues for 3PLs.
To make the best use of the new warehousing system after VAT, that is operating warehouses
at centrally located hubs, FMCG companies are also expected to use professional transportation services, which again offer a tremendous opportunity for 3PLs. In the new scenario.
Also, FMCG companies would willingly outsource their entire logistics needs pertaining to
complete supply chain to a single 3PL company. This offers significant opportunity for 3PLs,
and simultaneously calls for enhancement of their capabilities to offer the complete solutions
for FMCG sector.
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Challenges for 3PL Service Providers in Benefitting from VAT's Impact

on FMCG Sector
Despite several opportunities offered by VAT for the 3PL service providers in the FMCG
sector, there are a few challenges as mentioned below:
The current VAT system is not implemented by all states in India, making it beneficial
only when traded within or between VAT implemented states. FMCG sector that needs a
country wide trading is forced to adopt two different strategies for VAT and non-VAT
states, increasing the complexity of services desired from the 3PL service companies.
Despite implementation of the VAT system some states have been offering tax sops for a
10 year period for the business units setup before 2007. This is driving FMCG companies
to set up plants or own warehouses in those states to benefit from the tax savings. Such
developments in reverse direction from the model suitable for VAT, also pose as a major
challenge for many 3PL service companies, which either need to setup additional
operations in those states or lose that business.
Until the CST exists, FMCG companies do not intend to make any changes to their
existing supply chain models, leaving the 3PL companies aspiring for the expected new
business in a complete uncertainty. All major FMCG companies have no plans of
changing their supply chain model for the next 5 years, which would be a very long time
and a major challenge for the 3PL service providers in gaining the benefits of VAT
Services have not been included in the VAT system, which means that 3PLs cannot benefit
from the ITC model, and would have to incur taxes at multiple stages, which would
invariably be passed on to the end users of the service. This could restrain FMCG
companies from using 3PL services for their complete supply chain needs.
The current VAT system provides for tax credits for intrastate transactions only, which
discourages companies from sourcing materials or selling finished goods across states.
This could lead FMCG companies to have state specific 3PL contracts, necessitating 3PL
service providers to have local presence in all the states required by the FMCG company,
thus resulting in higher operational costs for 3PL service providers. There has been a
universal demand from all industries to scale up the VAT system to include inter-state
transactions, but no such intentions have been divulged by the government.
VAT requires fool proof information management by all participants in a company's

supply chain, and hence necessitates all participants to have automation of their
processes. Such compulsions could result in high investment costs for all participants,
resulting in the escalation of final price of a product, ultimately proving to be a deterrent
rather than an incentive for improving the supply chains. Considering long supply chain
of the Indian FMCG sector, this could even have a higher negative effect on the supply
chain costs, and lead to usage of local and unorganized service providers rather than
professional 3PL service providers.
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Conclusions
and
Recommendations
Conclusions about the 3PL Market in the Indian FMCG Sector and
Recommendations to 3PL Providers
Despite a high level of awareness about 3PL in the Indian FMCG sector, the 3PL usage level
has been almost 10 times lower than the usage levels in developed countries such as the
United States. This signifies that even a standard level estimation to reach that level of usage,
the market has a potential to grow up to 10 times its current size. If the potential for organic
growth is also considered, the market for 3PL in the Indian FMCG sector can be rated as a
highly potential market. Hence 3PL companies in India should initiate aggressive promotional strategies and persuasion efforts to capture the untapped market.
The perception and attitudes about 3PLs in the Indian FMCG companies are largely negative
except for the multinational FMCG companies. This signifies a major cause of concern and a
serious challenge for the 3PL service providers that need to be addressed immediately
through effective communication about the benefits of using 3PL services, and also proving
their claims through sustained results.
3PL companies in India still lack the capability to offer a complete customized solution to the
FMCG sector. Efforts to address this hurdle are needed on an urgent basis from the 3PL
companies, if they wish to grow their business in this sector.
A large section of Indian FMCG sector believes that 3PL companies do not understand the
high-volume low-value high-movement' characteristic of the FMCG industry, and its unique
logistic needs due to the considerably long supply chain with almost five levels of intermediaries. As a result, 3PL companies are offering the general service package offered to other
industries, which is not within the affordable limit of majority of FMCG companies.
In the Indian FMCG sector, warehousing models are completely going to change as a result of
the impending full VAT implementation during 2007 or 2008, which offers a large potential
market for 3PL companies. As a result of VAT, FMCG companies are expected to adopt a
hub-and-spoke model warehousing system, which would require large-sized warehouses in
centrally located hub cities for each region in the country. However, since such large-scale
warehouses need huge investments, most of the FMCG companies plan to outsource their
warehousing requirements to 3PL companies. To meet this massive demand for warehousing,
and successfully tap the market, 3PL companies in India should scale up their warehousing
capacities by several million square feet and be prepared by that time.
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Freight forwarding related to FMCG sector is another activity where 3PL companies in India
should focus on tapping potential in the coming years, as all the multinational FMCG
companies are making India as their outsourcing base for the entire Asian region. In addition, the major domestic FMCG companies are also capturing significant business in the
overseas markets, for which they are increasingly exporting the products from India. 3PL
companies should sharpen their expertise in this function and offer lucrative solutions
fulfilling end-to-end needs in this export activity.
It is mostly observed that there is a mismatch between the capability of the 3PL companies
and their target FMCG clients, which results in a negative impact on the client's business as
well as the 3PL's credibility in future. To avoid this, 3PL service providers should analyze
their own network, infrastructure, and technical capabilities to decide the most suitable category of target customers that could be effectively served by them. Such an approach is likely
to increase the winning rate of customers and also their retention rate, which would result in
increased credibility and further business for the 3PL provider.
The 3PL industry is largely neglecting the investments in transportation infrastructure despite
knowing that the function accounts for 60 percent of the total cost of logistics in the Indian
FMCG sector. There is a huge scope for significant reduction of this cost component, if a very
organized and integrated transportation infrastructure is built and managed by a professional
service providers such as 3PL. Such high level reductions in costs would be highly lucrative
and induce large share of Indian FMCG sector to use 3PL services in transportation also.
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3
End-User AnalysisOverview of 3PL Needs
and Practices in the Indian FMCG Sector
Introduction
Introduction to Indian FMCG Sector

The FMCG sector is the fourth largest industrial sector in the Indian economy. This industry
produces consumer non durable (CND) products, useful for the everyday needs of the
population.
The following characteristics are attributed to FMCG products:
Used very frequently (many are used daily)
Used mostly by the end-consumer directly
Have low shelf-life
Are sold in multi-sized packages as variants
Are all branded
Have low brand loyalty
The major characteristic of Indian FMCG sector is high-volume low-value high-movement'

of its goods. The sector is driven by volume and has low margins. The products need heavy
marketing, advertising, slick packaging, and strong distribution networks. Also, raw material
prices have a strong impact on the final pricing of the products and availability of most of
these raw materials has seasonal fluctuations.
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The population of India, which is more than one billion, presents a massive market for this
sector. Also, the 300 million population in the Indian middle class segment represents a
highly potential market for the branded food and beverages segment, which is the fastest
growing segment in the Indian FMCG sector.
The sector is characterized by a strong and historical successful presence of many multinational companies. While multinational companies such as Hindustan Lever and Procter and
Gamble have wide presence in the market, domestic companies such as Nirma and Godrej
also have an equally wide presence.
With varied geographic conditions, consumer habits, and infrastructure conditions, efficiently managing the supply chain to reach all parts of the country is a major challenge for
the Indian FMCG companies. The country had 3.3 million FMCG retail outlets as of 2005.
Attaining a direct reach and consistent presence at maximum number of these outlets remains
one of the highest priorities of all companies. As of 2005, even the major companies with
widest distribution network across the country, for example Hindustan Lever, Nirma, and
Colgate-Palmolive, had a direct retail reach to only about half of the total retail outlets.
Since 1990s, the Indian FMCG sector has been witnessing a few fundamental shifts with
basic products market stagnating, growing intensity and complexity of competition, evolution and impact of technology on businesses, international and environmental issues coming
to the forefront, and global exposure as a result of India's globalization efforts.
Considering such diversities and complexities of the Indian market, expanding their presence,
revenues, and profits, FMCG companies need a very strong distribution network, supported
by a very well laid out supply chain that is controlled through efficient logistics.
Various Segments in the Indian FMCG Sector

The Indian FMCG sector can be divided into five segments based on product categorization.
Figure 3-1 shows the segmentation of Indian FMCG sector by product category in 2005.
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Figure 3-1
3PL Markets in the Indian FMCG Sector: Segmentation of FMCG Sector by Product Category (India), 2005
Personal Care Segment
Products included in this segment
oral care; hair care; skin care; personal wash(soaps);cosmetics

and toiletries; deodorants; perfumes; paper products(tissues,
diapers, sanitary); shoe care
Major companies active in this segment
Hindustan Lever, Godrej Consumer Products, Colgate-Palmolive, Marico, Dabur, ReckittBenckiser and Procter & Gamble
Household Care Segment

Fabric wash (laundry soaps and synthetic detergents);household cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal
polish and furniture polish).
Hindustan Lever, Nirma, Procter & Gamble, Henkel and

Reckitt Benckiser
Branded and Packaged Food and Beverages

health beverages; soft drinks; staples/cereals; edible oils, bakery

products (biscuits, bread, cakes); snack food; chocolates; ice
cream; tea; coffee; processed fruits, vegetables and meat;dairy
products; bottled water; branded flour; branded rice; branded
sugar; juices, and others
Hindustan Lever, Nestle, Cadbury, Amul, Coca-Cola, PepsiCo,

Britannia and Dabur
Spirits and Tobacco Products

cigarettes, beedis, chewable tobacco products,alcoholic beverages
ITC, Godfrey Philips, VST, Manikchand, UB andShaw Wallace.
Miscellaneous
Stationery, Alkaline Batteries, Disposableglasses and plates,

and others
Eveready Industries, RPE Group, Luxor, Cello

Personal Care, Household Care and Packaged Food and Beverages segments are the three
largest segments in the Indian FMCG sector in their respective order.
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Industry Overview and Current Size in Terms of Revenues

The
Indian
FMCG
sector
was
about
US$14.5
billion
in
2005
(approximately
Rs. 65,000 crore). This amounts to about 2.0 percent of India's overall GDP, and 7.0 percent
of the total revenues contributed by the entire industrial sector to the GDP. The sector is estimated to grow at a CAGR of 5.1 percent during the period 2005-2012, and reach a value of
US$19.2 billion by 2012.
Figure 3-2 and Chart 3.1 show the revenue forecasts and growth rates for the Indian FMCG
sector in the 3PL markets during 2002 to 2012.
Figure 3-2
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for FMCG Sector (India),
2002-2012
Revenue
Revenues
Growth Rate
Year
($ Billion)
(%)
2002
13.4
----
2003
13.6
1.5
2004
14.0
3.0
2005
14.5
4.0
2006
15.3
4.0
2007
15.9
4.4
2008
16.5
5.0
2009
17.1
5.0
2010
17.8
5.5
2011
18.5
6.0
2012
19.2
6.0

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Chart 3.1
3PL Markets in the Indian FMCG Sector: Revenue Forecasts for Total FMCG Sector (India),
2002-2012
Revenue US$ Billion
25
Growth Rate(% )
7
6
5
15
4
3
10
Growth Rate (%)
Revenues (US$ Billion)
20
5
1
0
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
The growth of the Indian FMCG sector is expected to pickup pace from 2008, whereby the
government's initiatives favoring the industry such as uniform VAT and export oriented policies, as well as the sector's own initiatives for rural market penetration are likely to show
success.
Number of Industry Participants and Segmentation of Participants

The Indian FMCG industry is considered to be massive in terms of the number of participants. The total number of participants in the industry were about 10,790 in 2005.
Figure 3-3 shows the industry size in terms of number of participant companies in the Indian
FMCG sector by type of the company in 3PL markets in 2005.
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Figure 3-3
3PL Markets in the Indian FMCG Sector: Size and Structure of FMCG Sector by Type of Participant (India), 2005
Type of Company
Number (Approx)
Multi National Companies with National Presence
50
Multi National Companies with Regional Presence
10
Domestic Companies with National Presence
80
Domestic Companies with Regional Presence
150
Domestic Companies with Remote Presence
500
Unorganized and Unregistered Proprietary Firms
10,000
Total Number of Companies in Industry
10,790
Multinational FMCG companies, despite representing less than one percent of the industry in
terms of number, account for about 60.0 percent of the total industry revenues. Domestic
major companies, which represent about 2.0 percent of the industry in terms of number,
account for about 30.0 percent of its revenues. The remaining 10.0 percent of the market is
highly fragmented, shared by more than 10,000 companies.
Annual Production Volume of the Indian FMCG Sector

The annual production volume of the Indian FMCG sector was about 490 million tonnes in
2005.
Figure 3-4 shows the annual production volume of various product segments in the Indian
FMCG sector in 2005.
Figure 3-4
3PL Markets in the Indian FMCG Sector: Annual Production Volume of FMCG Sector by
Product Segment (India), 2005
Product Segment
Annual Production Volume (Million Tonnes)
Personal Care
80
Household Care
150
Branded and Packaged Food & Beverages
200
Tobacco and Spirits
50
Miscellaneous
10
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The Indian FMCG sector's huge annual production output of 490 million tonnes, consumes
about 800 million tonnes of raw materials which generates huge inbound logistics activity.
The sector's outbound logistics volume including the products and related promotional materials is estimated to be 510 million tonnes. The figures represents the massive transportation,
warehousing, and other logistics operations associated with the Indian FMCG sector.
3PL Practices
Sector
in
the
Overall
Indian
FMCG
Evolution of Logistics in FMCG Sector and Current Scenario

Measurement
Due to its high volume and low value products, FMCG sector needs a different kind of logistics setup, much more dynamic than that needed by any other sector. Most of the products
have low shelf life and have to be manufactured and supplied regularly in optimum quantities
to avoid excess stocks. Since these low-life products are continuously needed to be available
in retail shelves at all places across the country at all times in right quantity, FMCG logistics
needs to be very volatile and dynamic.
The major logistics functions for the Indian FMCG companies include:
Transportation
Warehousing
Freight Forwarding
MIS/Other Value Added Operations
Traditionally, Indian FMCG companies have managed and controlled majority of logistics
functions by themselves, even though they were outsourced to specific service providers in
different models. Transportation was outsourced to individual truckers in discrete parts.
Warehousing was outsourced to company's own C&F agents under the second-party logistics
model. Every major company has a warehouse in each state. Freight forwarding was
outsourced to customs brokers as and when required. MIS and Other operations were
managed by inhouse departments created exclusively for that function.
Over the years, as logistics gained prominence as a core function, almost all FMCG companies created an exclusive logistics department to completely manage the movement of its
goods.
Of late, increasing competitive pressures necessitated FMCG companies to gain efficiencies in
supply chain, leading to the outsourcing of these functions to specialist professional logistics
service companies or 3PL companies. Multinational companies and major local companies
have taken this approach. However, still, majority of the industry follows the old model of
managing logistics on their own.
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Introduction to 3PL Status in the Overall Indian FMCG Sector

There is a high level of awareness about 3PL in the Indian FMCG sector, but the overall
usage level of 3PL is very low. 3PL had been used by the companies in this sector since late
1990s.
Chart 3.2 shows the comparison of overall level of awareness about 3PL versus overall usage
of 3PL among major companies of the Indian FMCG sector in 2005.
Chart 3.2
3PL Markets in the Indian FMCG Sector: 3PL Awareness Level Versus 3PL Usage Level in
75
80
70
Measure %
60
50
40
30
20
8
10
0
Level of Awarenes
Level of Usage
Parameter
Multinational FMCG companies are the leading users of 3PL for both the basic logistics
functions and also various advanced services such as Information Management (MIS), order
processing, and customer service. Major local FMCG companies have also started using 3PL
services for part of their warehousing and transportation needs. In the next five to ten years,
these local companies are also expected to be using 3PL services equally as their multinational competitors.
Considering these developments, the Indian FMCG sector is expected to turn into one of the
high potential markets for 3PL services in the next five to ten years.
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Figure 3-5 shows the percent breakup of logistics functions managed in-house, outsourced to
3PL, and outsourced to others in the Indian FMCG sector, as of 2005.
Figure 3-5
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by FMCG Sector Versus the Shares Outsourced to 3PL and Others (India),
2005
Managed
In-house (%)
Logistics Function
Warehousing
Outsourced to Outsourced to Oth3PL (%)

ers (%)
40
15
45
Transportation
97
Freight Forwarding
20
80
50
15
35
MIS/Other Value Added Logistics Operations
The current low level of 3PL's representation in the overall logistics management of the
Indian FMCG sector actually presents further potential for the growth of 3PL in this sector,
since there has been a steady rise in adoption of 3PL by this sector since 2002. Various
reasons have been driving this steady rise in 3PL adoption, such as lack of capability, preference for a professional service, and others.

Figure 3-6 shows the top reason(s) mentioned by the Indian FMCG companies for
outsourcing various logistics functions to 3PL companies in 2005.
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Figure 3-6
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by FMCG Sector for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL as Mentioned by FMCG Sector
Warehousing
Relieves us from huge investments related to infrastructure. We believe that 3PLs do

a professional job than a C&F agent
Transportation
We do not have the capability to own and manage fleet. We believe that 3PLs are
well organized than ordinary truckers
Freight Forwarding
We do not have the expertise to execute this function. We believe that 3PLs have
global exposure in this to help us globally
MIS/Other Value Added

Logistics Operations
Relieves us from day to day pain staking record management. We believe that 3PLs
can also help us in production planning and other guidance if they are involved in
this
The reasons mentioned by the Indian FMCG sector for usage of 3PL are a reflection of its
logistics needs of the sector and its expectations from the 3PLs regarding its specific logistics
functions.

of Indian FMCG Sector
Figure 3-7 shows the needs and preferences mentioned by the Indian FMCG sector regarding
various logistics functions outsourced to 3PL companies in 2005.
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Figure 3-7
3PL Markets in the Indian FMCG Sector: Needs and Preferences of FMCG Sector Regarding
Logistics Function
Needs
Preferences from 3PL
Warehousing
Extensive and efficient warehousing setup

and system with highest region coverage
and lowest inventory holdingRelief from
huge investments locked in warehouse
assets and inventories
State-of-the-art technology integrated large

scale warehousing facilities with flexibility
to scale up or down the capacity according
to seasonal or market fluctuations
Should enable lean manufacturing
Transportation
An efficient and reliable transportation

system with extensive network coverage
and full visibility
State-of-the-art multi-mode integrated efficient transportation system with nationwide network coverage and reliable
delivery timelines
Freight Forwarding
Reliable and fast freight forwarding serv- Expertise to facilitate efficient and fast
ices with a global level network and exper- freight forwarding services across the globe
tise
to support the rising exports opportunities
for Indian FMCG sector
MIS/Other Value
Added Logistics
Operations
Advanced logistics services to fulfill the

emerging needs of information management, demand planning, customer support, marketing campaigns, and others
Relief from numerous non-core functions
related to supply chain
Ability to provide advanced information

technology solution to enable complete visibility of entire logistics operations, supporting in superior decision making
process
Professional management of communications with partners, customers, and authorities
Complete bundle of integrated end-to-end
supply chain need fulfilling solution customized for FMCG
It is evident from the logistic needs and the related preferences from 3PL mentioned by the
Indian FMCG sector that a major part of the sector considers the need to have a
state-of-the-art logistics setup to fulfill their domestic and international trade operations,
which would also aid them in achieving a high level of efficiency in the entire supply chain
operations. The sector prefers to have a complete bundle of integrated and customized solution to fulfill its entire supply-chain needs.
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3PL
Status
Indian
Industry
FMCG
Av e r ag e
Metrics
in
the
Sector
Warehouse Infrastructure and Geographic Coverage Metrics

For the Indian FMCG sector, a well established distribution network and infrastructure aids
in attaining the overall competitive advantage for any company.
Figure 3-8 shows the industry average figures of warehouse infrastructure and geographic
coverage metrics for the major FMCG companies with nation wide presence in the 3PL
markets in 2005.
Figure 3-8
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic CoverageIndustry Average of Major FMCG Companies (India), 2005
Parameter
Total
Own
3PL
Others
2 (almost)
0 (almost)
25
20
500
50
450
2 (almost)
0 (almost)
25
20
600
50
550
Master
50000
50000
---
---
Regional/State
20000
20000
25000
10000
1000
--
5000
1000
Number of Location of Warehouses

Master
Regional/State
District/City
Total Number of Warehouses
Master
Regional/State
District/City
Average Size of Warehouse (Sq. Ft.)
District/City
Average Number of Employees per Warehouse

Master
50
50
---
---
Regional/State
10
10
12
---
0.05
0.25
District/City
Number of Retail Outlets Serviced across the Country (In Million)

Retail reach
0.6
0.3
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In the extensive warehousing infrastructure of Indian FMCG sector, 3PL provides a very low
share as of 2005. However, this situation is expected to improve from 2007 or 2008, when
the Indian FMCG sector's warehousing models are likely to undergo a total transformation
due to full implementation of a uniform VAT across the country.
Transportation Infrastructure Metrics

Figure 3-9 shows the industry average figures of transportation infrastructure metrics for the
major FMCG companies with nation wide presence in the 3PL markets in 2005.
Figure 3-9
3PL Markets in the Indian FMCG Sector: Metrics for Transportation InfrastructureIndustry Average of Major FMCG Companies (India), 2005
Parameter
Total
Own
3PL
Others
Number of Vehicles in Transportation Fleet (At disposal on any given day)

Large Trucks
30
--
28
Light Trucks
50
--
48
600
--
10
590
--
10
590
Light Vehicles/Autos
Number of Transportation Management Offices

Offices
600
Considering the high level of every day transportation infrastructure requirement of each
major FMCG company as mentioned above, the total sector's transportation infrastructure
requirements can be termed as massive and the 3PL companies planning to provide these
services to the FMCG sector should build an extensive transportation infrastructure for effectively gaining the business.
Goods Flow Model in the Indian FMCG Sector from Manufacturer to

Retailer
The standard Goods Flow model of Indian FMCG sector from the manufacturer to retailer,
through which goods have to flow, is significantly long, with 5 levels of intermediaries
between the company and the end consumer.
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Chart 3.3 shows the standard and 3PL model of goods flow in the Indian FMCG sector from
manufacturer to retailer in 2005.
Chart 3.3
3PL Markets in the Indian FMCG Sector: Standard and 3PL Model of Goods Flow in FMCG
Sector (India), 2005
Indian FMCG Sector - Standard Goods Flow Model
Indian FMCG Sector - Goods Flow Model through 3PL
Consolidation
Center owned
by 3PL
Company
M anufacturing Unit owned
by FM CG Company
M anufacturin
g Unit owned
by FM CG
Company
Central W arehouse
owned by FM CG
Company
Central W arehouse
owned by FM CG
Company
State/ Regional
W arehouses owned
by C & F Agents
Town Level Stock

District / City Level
Points owned by
Stock Points owned
W holesalers
by Distributors
Retailers
Town Level
Stock Points
owned by
W holesalers
State/ Regional
W arehouses owned
by C & F Agents
District / City
Level Stock
Points owned
by
Distributors
Traditional Retailers
M odern Retail Chains
While the standard goods flow model traditionally followed by the Indian FMCG sector has
to go through the long chain of intermediaries, a 3PL model offers the flexibility and a
combination of multiple flows simultaneously, offering immense opportunities to use a suitable flow for different regions and clients.
Logistics Cost and Efficiency Metrics

The superiority of an FMCG company's supply chain and logistics functions is measured
based on the cost and efficiency levels for each of the component in the function, in terms of
their ratio or relation to the total sales value.
Figure 3-10 shows the comparison of industry average figures versus individual company
figures of broad 3PL and logistics cost metrics, for the major Indian FMCG companies in the
3PL markets in 2005.
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Figure 3-10
3PL Markets in the Indian FMCG Sector: Broad Metrics for 3PL and Logistics Cost-Comparison of FMCG Industry Average Versus Major FMCG Companies (India), 2005
Parameter
IA
HLL
P&G
Wipro
GSK
Amul
Tata Tea
Total Cost of Logistics

as Percent of Total
Sales (%)
5.00
3.00
4.80
6.00
3.00
3.50
7.00
8.00
6.00
8.00
1.00
Total Spend on 3PL as

Percent of Total Cost
of Logistics (%)
8.00
30.00
30.00
40.00
10.00
25.00
20.00
10.00
20.00
5.00
5.00

Percent of Total Sales
(%)
0.40
1.00
1.40
2.40
0.30
0.90
1.40
0.80
1.20
0.04
0.05
Transportation Cost as
a Percent of Total Sales
(%)
3.00
1.80
3.20
4.50
1.75
2.00
4.00
5.50
3.50
2.00
0.50
Cost of Warehousing
as a Percent of Total
Sales (%)
1.25
0.75
1.00
0.80
0.75
0.80
1.75
1.75
1.75
5.00
0.20
Cost of Freight Forwarding as a Percent of

Total Sales (%)
0.25
0.20
0.20
0.30
0.30
0.30
0.50
0.40
0.25
0.40
0.20
Cost of MIS/Other
Value Added Logistics
Operations as Percent
of Total Sales (%)
0.50
0.25
0.40
0.40
0.20
0.40
0.75
0.35
0.50
0.60
0.10
Average Inventory
Turnover Rate
24
30
18
26
36
16
18
72
36
18
24
Average Inventory
Days
15
12
20
14
10
22
20
10
20
15
Parameter
IA
JL
UB G
PF
C&P
LO
RB
Dabur
Marico
Himalaya
Total Cost of Logistics

as Percent of Total
Sales (%)
5.0
13.0
6.0
4.0
15.0
7.0
3.0
8.0
4.0
10.0
5.0

percent of Total Cost
of Logistics (%)
8.0
5.0
20.0
10.0
10.0
25.0
30.0
10.0
5.0
15.0
15.0

Percent of Total Sales
(%)
0.40
0.06
1.20
0.40
1.50
1.75
0.90
0.80
0.02
0.15
0.75
Transportation Cost as
a Percent of Total Sales
(%)
3.00
7.50
3.50
2.00
8.00
4.50
1.50
5.00
2.25
6.00
3.00
Cost of Warehousing
as a Percent of Total
Sales (%)
1.25
3.50
1.50
1.00
4.00
1.50
0.75
1.75
1.00
2.00
1.20
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Figure 3-10 (Continued)
3PL Markets in the Indian FMCG Sector: Broad Metrics for 3PL and Logistics Cost-Comparison of FMCG Industry Average Versus Major FMCG Companies (India), 2005
Parameter
IA
HLL
P&G
Cost of Freight Forwarding as a Percent of

Total Sales (%)
0.25
0.50
0.30
0.30
1.00
0.40
Cost of MIS/Other
Value Added Logistics
Operations as Percent
of Total Sales (%)
0.50
1.50
0.70
0.70
2.00
Average Inventory
Turnover Rate
24
24
15
28
Average Inventory
Days
15
15
25
13
Key:
Nestle Nirma Godrej Henkel
Wipro
GSK
Amul
Tata Tea
0.25
0.50
0.20
1.00
0.20
0.60
0.50
0.75
0.55
1.00
0.60
18
12
30
30
36
45
20
30
12
12
10
45
I A=Industry Average
J L=Jyothi Labs
A=Anchor
UB G=UB Group
P F=Priya Foods
C&G=Colgate Palmolive
LO= L O Real
R B=Reckitt Benckiser
The total cost of logistics as well as the average inventory days for a few major FMCG
companies has been found to be higher than the rest of the industry. This could be attributed
to their lower efficiency in demand planning, lack of economies of scale, and also usage of
inefficient supply chain service partners.
figures of purchase and procurement logistics cost metrics, for the major Indian FMCG
companies in the 3PL markets in 2005.
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Figure 3-11
3PL Markets in the Indian FMCG Sector: Metrics for Inbound Logistics Efficiency-Comparison of FMCG Industry Average Versus Major FMCG Companies (India), 2005
IA
HLL
P&G
Nestle
Purchase and Procurement Logistics Cost as

Percent of Total Sales (%)
0.25
0.20
0.20
0.30
0.15
0.30
Time Between Company's Order and Supplier

Actual Deliveryin Days
(domestic Supplies)
25
20
20
30
90.0
95.0
92.0
IA
JL
Purchase and Procurement Logistics Cost as

Percent of Total Sales (%)
0.25
Time Between Company's Order And Supplier Actual Deliveryin

Days (Domestic Supplies)
Days (International Supplies)
Parameter

Days (International Supplies)
Supplier Orders Delivered on Time (%)
Parameter
Supplier Orders Delivered on Time (%)
Key:
Nirma Godrej Henkel
Wipro
GSK
Amul
Tata Tea
0.30
0.35
0.40
0.50
0.15
20
25
28
30
28
30
20
98.0
95.0
98.0
90.0
80.0
92.0
95.0
85.0
UB G
PF
C&P
LO
RB
0.40
0.40
0.30
0.18
0.20
0.35
0.30
0.40
0.35
0.35
25
20
25
30
40
22
20
30
35
30
32
90.0
85.0
88.0
92.0
85.0
90.0
95.0
85.0
80.0
95.0
90.0
Dabur Marico Himalaya
J L=Jyothi Labs
A=Anchor
UB G=UB Group
P F=Priya Foods
LO= L O Real
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The inbound logistics costs of a few major FMCG companies have been found to be higher
than the rest of the industry because of the inefficiency of their suppliers and inbound supply
chain service providers. Outsourcing these activities to a 3PL provider under a contract that
has stringent performance demands could improve their inbound logistics efficiency.
figures of sales and delivery logistics cost metrics, for the major Indian FMCG companies in
the 3PL markets in 2005.
Figure 3-12
3PL
Markets
in
the
Indian
FMCG
Sector:
Metrics
for
Outbound
Logistics
Efficiency -Comparison of FMCG Industry Average Versus Major FMCG Companies (India),
2005
IA
HLL
P&G
Nestle
Nirma
Standard Customer
Lead Timein Days
(Order Entry To Shipment)
Standard Transportation Time-in Days

(Shipment To Delivery
At Domestic Customer)

(Shipment to Delivery
at International Customer)
20
18
20
25
Sales Orders Delivered

on Time (%)
85.0
95.0
96.0
Average Number Of
Order Lines At Master
Warehouse On A Day
30
45
Average Number Of
Order Lines At
Regional Warehouse
On A Day
20
Customer Order Fill

Rate (%)
Parameter
Wipro
GSK
Amul
Tata Tea
20
22
25
28
20
20
15
95.0
95.0
98.0
85.0
80.0
90.0
80.0
90.0
30
40
30
45
35
30
20
15
10
25
20
18
22
20
15
18
12
10
10
90.0
95.0
90.0
85.0
85.0
90.0
80.0
85.0
80.0
85.0
80.0
Customer Order Line

Fill Rate (%)
70.0
90.0
85.0
85.0
90.0
90.0
60.0
75.0
70.0
80.0
75.0
Sales Orders Not Fulfilled Due To Stock

Outs (%)
8.0
2.0
4.0
4.0
1.0
2.0
10.0
6.0
5.0
8.0
2.0
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3PL
Markets
in
the
Indian
FMCG
Sector:
Metrics
for
Outbound
Logistics
Efficiency -Comparison of FMCG Industry Average Versus Major FMCG Companies (India),
2005
Parameter
IA
HLL
P&G
Nestle
Nirma
Parameter
IA
JL
UB
PF
C& P
Standard Customer
Lead Time-in Days
(Order Entry To Shipment)

At Domestic Customer)

At International Customer)
20
28
25
Sales Orders Delivered

on Time (%)
85.0
80.0
Average Number Of
Order Lines At Master
Warehouse On A Day
30
Average Number Of
Order Lines At
Regional Warehouse
On A Day
Wipro
GSK
Amul
Tata Tea
LO
RB
Dabur
Marico
Himalaya
20
40
22
15
28
30
25
20
82.0
95.0
90.0
95.0
90.0
80.0
75.0
85.0
90.0
30
30
50
10
25
20
25
20
30
12
20
15
12
100
10
10
15
15
Customer Order Fill

Rate (%)
90.0
75.0
70.0
90.0
65.0
80.0
75.0
80.0
70.0
85.0
80.0
Customer Order Line

Fill Rate (%)
70.0
60.0
60.0
85.0
50.0
70.0
60.0
65.0
60.0
70.0
70.0
Sales Orders Not Fulfilled Due To Stock

Outs (%)
8.0
10.0
9.0
4.0
20.0
6.0
8.0
10.0
12.0
6.0
8.0
Key:
Godrej Henkel
J L=Jyothi Labs
A=Anchor
UB G=UB Group
P F=Priya Foods
LO= L O Real
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The outbound logistics efficiencies of a few major FMCG companies have been found to be
significantly lower than the rest of the industry. This could be attributed to their warehousing and transportation management practices and the efficiency of related service
providers. There is a high scope for improvement in these efficiencies if a true performing
3PL with a nationwide network and adequate infrastructure is used to manage the logistics
functions. Also, the FMCG companies need to improve upon their demand planning systems
to reduce stock outs.
figures of reverse logistics cost metrics, for the major Indian FMCG companies in the 3PL
markets in 2005.
Figure 3-13
3PL Markets in the Indian FMCG Sector: Metrics for Reverse Logistics EfficiencyIndustry
Average of Major FMCG Companies (India), 2005
Parameter
Value
Revere Logistics Cost as Percent of Total Sales
0.25%
Return Goods Processing Cycle Time
8 days
The cost of reverse logistics had been found to be negligible across the Indian FMCG sector
and nonexistent for a few companies. As a result, an exact figure of reverse logistics cost for
each individual company could not be estimated.
However, the reverse logistics efficiencies of major FMCG companies have also been found to
be significantly higher than the rest of the industry in terms of the number of days needed for
the processing of return goods. A superior level of demand planning, which minimizes
expired stock returns and higher product packing quality, which minimizes damaged goods
returns are observed as the reasons for this higher efficiency.
figures of logistics function process automation metrics, for the major Indian FMCG companies in the 3PL markets in 2005.
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Figure 3-14
3PL Markets in the Indian FMCG Sector: Metrics for Logistics Function Process Automation-Comparison of FMCG Industry Average Vs Major FMCG Companies (India), 2005
Parameter
IA
HLL
P&G
Nestle
Overall Level Of Visibility Of Entire Logistics Functions Process

(%)
25
50
35
40
20
35
30
Level Of Visibility Of
Transportation Function Process (%)
10
10
Warehousing Function
Process (%)
50
80
60
70
40
Freight Forwarding
Function Process (%)
25
50
50
40
MIS /Other Value
Added Logistic Functions Process (%)
10
15
15
Parameter
IA
JL
Overall Level Of Visibility Of Entire Logistics Functions Process

(%)
25
Transportation Function Process (%)
GSK
Amul
Tata Tea
25
35
15
35
50
50
40
60
20
50
20
40
25
20
40
15
35
12
10
12
10
15
10
UB
PF
C&P
LO
R B Dabur
Marico
Himalaya
15
20
40
10
40
50
35
25
30
40
12
15
Warehousing Function
Process (%)
50
30
30
60
15
60
70
60
60
50
70
Freight Forwarding
Function Process (%)
25
20
20
40
10
30
50
30
25
20
40
MIS / Other Value
Added Logistic Functions Process (%)
10
15
12
15
10
12
Key:
Nirma Godrej
Henkel Wipro
J L=Jyothi Labs
A=Anchor
UB G=UB Group
P F=Priya Foods
LO= L O Real
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The process automation and visibility levels of entire logistics functions of the major FMCG
companies are found to be significantly higher and sometimes double the industry average
figures. This is attributed to their proactive adoption of information technology (IT) solutions to integrate the entire supply chain.
Factors Considered by the Overall Indian FMCG Sector for Choosing

3PL Providers
Figure 3-15 shows the top factor(s) considered for choosing a 3PL provider as mentioned by
the Indian FMCG companies in 2005.
Figure 3-15
3PL Markets in the Indian FMCG Sector: Top Factors Considered by FMCG Sector for
Choosing a 3PL Provider (India), 2005
Rank
Factor Considered for Choosing 3PL Provider as Mentioned by FMCG Companies
Capability to offer a customized package for the company
Range of services offered
Network reach in the desired region for the required logistics function
FMCG industry logistics expertise
Capability to offer an End-to-end supply chain integration
Reasonable pricing and flexibility of payment
Reputation of the Reliability levels of the provider in delivery speed and consistency
Information security standards
Security of goods in transport, handling and storage
10
Responsiveness to problems / complaints

The above mentioned factors reiterate the universal appeal from the FMCG sector to the 3PL
companies to develop a deep understanding of the sector's unique logistics needs and offer a
complete end-to-end integrated logistics solution within the affordability level of the entire
sector. Additionally, an extensive nationwide network, a high level of security standards for
goods as well as information, and a sincere commitment to address client complaints are to
be provided by any prospective 3PL provider targeting the Indian FMCG sector, to effectively
tap the market.
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Hindustan
Lever
Limited3PL
Practices,
Needs
and
Status,
Metrics
Overview of Logistics Status of HLL

HLL, the Indian subsidiary of the Anglo-Dutch FMCG giant Unilever, has been operating in
India since 1888. HLL is the country's largest company in overall FMCG sector as well as
unchallenged leader in a majority of product categories. The company's product range
includes a wide range of personal care, household care, and packaged foods.
Logistics setup of the company is well established and is quite superior to other FMCG
companies (including other multinational FMCG companies) operating in India. It has a very
wide presence across the country, because of its extensive distribution network and logistics
setup.
HLL's extensive distribution network covers over 3,400 distributors and 1.6 million outlets.

Figure 3-16 shows the percent breakup of HLL's logistics functions managed in-house,
outsourced to 3PL, and outsourced to others, in 2005.
Figure 3-16
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by HLL Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Logistics Function
Warehousing
Outsourced to Outsourced to Oth3PL (%)

ers (%)
25
50
25
Transportation
25
75
Freight Forwarding
80
20
50
40
10
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HLL had been an early adopter and beneficiary of 3PL services in the Indian FMCG sector as
a result of the guidance gained from its parent company, Unilever. Its level of 3PL usage is
significantly higher than the average industry standard for 3PL usage in all the logistic functions. The same is evident from the figures shown in the above figure and reasons as
mentioned by the company for outsourcing various logistics functions to 3PL.

Companies
Figure 3-17 shows the top reason(s) mentioned by HLL for outsourcing various logistics
functions to 3PL companies in 2005.
Figure 3-17
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by HLL for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by HLL
Warehousing
Relieves us from major investment lockups and also enables us to focus more on
core competence
Transportation
We use 3PLs for time bound large order deliveries
Freight Forwarding
We use them in our export related logistics, and the practice is in line with our parent's global level usage of 3PL

3PLs manage MIS for all our major warehouses in their control. It provides us relief
from day to day record management hassles. We are using 3PL also for advanced
services to gain competitive advantage
The reasons mentioned by HLL signify that the company has realized the benefits of
outsourcing its logistics functions to 3PL companies.

Figure 3-18 shows the needs and preference(s) mentioned by HLL, regarding various logistics
functions outsourced to 3PL companies in 2005.
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Figure 3-18
3PL Markets in the Indian FMCG Sector: Needs and Preferences of HLL Regarding Logistics
Logistics Function
Needs
Warehousing
Large and efficient warehousing setup

with extensive nationwide coverage supporting even rural distribution
A warehousing setup that fulfills our

domestic as well as export related
needs
Transportation

reaching the remotest parts of the country
State-of-the-art multi-mode integrated

efficient transportation system to fulfill our needs
Freight Forwarding
Expertise in freight forwarding to the

countries where we export. Also to handle our large quantity raw material
import freight forwarding
A provider to meet our specific needs

of exports and imports

MIS and Other Value Added Logistics

Services should provide us relief from
information management hassles while
giving us dependable timely inputs for
accurate decision making
3PLs should contribute their expertise

in planning and execution of logistics
to improve our competitive advantage
The company's needs and preferences for the 3PL services can be summarized as a solution,
which provides an extensive national network with global level access, complemented by
state-of-the-art infrastructure, technologies, and in-depth skills.
Warehouse Infrastructure and Geographic Coverage Metrics of HLL

Figure 3-19 shows the figures of warehouse infrastructure and geographic coverage metrics
of HLL, in 2005.
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Figure 3-19
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of HLL (India), 2005
Parameter
Total
Own
3PL
Others
28
25
600
100
500
40
35
3400
100
3300
200000
---
250000
---
30000
30000
30000
---
Master
65
---
65
---
Regional/State
11
12
---
1.5
0.1
1.0

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Retail reach
2.6
The metrics mentioned in the above figure signify the formidable distribution network owned
by HLL, and provides a clear insight for the enthusiastic 3PL companies regarding the capabilities and strengths needed to serve HLL. The transportation metrics of the company also
provide a deeper insight into the current transportation system and required capabilities and
expertise from the 3PL companies for serving HLL.
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Transportation Infrastructure Metrics of HLL

Figure 3-20 shows the figures of transportation infrastructure metrics of HLL, in 2005.
Figure 3-20
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of HLL
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
40
--
35
Light Trucks
60
--
55
1000
--
50
950
Major 3PL Service Providers Used by HLL

Major 3PL service providers used by HLL are:
DHL-Exel
Reliance Logistics
TCI
Gati
Safexpress

HLL's overall logistics cost is about 40 percent lower than the average industry standard,
signifying the high level of efficiency of this function already achieved by the company. As
the market leader, it has presented itself as a good role model for an evolving and perfect mix
of 3PL, unorganized service providers, and inhouse management of logistics suitable for the
Indian market. 3PL companies targeting the Indian FMCG sector as well as other FMCG
companies can benchmark with HLL's model and standards for improving their logistics
efficiency.
Other logistics metrics mentioned below also reiterate HLL's higher efficiency level of logistics than the rest of the industry.
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The company has also been an early adopter of IT solutions to integrate and improve its
supply chain. The company uses a variety of function specific IT solutions to manage its
logistics functions, such as Supply Chain Planning tool, Datawarehouse tool, Manufacturing
Plant Transactions Automation tool, and so on. As a result, the company's overall automation and visibility of logistics functions is double that of rest of the industry.
The company has already initiated plans to modify its warehousing network to make the best
use of new VAT regime, which includes a significant share of these operations being
outsourced. 3PL providers interested in tapping this huge potential market should significantly enhance their warehousing capabilities in all the strategic hub cities in different
regions, and also improve their information management capabilities. 3PL companies with
high international logistics expertise can also aim to capture a share of HLL's increasing
exports related logistics activities.
Procter
&
(P&G)3PL
Gamble
Status,
Health
and
Practices,
Hygiene
Needs
and
Metrics
Overview of Logistics Status of P&G

Proctor & Gamble (P&G's) logistics setup is well established as far as the urban areas of
India are concerned. Due to its long presence in India through generic medicine Vicks' operations, the company's distribution network is also better than other multinational FMCG
companies operating in India.
It uses a dual supply chain model consisting of the regular C&F agent distributor chain and a
special Golden Eye' model in which distributors act as C&F agents and share the regional
warehouses (called as depots) along with the regular C&F agents. Almost 60 percent of its
regional depots are managed in this model. For transportation, the company uses four major
regional transport companies and several other local trucking companies.

Figure 3-21 shows the percent breakup of P&G's logistics functions managed in-house,
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Figure 3-21
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by P&G Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Logistics Function
Warehousing
Outsourced Outsourced to Othto 3PL (%)

ers (%)
40
40
20
Transportation
20
80
Freight Forwarding
75
25
40
40
20
The company had been one of the pioneering adopters of 3PL services in the Indian FMCG
sector as a result of the guidance gained from its parent company, P&G of USA. Its level of
3PL usage is significantly higher than the average industry standard for 3PL usage in all the
logistic functions. The same is evident from the data shown in the above figure and reasons

Companies
Figure 3-22 shows the top reason(s) mentioned by P&G for outsourcing various logistics
functions to 3PL companies in 2005.
Figure 3-22
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by P&G for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by P&G
Warehousing
Using 3PLs had proved to cost us significantly lesser than the own management. It
also enables us to focus on core competence
Transportation
We use 3PLs for primary transportation to our main warehouses
Freight Forwarding

We use 3PLs to manage MIS for our two consolidation centres and also major warehouses in their control. It provides us relief from day to day record management
hassles. We are planning to use advanced value added services from capable providers.
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The reasons mentioned by P&G signify that the company has realized the benefits of
outsourcing its logistics functions to 3PL companies.

Figure 3-23 shows the needs and preference(s) mentioned by P&G, regarding various logistics functions outsourced to 3PL companies, in 2005.
Figure 3-23
3PL Markets in the Indian FMCG Sector: Needs and Preferences of P&G Regarding Logistics
Logistics Function
Needs
Warehousing
Large and efficient warehousing setup with

extensive nationwide coverage supporting
even rural distribution in near future
A warehousing setup that fulfills

our current needs and also our penetration into rural areas
Transportation
An efficient and reliable transportation system with extensive network coverage reaching all the urban parts of the country
State-of-the-art multi-mode integrated efficient transportation system in synergy with our distribution
network
Freight Forwarding
Expertise in freight forwarding to the countries where we export. Also to support us in

our raw material imports
A provider to meet our increasing

needs of exports to Asian countries.
And also to help us in imports of
our high end products

MIS and Other Value Added Logistics Services should provide us more than relief from
information management hassles, to the level
of demand planning and reduced inventory
3PLs should partner with us in long

term contracts and sincerely commit
their capabilities to improve our
competitive advantage
which currently provides an extensive urban area covering national network with global level
access, complemented by state-of-the-art infrastructure, technologies, and in-depth skills.
The network and infrastructure should be scalable in short term to accommodate the
company's rural expansion efforts as well as growing exports.
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Warehouse Infrastructure and Geographic Coverage Metrics of P&G

of P&G, in 2005.
Figure 3-24
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of P&G (India), 2005
Parameter
Total
Own
3PL
Others
25
10
15
300
50
250
28
12
13
1500
1500
100000
--
150000
--
22000
20000
25000
--

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
--
50
--
Regional/State
10
10
10
--
0.1
0.3
Number of Retail Outlets Serviced Across the Country (In Million)

Retail reach
1.0
0.6
The metrics mentioned above signify the formidable distribution network owned by P&G,
and provide clear insight for the enthusiastic 3PL companies regarding the capabilities and
strengths needed to serve the company. The transportation metrics mentioned by the
company also provide a deeper insight into the current transportation system and required
capabilities and expertise from the 3PL companies for serving P&G.
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Transportation Infrastructure Metrics of P&G

Figure 3-25 shows the figures of transportation infrastructure metrics of P&G, in 2005.
Figure 3-25
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of P&G
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
25
---
20
Light Trucks
70
---
65
300
---
50
250
Major 3PL Service Providers Used by P&G

Major 3PL service providers used by P&G are:
DHL Exel
SembCorp Logistics

P&G had been consistently patronizing the 3PL services in the Indian FMCG sector, thereby
gaining specific benefits. In future, the company needs a wider range of services apart from
an expanded network in several semi-urban areas of the country. However, the company
believes that current 3PL providers in the FMCG sector significantly lack capabilities for a
full supply chain management. Also, the company has serious concerns about the lack of
skilled personnel in the Indian 3PL companies to manage the diverse needs of the Indian
FMCG sector.
It plans to modify its warehousing network after full implementation of the uniform VAT
regime, which includes a significant share of these operations being outsourced. Hence, 3PL
service providers that wish to target this company's expanding needs should enhance their
capabilities in all logistic functions and network. They should also be ready for long term
contracts involving greater commitment so as to gain larger share of the company's logistics.
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Nestl
Needs
India
and
Limited3PL
Status,
Practices,
Metrics
Overview of Logistics Status of Nestle

Nestle has a long and successful presence in India through its coffee, baby food, and chocolate products. The company's logistics setup is quite formidable as far as the urban areas are
concerned. It has a strong distribution network uniformly covering all parts of urban India.
The company uses 3PL services for its warehousing and primary transportation needs. It also
uses 3PL services in freight forwarding of its imports occasionally. However, the company
manages majority of its information management functions in-house. For its overall transportation needs, it uses more than 30 service providers across the country.

Figure 3-26 shows the percent breakup of Nestle's logistics functions managed in-house,
Figure 3-26
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Nestle Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
10
40
50
Transportation
40
60
Freight Forwarding
25
75
60
40
Logistics Function
Warehousing
Nestle also had been one of the early adopters of 3PL services in the Indian FMCG sector, as
a result of the guidance gained from its parent company Nestle S.A. Hence Its level of 3PL
usage is significantly higher than the average industry standard for 3PL usage in all the
logistic functions. This is evident from the figures shown above and reasons mentioned by the
company for outsourcing various logistics functions to 3PL companies.
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Companies
Figure 3-27 shows the top reason(s) mentioned by Nestle for outsourcing various logistics
functions to 3PL companies, in 2005.
Figure 3-27
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Nestle for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Nestle
Warehousing
Offers scope for flexibility in warehousing infrastructure
Transportation
3PLs are needed for transporting our food grade products to main cities
Freight Forwarding
All our chocolate and high end coffee products are imported regularly and we need
3PLs for bulk consignments

We use 3PLs to manage MIS for our regional depots where we do not have own
infrastructure and manpower

Figure 3-28 shows the needs and preference(s) mentioned by Nestle regarding various logistics functions outsourced to 3PL companies in 2005.
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Figure 3-28
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Nestle Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

A warehousing setup that offers us signifiwith extensive nationwide coverage sup- cantly higher level of efficiency than our
porting even rural distribution in near
existing structure
future
Transportation

system with extensive network coverage reaching all the urban parts of the
country
Freight Forwarding
Expertise in handling our regular freight A provider to meet our increasing needs of
forwarding needs related to imports
imports as our sales in India are growing
year over year
Strong international transportation expertise and extensive inland road transportation network
MIS/Other Value Added MIS services should provide us full visi- 3PLs who can provide an end-to-end inteLogistics Operations
bility of our supply chain, and also
gration of our supply chain as well as posinformation security
sess high security standards
which currently provides an extensive urban area coverage,covering national network with
high level expertise in import related freight forwarding expertise.
Warehouse Infrastructure and Geographic Coverage Metrics of Nestle

of Nestle, in 2005.
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Figure 3-29
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Nestle (India), 2005
Parameter
Total
Own
3PL
Others
25
10
15
300
50
250
40
40
1800
1800
150000
--
150000
--
25000
25000

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
---
50
---
Regional/State
10
10
0.1
0.5

Retail Reach
1.2
0.6
The metrics mentioned above signify the formidable distribution network owned by Nestle,
strengths needed to serve Nestle, which needs a nationwide extensive services from any
prospective service provider. The transportation metrics mentioned below also provide a
deeper insight into the current transportation system and required capabilities from the 3PL
companies for serving Nestle.
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Transportation Infrastructure Metrics of Nestle

Figure 3-30 shows the figures of transportation infrastructure metrics of Nestle, in 2005.
Figure 3-30
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Nestle
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
30
--
25
Light Trucks
30
--
--
30
300
--
50
250
Major 3PL Service Providers Used by Nestle

Major 3PL service providers used by Nestle include:
Reliance Logistics
TCI
Indo Arya
Dynamic Logistics

Nestle has been a steadily growing company in the Indian FMCG sector with its expansion
from the original baby food to a wide range of food products at present. The company's
distribution needs have also steadily grown over the years and offer a perennial business for
the providers. Currently, the company is using a large number of regional service providers
due to lack of integrated service providers with nationwide network. However, the
company's retail reach had been only until the urban areas of India. Nestle is expecting a
growth in its exports and needs major support in the related logistics. It is highly stringent in
terms of performance of its service providers and prefers time-bound and committed companies over others. The company has major warehouse network reconstitution plans after
uniform VAT is implemented.
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3PL companies interested in targeting this company should improve upon the reliability of
their services as well as their capabilities in supporting specific warehousing needs of its
multiple range of food products.
Nirma
and
Limited3PL
Status,
Practices,
Needs
Metrics
Overview of Logistics Status of Nirma

Nirma Limited is the most successful domestic company in the Indian FMCG sector's detergent product segment, with its flagship brand 'Nirma' detergent products. The company has
also successfully ventured into body soaps segment. Its logistics setup is quite formidable as
far as the rural areas are concerned. The company has a strong distribution network extensively covering all parts of rural India and reasonably covering the urban areas. It uses dual
supply chains, one each for its two product segments, Nirma and Nima.
The company uses very low level of 3PL services for its supply chain needs. It occasionally
uses 3PL services in freight forwarding of its exports. It manages majority of its warehousing
operations through its C&F agents, and its information management functions in-house. For
its overall transportation needs, the company uses more than 50 service providers across the
country.

Figure 3-31 shows the percent breakup of Nirma's logistics functions managed in-house,
Figure 3-31
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Nirma Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
100
Freight Forwarding
10
80
100
Logistics Function
Warehousing
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The company had been one of the conservative companies avoiding 3PL services in the Indian
FMCG sector, as a result of perceived higher costs and information leakage risk. Its level of
3PL usage is significantly lower than the average industry standard for 3PL usage in all the
logistic functions. The same is evident from the figures shown in the above mentioned figure
and reasons as mentioned by the company for outsourcing various logistics functions to 3PL.

Companies
Figure 3-32 shows the top reason(s) mentioned by Nirma for outsourcing various logistics
Figure 3-32
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Nirma for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Nirma
Warehousing
We do not use them because they do not offer any real value addition to our status
Transportation
Freight Forwarding
We use them occasionally when bulk export consignments are to be handled

We do not use them because it could result in the loss of our control on the supply
chain and also there is risk of information leakage

Figure 3-33 shows the needs and preference(s) mentioned by Nirma regarding various logistics functions outsourced to 3PL companies, in 2005.
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Figure 3-33
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Nirma Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

with extensive nationwide coverage supporting deep rural distribution
A warehousing setup that offers us

significantly higher level of efficiency
than our existing structure
Transportation
A low cost and reliable transportation

reaching even interior rural parts of the
country
Strong domestic transportation network and infrastructure to reach the

deep rural areas where we have good
presence
Freight Forwarding
Expertise in handling our regular freight

forwarding needs related to exports
A provider to efficiently meet our

increasing needs of exports

MIS services should provide information

security and access to only authorized
persons for decision-making
3PLs who can provide assured information security and integration of all
major supply chain activities
which currently provides a nationwide extensive rural area coverage network with high level
of standards in information management. The 3PL should also own expertise in export
related freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Nirma

of Nirma, in 2005.
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Figure 3-34
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Nirma (India), 2005
Parameter
Total
Own
3PL
Others
29
10
19
500
500
29
10
19
2500
2500
200000
200000
---
---
30000
30000

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
50
---
---
Regional/State
10
10
---
1.0

Retail Reach
2.5
1.5
The metrics mentioned in the figure above signify the formidable distribution network owned
by Nirma, and provide a clear insight for the enthusiastic 3PL companies regarding the capabilities and strengths needed to serve Nirma. The transportation metrics mentioned below
also provide a deeper insight into the current transportation system and required capabilities
and expertise from the 3PL companies for serving Nirma.
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Transportation Infrastructure Metrics of Nirma

Figure 3-35 shows the figures of transportation infrastructure metrics of Nirma, in 2005.
Figure 3-35
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Nirma
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
30
---
---
30
Light Trucks
50
---
---
50
400
---
---
400
Major 3PL Service Providers Used by Nirma

Nirma does not use any major 3PL service providers. It uses only regional and remote 3PL
companies in case of need.

Nirma is a highly conservative family owned FMCG company, with an impressive success
story of being the most successful domestic FMCG company in India. The company's 3PL
usage is far below the industry standard, and yet the company has managed to control its
total logistics cost at just 3 percent of its total sales value. However, considering the massive
scale of operations of the company, it could become a major 3PL user if a viable solution is
offered by convincing the company.
The 3PL companies interested in targeting this large company with high potential logistics
needs should eliminate its negative perceptions or beliefs about 3PL. The most suitable way
to build trust and induce Nirma into usage of 3PL services is through a long term partnership
model package offering highly efficient cost achievements, reinforced by strict performance
standards, supported by even penalties for not meeting the promised standards.
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Godrej
Consumer
Products
Status,
Practices,
Needs
Limited3PL
and
Metrics
Overview of Logistics Status of Godrej

Godrej is the most successful domestic company in the Indian FMCG sector's personal soaps
and cosmetics product segment, gaining popularity with its Cinthol range of products. The
company has also successfully ventured into home care segment with its Good Knight range
of products, through its partnership with Sara Lee Corporation of the United States. In addition, it also has a strong presence in packaged juices segment. The company's logistics setup
is quite formidable and spread uniformly across urban and rural areas of the country. The
company has an extensive distribution network covering all parts of India.
It uses reasonable level of 3PL services for its transportation and warehousing needs. It also
uses 3PL services in freight forwarding of its exports. The company manages part of its warehousing operations through its C&F agents, and part of its information management
functions inhouse. Rest of the warehousing and information management is outsourced to
3PL. For its overall transportation needs, the company uses more than 20 service providers
across the country.

Figure 3-36 shows the percent breakup of Godrej's logistics functions managed inhouse,
Figure 3-36
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Godrej Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
25
75
Freight Forwarding
70
30
40
60
Logistics Function
Warehousing
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Godrej had been one of the early adopters of 3PL services from the domestic companies in
Indian FMCG sector, as a result of its association with Sara Lee. Its level of 3PL usage is
considerably higher than the average industry standard for 3PL usage in all the logistic functions. The same is evident from the figures shown in the above figure and reasons mentioned
by the company for outsourcing various logistics functions to 3PL.

Companies
Figure 3-37 shows the top reason(s) mentioned by Godrej for outsourcing various logistics
Figure 3-37
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Godrej for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Godrej
Warehousing
It offers relief from risky investments in warehousing infrastructure and also asset
flexibility
Transportation
3PLs provide us the important primary transportation services up to our regional

warehouses
Freight Forwarding
Our important import and export consignments are handled by 3PL

We use 3PLs to manage MIS for our regional warehouses where we do not have
own infrastructure and manpower

Figure 3-38 shows the needs and preference(s) mentioned by Godrej, regarding various logistics functions outsourced to 3PL companies, in 2005.
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Figure 3-38
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Godrej Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

with extensive nationwide coverage
supporting deep rural distribution
A warehousing setup that offers us significantly higher level of efficiency than

our existing structure
Transportation

Strong domestic transportation network
system with extensive network coverage and infrastructure with uniform reach
reaching even interior rural parts of the in the urban and rural areas
country
Freight Forwarding
Expertise in handling our regular

freight forwarding needs related to
imports and our growing exports
A provider to efficiently handle our regular imports and increasing needs of

exports

MIS should help us in making more

informed decisions
3PLs who can provide value added services apart from basic MIS
Its needs and preferences for the 3PL services can be summarized as a solution, which
currently provides a nationwide extensive uniform coverage network with high level of
standards in information management. The 3PL should also own expertise in export and
import related freight forwarding. A well established transportation network owned by 3PL
would be an added advantage.
Warehouse Infrastructure and Geographic Coverage Metrics of Godrej

of Godrej, as of 2005.
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Figure 3-39
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Godrej (India), 2005
Parameter
Total
Own
3PL
Others
28
10
18
400
400
40
12
28
1500
1500
160000
150000
180000
---
20000
20000
20000
---
45
50
40
---
---
---
0.4

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
1.5
1.1
The metrics mentioned above signify the formidable distribution network owned by Godrej,
strengths needed to serve the company. The transportation metrics mentioned below also
expertise from the 3PL service providers for serving the company.
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Transportation Infrastructure Metrics of Godrej

Figure 3-40 shows the figures of transportation infrastructure metrics of Godrej, in 2005.
Figure 3-40
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of
Godrej (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
20
--
--
20
Light Trucks
40
--
--
40
250
--
--
250
Major 3PL Service Providers Used by Godrej

Major 3PL service providers used by Godrej include:
DHLExel
SembCorp
Gati
Reliance Logistics
Om Logistics

Godrej Consumer Products Limited is considered as a balanced mix of domestic and multinational operations, which achieved significant success in a wide range of segments in the
Indian FMCG sector. The company has a nationwide uniform presence signifying a similar
kind of presence for its logistics service providers. It has been proactive in adopting the 3PL
services in all its logistics functions, and has plans for further usage of these services if the
providers can offer more affordable pricing. Apart from this, the company has also initiated
plans for reconstitution of its warehousing operations as and when fully uniform VAT is
implemented across the country. It has also been an early adopter of ERP solutions to provide
more visibility throughout the organisation. The company has also helped it to formulate
market strategies by providing better understanding of market conditions.
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3PL service providers targeting the company should offer it a long term affordable package
so as to encourage the company in its proactive outsourcing to 3PLs. Being ready with the
needed exhaustive warehousing capabilities by the time of full implementation of VAT would
also benefit the interested 3PLs in successfully gaining this company's logistics business.
Added to this, having a group company to manage its MIS operations limits the 3PL
providers from offering complete supply chain solution for the company. Apart from the
basic MIS services, 3PL companies targeting Godrej should be able to offer a wide range of
value-added services.
Henkel
Needs
India
and
Limited3PL
Status,
Practices,
Metrics
Overview of Logistics Status of Henkel

Henkel India, which was started as Henkel Spic, the partnership venture between Henkel of
Germany and SPIC of India, has been a highly successful FMCG company in a short span of
time. The company's logistics setup is well established as far as the urban areas of India is
concerned.
The company's warehousing operations are managed through C&F agents, except for its
major warehouses. For transportation, the company uses several major regional transport
companies and several other local trucking companies, which have the local experience in
different geographic regions.

Figure 3-41 shows the percent breakup of Henkel's logistics functions managed inhouse,
outsourced to 3PL, and outsourced to others, as of 2005.
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Figure 3-41
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Henkel Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
40
40
20
Transportation
20
80
Freight Forwarding
50
50
50
50
Logistics Function
Warehousing
The company had been one of the pioneering adopters of 3PL services in the Indian FMCG
sector due to guidance gained from its parent company, Henkel of Germany. Its level of 3PL
usage is significantly higher than the average industry standard for 3PL usage in all the
logistic functions. The same is evident from the figures shown in Figure 3-41 and reasons
mentioned by the company for outsourcing various logistics functions to 3PL companies.

Companies
Figure 3-42 shows the top reason(s) mentioned by Henkel for outsourcing various logistics
functions to 3PL Companies, in 2005.
Figure 3-42
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Henkel for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Henkel
Warehousing
3PLs provide us knowledge for better supply chain management
Transportation
Freight Forwarding
MIS/Other Value Added We use 3PLs to manage MIS for our distribution consolidation centers, and also
major warehouses in their control. It provides us greater insights for decision-making. We are planning to use advanced value added services from capable providers
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Figure 3-43 shows the needs and preference(s) mentioned by Henkel, regarding various logistics functions outsourced to 3PL companies, in 2005.
Figure 3-43
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Henkel Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

A warehousing setup that fulfills our

current needs and also our penetration
into rural areas
Transportation
An Efficient and Reliable transportation system with extensive network coverage reaching all the urban parts of the country as of
now
State-of-the-art multi-mode integrated

efficient transportation system in synergy with our distribution network.
Should offer visibility and security also
Freight Forwarding
Expertise in freight forwarding to the countries where we export. Also to support us in

our raw material imports
A provider to meet our increasing

needs of exports to Asian countries.
And also to help us in imports of our
high end products
MIS/Other Value
MIS and Other Value Added Logistics ServAdded Logistics Oper- ices should provide us more than relief from
ations
information management hassles, to the
level of demand planning and reduced
inventory
3PLs should look for consistent returns

over a longer period of time and offer
value added services in affordable
range to improve our competitive
advantage
Henkel's needs and preferences for the 3PL services can be summarized as a solution, which
currently provides an extensive urban area covering national network with global level
access, complemented by state-of-the-art infrastructure, technologies, and in-depth skills.
Warehouse Infrastructure and Geographic Coverage Metrics of Henkel

of Henkel, as of 2005.
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Figure 3-44
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Henkel (India), 2005
Parameter
Total
Own
3PL
Others
25
10
15
200
200
33
12
21
800
800
100000
---
100000
---
10000
10000
---
---
30
---
35
---
---
---
---
0.2

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.6
0.4
The metrics mentioned in the above figure signify the formidable distribution network owned
by Henkel, and provide clear insight for the enthusiastic 3PL companies regarding the capabilities and strengths needed to serve the company. The transportation metrics mentioned
below also provide a deeper insight into the current transportation system and required capabilities and expertise from the 3PL companies for serving the company.
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Transportation Infrastructure Metrics of Henkel

Figure 3-45 shows the figures of transportation infrastructure metrics of Henkel, in 2005.
Figure 3-45
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Henkel (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
15
---
10
Light Trucks
20
---
---
20
100
---
---
100
Major 3PL Service Providers Used by Henkel

Major 3PL service providers used by Henkel include:
SembCorp
TCI
AB Cargo
ARC Logistics
Several regional service providers such as KRL in Kerala, ABT in Tamilnadu, VRL in
Karnataka, and Navata in Andhra Pradesh

Henkel India, which started operations as Henkel Spic had been steadily expanding usage of
3PL services in its logistics functions. In future, the company needs a wider range of services
apart from an expanded network in several semi-urban areas of the country. However, the
company believes that current 3PL providers in the FMCG sector significantly lacks capabilities for a full supply chain management. Also, the company has serious concerns about the
current model of warehousing and transportation management employed by the 3PL companies, which is resulting in twice the cost of inhouse logistics management. The company is
open toward the shared warehouse model for achieving a lower cost of logistics if the 3PL
companies can provide high level of security for its information and goods. Also, the lack of
FMCG sector is considered as a major draw back by Henkel for expanding of 3PL penetration in the FMCG sector.
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The company plans to modify its warehousing network after full implementation of uniform
VAT regime, as a part of which a significant share of these operations could be outsourced.
Hence, 3PL service providers that wish to target this company's expanding needs should
enhance their capabilities in all logistic functions and network. They should also be ready for
long term contracts involving greater commitment so as to gain larger share of the company's
logistics. 3PL companies, which can offer shared warehousing with high information security
standards, can also approach the company for a share of its logistics business.
WIPRO
Consumer
(WCCL)-3PL
Care
Status,
and
Lighting
Practices,
Needs
and
Metrics
Overview of Logistics Status of Wipro

Wipro is a successful domestic company in the Indian FMCG sector's body soaps segment. It
has also successfully ventured into baby care products. The company's logistics setup is
optimum to its limited market presence and focus in the product segments. The company has
a strong distribution network, extensively covering all parts of India.
uses 3PL services in freight forwarding of its exports. It manages majority of its warehousing
operations through its C&F agents, and its information management functions inhouse. For
country.

Figure 3-46 shows the percent breakup of Wipro's logistics functions managed inhouse,
outsourced to 3PL, and outsourced to others, as of 2005.
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Figure 3-46
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Wipro Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
70
30
Transportation
100
Freight Forwarding
10
80
100
Logistics Function
Warehousing
This company had been another conservative company avoiding 3PL services in the Indian
FMCG sector, due to perceived higher costs and information leakage risk. Its level of 3PL
usage is significantly lower than the average industry standard for 3PL usage in all the
logistic functions. The same is evident from the figures shown in the Figure 3-46 above, and
reasons mentioned by the company for outsourcing various logistics functions to 3PL
companies.

Companies
Figure 3-47 shows the top reason(s) mentioned by Wipro for outsourcing various logistics
Figure 3-47
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Wipro for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Wipro
Warehousing
Transportation
We do not use them because they do not offer any real value addition to the efficiency of our current transportation model
Freight Forwarding

chain and also there is risk of information leakage. Also we have a group company
to manage this
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Figure 3-48 shows the needs and preference(s) mentioned by Wipro, regarding various logistics functions outsourced to 3PL companies, in 2005.
Figure 3-48
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Wipro Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

with extensive nationwide coverage supporting deep rural distribution

Transportation

uniformly reaching all parts of the country

and infrastructure to reach the overall
regions uniformly
Freight Forwarding



MIS should provide much more than

information security and info for decision-making
Wipro's nationwide presence and its ambitions for expansion into new segments translate
into logistics needs such as a nationwide extensive uniform coverage network with high level
standards in information management. The aspiring 3PL companies to serve Wipro should be
able to provide a higher level of services and efficiency in MIS activity, apart. from having
expertise in export related freight forwarding.
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Warehouse Infrastructure and Geographic Coverage Metrics of Wipro

of Wipro, as of 2005.
Figure 3-49
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Wipro (India), 2005
Parameter
Total
Own
3PL
Others
20
18
300
300
28
22
1200
1200
100000
100000
---
---
10000
10000
---
---
25
25
---
---
---
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.8
0.5
The above mentioned metrics signify the strong nationwide distribution network owned by
Wipro. They also provide an insight for the enthusiastic 3PL companies regarding the capabilities and strengths needed to serve Wipro. The transportation metrics mentioned below
also provide a deeper insight into the current transportation system and required capabilities
from the 3PL companies for serving Wipro.
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Transportation Infrastructure Metrics of Wipro

Figure 3-50 shows the figures of transportation infrastructure metrics of Wipro, in 2005.
Figure 3-50
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Wipro
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
---
---
10
Light Trucks
25
---
---
25
100
---
---
100
Major 3PL Service Providers Used by Wipro

Major 3PL service providers used by Wipro include:
Patel Logistics
Several other regional service providers

Wipro is a highly conservative family owned FMCG company, owned by a group with an
impressive success story of being one of the most successful domestic diverse industrial group
in India. The company's 3PL usage is far below the industry standard, and its existing logistics practices have been incurring significantly higher costs for the company. However,
considering the reasonably good scale of operations of the company, it could become a major
3PL user if a viable solution is offered by convincing the company. Added to this, having a
group company to manage its MIS operations limits the 3PL providers from offering
complete supply chain solution for this company.
The 3PL companies interested in targeting this large and successful domestic company with
high potential logistics needs should strive to eliminate its negative perceptions or beliefs
about 3PL. The most recommended way to build trust and induce Wipro into usage of 3PL
services is through a long term partnership model package offering highly efficient cost
achievements, reinforced by strict performance standards supported by even penalties for not
meeting the promised standards. Regarding the fulfillment of its MIS needs also, if any 3PL
provider could offer a wider range services package with a substantial reduction in overall
costs, the company is likely to accept the offer.
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Glaxo
SmithKline
India 3PL
Consumer
Status,
Healthcare
Practices,
Needs
and
Metrics
Overview of Logistics Status of Glaxo SmithKline

GSK has a long and successful presence in India through its nutritional foods and confectionary product. As a major pharmaceutical company, the company's logistics setup is quite
formidable across the country. The company has a strong distribution network uniformly
covering all parts of India.
It uses 3PL services for its warehousing and primary transportation needs. It also uses 3PL
services in freight forwarding of its imports occasionally. The company uses 3PL in half of its
information management functions. For its overall transportation needs, the company uses
more than 30 service providers across the country.

Figure 3-51 shows the percent breakup of GSK's logistics functions managed inhouse,
Figure 3-51
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by GSK Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
30
40
Transportation
20
80
Freight Forwarding
25
75
50
50
Logistics Function
Warehousing
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GSK had been one of the early adopters of 3PL services in the Indian FMCG sector, as a
result of the guidance gained from its parent company, Glaxo SmithKline Plc of UK. Its level
of 3PL usage is significantly higher than the average industry standard for 3PL usage in all
the logistic functions. The same is evident from the figures shown above in figure 3-51, and
reasons mentioned by the company for outsourcing various logistics functions to 3PL.

Companies
Figure 3-52 shows the top reason(s) mentioned by GSK for outsourcing various logistics
Figure 3-52
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by GSK for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by GSK
Warehousing
Offers scope for flexibility in warehousing infrastructure and frees a lot of investments for usage in better functions
Transportation
3PLs are best for primary transportation of our products to main warehouses
Freight Forwarding
Our increasing export to Asian countries is supported by 3PLs for bulk consignments


Figure 3-53 shows the needs and preference(s) mentioned by GSK, regarding various logistics
functions outsourced to 3PL Companies, as of 2005.
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Figure 3-53
3PL Markets in the Indian FMCG Sector: Needs and Preferences of GSK Regarding Logistics
Logistics Function
Needs
Warehousing

A warehousing setup that offers us scope

for flexible scaling of warehousing capacity, with a reach up to rural India
Transportation
An efficient and reliable transportation sys- Extensive inland road transportation nettem with extensive network coverage
work to offer lowest cost service
reaching all the urban parts of the country
Freight Forwarding

MIS/Other Value
Added Logistics
Operations
MIS should provide us full visibility of our 3PLs that can provide an end-to-end intesupply chain, and several value-added serv- gration of our supply chain as well as
ices
value added services
A provider to meet our increasing needs

of exports as our sales in Asia are growing year over year
GSK's needs and preferences for the 3PL services can be summarized as a solution, which
currently provides an extensive urban area coverage across the nation, and with scope for
steady expansion into rural areas, combined with high level expertise in export related
freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Glaxo

SmithKline
of GSK, as of 2005.
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Figure 3-54
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of GSK (India), 2005
Parameter
Total
Own
3PL
Others
25
20
300
300
30
15
10
1000
1000
175000
150000
200000
---
12000
12000
15000
10000
40
40
40
---
0.1
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
1.0
0.6
The metrics mentioned above signify the nationwide strong distribution network owned by
GSK, and signify the required capabilities and strengths needed to serve GSK. The transportation metrics mentioned below also provide a deeper insight into the existing transportation
infrastructure and strengths required for the 3PL companies to serve GSK.
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Transportation Infrastructure Metrics of Glaxo SmithKline

Figure 3-55 shows the figures of transportation infrastructure metrics of GSK, in 2005.
Figure 3-55
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of GSK
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
---
Light Trucks
15
---
---
15
100
---
100
Major 3PL Service Providers Used by Glaxo SmithKline

Major 3PL service providers used by GSK include:
TCI
Om Logistics

GSK is a leading participant in the Indian pharmaceutical industry, and it is credited to be the
oldest nutritional drinks manufacturer in the Indian FMCG sector, offered under the brand
Horlicks'. The company has successfully ventured into nutritional biscuits segment also. The
company's distribution needs have steadily grown over the years and offer a perennial business for the providers. Currently, the company is using a large number of regional service
providers due to lack of integrated service providers with nationwide network. However, the
company's retail reach had only been until the urban areas of India. GSK is expecting a
growth in its exports and needs major support in the related logistics. The company also has
a major warehouse network reconstitution plans after uniform VAT is implemented.
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Amul
(Gujarat
Federation
Needs
and
Cooperative
Limited)3PL
Milk
Marketing
Status,
Practices,
Metrics
Overview of Logistics Status of Amul

Amul is a unique case in the Indian FMCG sector. The name representing a cooperative dairy
organization has a long and successful presence in India through its dairy and nutritional
foods, confectionary products, and as a major confectionary company. The company's logistics setup is quite formidable across the country. It has a strong distribution network
uniformly covering all parts of India.
However, the company uses very low level of 3PL services for its warehousing and transportation needs. It also occasionally uses 3PL services in freight forwarding of its exports and
imports. It uses 3PL for a minor part of its information management functions. For its overall
transportation needs, the company uses more than 50 service providers across the country.

Figure 3-56 shows the percent breakup of Amul's logistics functions managed inhouse,
Figure 3-56
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Amul Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
60
10
30
Transportation
10
90
Freight Forwarding
25
75
90
10
Logistics Function
Warehousing
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The company had been shying away from adopting of 3PL services due to its unique model of
supply chain and logistics needs. Its level of 3PL usage is significantly lower than the average
industry standard for 3PL usage in all the logistic functions. The same is evident from the
figures shown in the figure 3-56 and reasons mentioned by the company for outsourcing
various logistics functions to 3PL.

Companies
Figure 3-57 shows the top reason(s) mentioned by Amul for outsourcing various logistics
Figure 3-57
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Amul for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Amul
Warehousing
Transportation
Freight Forwarding
Our increasing exports to Asian countries is supported by 3PLs for bulk consignments

Needs and Preferences for 3PL Services in various Logistics Functions

Figure 3-58 shows the needs and preference(s) mentioned by Amul, regarding various logistics functions outsourced to 3PL Companies, as of 2005.
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Figure 3-58
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Amul Regarding Logistics
Logistics Function
Needs
Warehousing

with extensive nationwide coverage supporting even rural distribution in near
future

for flexible scaling of warehousing capacity, with a reach upto rural India
Transportation

Extensive inland road transportation netsystem with extensive network coverage
work to offer lowest cost service
Freight Forwarding

A provider to meet our increasing needs

of exports as our sales in Asia are growing year over year
MIS/Other Value
MIS should provide us full visibility of our 3PLs that can provide an end-to-end inteAdded Logistics Oper- supply chain, and also several value added gration of our supply chain as well as
ations
services
value added services
which currently provides an extensive urban area coverage across nation and with scope for
steady expansion into rural areas, combined with high level expertise in export related
freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Amul

of Amul, as of 2005.
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Figure 3-59
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Amul (India), 2005
Parameter
Total
Own
3PL
Others
20
12
200
200
60
40
10
10
1000
1000
200000
200000
---
---
10000
10000
10000
10000
70
70
---
---
0.1
0.2

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.8
0.5
The metrics mentioned above signify the formidable distribution network owned by Amul,
and provide a clear insight for the enthusiastic 3PL companies regarding the capabilities and
strengths needed to serve Amul. The transportation metrics mentioned below also provides a
deeper insight into the current transportation system and required capabilities and expertise
from the 3PL companies for serving Amul.
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Transportation Infrastructure Metrics of Amul

Figure 3-60 shows the figures of transportation infrastructure metrics of Amul, in 2005.
Figure 3-60
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Amul
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
30
---
25
Light Trucks
60
---
---
60
300
---
300
Major 3PL Service Providers Used by Amul

Major 3PL service provider used by Amul is:
TCI

Amul is a leading participant in the Indian FMCG sector's dairy, nutrition, and confectionery
products segment. It is also one of the oldest nutritional drinks manufacturers in the Indian
FMCG sector, The company has successfully ventured into nutritional biscuits and several
other dairy foods segment also. The company's distribution needs have also steadily grown
over the years and offer a perennial business for the providers. However, its logistics needs
are unique in terms of procurement of its primary raw material, milk in massive scale on a
daily basis, and also quick distribution of its finished products to gain maximum reach
within limited shelf-life period of the products. The storage needs of the company are also
unique such as the temperature controlled and frozen storage systems. Currently, the
company is using a large number of regional service providers due to lack of integrated
service providers with nationwide network to match its unique needs. However, the
company's retail reach had only been til the urban areas of India. It is expecting growth in its
exports and needs major support in the related logistics. The company also has major warehouse network reconstitution plans after uniform VAT is implemented.
their services, as well as their capabilities in supporting specific warehousing needs of its
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Ta t a
Te a
Needs
Limited3PL
and
Status,
Practices,
Metrics
Overview of Logistics Status of Tata Tea

Tata Tea is the most successful domestic company in the Indian FMCG sector's coffee and tea
producing segment. The company's logistics setup is quite formidable and spread uniformly
across urban and rural areas of the country. It has an extensive distribution network covering
all parts of the India.
The company uses reasonable level of 3PL services for its transportation and warehousing
needs. It also uses 3PL services in freight forwarding of its exports. It manages part of its
warehousing operations through its C&F agents, and part of its information management
functions in house. Rest of the warehousing and information management is outsourced to
across the country.

Figure 3-61 shows the percentage breakup of Tata Tea's logistics functions managed inhouse,
outsourced to 3PL and outsourced to others, in 2005.
Figure 3-61
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Tata Tea Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
60
40
Transportation
25
75
Freight Forwarding
70
30
60
40
Logistics Function
Warehousing
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It had been one of the early adopters of 3PL services from the domestic companies in Indian
FMCG sector. Its level of 3PL usage is considerably higher than the average industry standard
for 3PL usage in all the logistic functions. The same is evident from the figures shown in the
above figure and reasons mentioned by the company for outsourcing various logistics functions to 3PL companies.

Companies
Figure 3-62 shows the top reason(s) mentioned by Tata Tea for outsourcing various logistics
Figure 3-62
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Tata Tea for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Tata Tea
Warehousing
It offers relief from risky investments in warehousing infrastructure and also provides asset flexibility
Transportation
3PLs provide us the important primary transportation services upto our regional
warehouses
Freight Forwarding

We use 3PLs to manage MIS for our regional warehouses where we do not have our

Figure 3-63 shows the needs and preference(s) mentioned by Tata Tea regarding various
logistics functions outsourced to 3PL Companies, in 2005.
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Figure 3-63
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Tata Tea Regarding
Logistics Function
Needs
Warehousing


Transportation

system with extensive network coverage reaching even interior rural parts
of the country
Strong domestic transportation network and infrastructure with uniform

reach in the urban and rural areas
Freight Forwarding

A provider to efficiently handle our regular imports and increasing needs of

exports


informed decisions
3PLs that can provide value-added services apart from basic MIS
which currently provides a nationwide extensive uniform coverage network with high level
standards in information management. The 3PL should also own expertise in export import
related freight forwarding. A well established transportation network owned by the 3PL
would be an added advantage.
Warehouse Infrastructure and Geographic Coverage Metrics of Tata

Tea
of Tata Tea, as of 2005.
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Figure 3-64
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Tata Tea (India), 2005
Parameter
Total
Own
3PL
Others
25
20
800
800
45
30
15
2500
2500
100000
100000
---
---
15000
15000
15000
---
25
25
---
---
---
0.2
0.6

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
2.0
1.2
The metrics mentioned above signify the formidable distribution network owned by Tata Tea,
strengths needed to serve Tata Tea. The transportation metrics mentioned in below also
expertise from the 3PL service providers for serving the company.
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Transportation Infrastructure Metrics of Tata Tea

Figure 3-65 shows the figures of transportation infrastructure metrics of Tata Tea, as of
2005.
Figure 3-65
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Tata
Tea (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
25
---
---
25
Light Trucks
45
---
---
45
250
---
---
250
Major 3PL Service Providers Used by Tata Tea

Major 3PL service providers used by Tata Tea:
SembCorp
Mahindra Logistics

Tata Tea represents a unique case of success in the Indian FMCG sector competing against
multinational majors, such as Nestle and HLL. The company has a nationwide uniform presence signifying a similar kind of presence for its logistics service providers. It has been
proactive in adopting 3PL services in all its logistics functions, and has plans for further
usage of these services if the providers can offer more affordable pricing. Apart from this, the
company has also initiated plans for reconstitution of its warehousing operations as and
when fully uniform VAT is implemented across the country. The company has also been an
early adopter of ERP solutions to provide more visibility throughout the organization. It has
also helped it to formulate the market strategies by providing better understanding of market
conditions.
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3PL service providers targeting Tata Tea should offer it a long term affordable package so as
to encourage the company in its proactive outsourcing to 3PLs. Being ready with the needed
exhaustive warehousing capabilities by the time of full implementation of VAT would also
benefit the interested 3PLs in successfully gaining this company's logistics business. Added to
this, having a group company to manage its MIS operations limits the 3PL providers from
offering complete supply chain solution for this company. Apart from the basic MIS services,
3PL companies targeting Tata Tea should be able to offer a wide range of value-added
services.
Jyothi
Laboratories
Practices,
Needs
and
Limited3PL
Status,
Metrics
Overview of Logistics Status of Jyothi Laboratories

Jyothi Laboratories (Jyothi Labs) is a successful domestic company in the Indian FMCG
sector's fabric care segment. The company has also successfully ventured into home care
products. Its logistics setup is optimum to its limited market presence and focusses on the
product segments. The company has a strong distribution network extensively covering all
parts of India.
It uses very low level of 3PL services for its supply chain needs. It occasionally uses 3PL services in freight forwarding of its exports. The company manages majority of its warehousing
operations through its C&F agents, and its information management functions in house. For
country.

Figure 3-66 shows the percent breakup of logistics functions managed inhouse, outsourced to
3PL, and outsourced to others by Jyothi Labs, in 2005.
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Figure 3-66
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Jyothi Laboratories Versus the Shares Outsourced to 3PL and Others
(India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
70
30
Transportation
100
Freight Forwarding
10
90
100
Logistics Function
Warehousing
Jyothi Labs had been another conservative company avoiding 3PL services in the Indian
FMCG sector due to perceived higher costs and information leakage risk. Its level of 3PL
logistic functions. The same is evident from the figures shown in the above figure and reasons
mentioned by the company for outsourcing various logistics functions to 3PL companies.

Companies
Figure 3-67 shows the top reason(s) mentioned by Jyothi Labs for outsourcing various logistics functions to 3PL Companies, in 2005.
Figure 3-67
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Jyothi Laboratories for
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Jyothi Labs
Warehousing
Transportation
Freight Forwarding

chain and there is risk of information leakage as well. Also we have a group company to manage this
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Figure 3-68 shows the needs and preference(s) mentioned by Jyothi Labs, regarding various
logistics functions outsourced to 3PL companies, in 2005.
Figure 3-68
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Jyothi Laboratories
Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

A warehousing setup that offers us sigwith extensive nationwide coverage sup- nificantly higher level of efficiency than
porting deep rural distribution
Transportation

Strong domestic transportation netsystem with extensive network coverage work and infrastructure to reach the
uniformly reaching all parts of the coun- overall regions uniformly
try
Freight Forwarding
Expertise in handling our regular freight A provider to efficiently meet our



which currently provides a nationwide extensive uniform coverage network with high level
standards in information management. The 3PL should be able to provide a higher level of
services and efficiency in MIS activity. The 3PL should also own expertise in export related
freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Jyothi

Laboratories
of Jyothi Labs, as of 2005.
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Figure 3-69
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Jyothi Laboratories (India), 2005
Parameter
Total
Own
3PL
Others
20
18
300
300
28
22
1200
1200
100000
100000
---
---
10000
10000
---
---
25
25
---
---
---
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.8
0.5
The metrics mentioned above signify the formidable distribution network owned by Jyothi
Labs, and provide clear insight for the enthusiastic 3PL companies regarding the capabilities
and strengths needed to serve Jyothi Labs. The transportation metrics mentioned below also
provide a deeper insight into the current transportation system and required infrastructure
and expertise from the 3PL companies for serving the company.
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Transportation Infrastructure Metrics of Jyothi Laboratories

Figure 3-70 shows the figures of transportation infrastructure metrics of Jyothi Labs. in
2005.
Figure 3-70
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Jyothi
Laboratories (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
---
---
10
Light Trucks
25
---
---
25
100
---
---
100
Major 3PL Service Providers Used by Jyothi Laboratories

Jyothi laboratories uses none of the major 3PL service providers It uses only local service
providers.

Jyothi Laboratories is a family owned FMCG company, which had risen into the top league
within a short span of one decade, driven by its highly successful Ujala' product range. The
company's 3PL usage is far below the industry standard, and its existing logistics practices
have been incurring significantly higher costs for the company, almost 160 percent above the
industry standard. This signifies the huge additional costs the company is incurring on logistics and simultaneously presents an opportunity for the 3PL companies to target this
company. Considering the reasonably good scale of operations of the company, it could
become a major 3PL user if a viable solution is offered by convincing the company.
The 3PL companies interested in targeting this fast growing company with good potential
logistics needs should eliminate its negative perceptions or beliefs about 3PL. The most suitable way to build trust and induce Jyothi Labs into usage of 3PL services is through a long
term partnership model package offering highly efficient cost achievements, reinforced by
strict performance standards supported by even penalties for not meeting the promised standards. Regarding MIS needs fulfillment also, if any 3PL provider could offer a wider range
services package with a substantial reduction in overall costs, the company is likely to accept
the offer.
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Anchor
Health
Limited3PL
and
Beauty
Status,
Care
Practices,
Private
Needs
and
Metrics
Overview of Logistics Status of Anchor Health and Beauty Care

Anchor Group is the leading manufacturer of electrical appliances with strong brand name
and presence across all parts of the country. Due to this, the company has a strong distribution network extensively covering all parts of India. As a part of its diversification, it has
ventured into FMCG industry, under the name Anchor Health and Beauty Care, starting with
soaps and shampoos. The company has also successfully ventured into oral care products.
The company's FMCG logistics setup is optimum to its limited market presence and focus in
the select product segments.
uses 3PL services in freight forwarding of its exports. The company manages majority of its
warehousing operations through its C&F agents, and its information management functions
in house. For its overall transportation needs, the company uses more than 20 service
providers across the country.

Figure 3-71 shows the percent breakup of logistics functions managed in house, outsourced
to 3PL, and outsourced to others, in 2005.
Figure 3-71
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Anchor Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
70
30
Transportation
100
Freight Forwarding
10
90
100
Logistics Function
Warehousing
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Anchor had been another conservative company avoiding 3PL services in the Indian FMCG
sector. This is a result of its established logistics network through the parent company (electricals) and also as a result of perceived higher costs and information leakage risk. Its level of
3PL usage is significantly lower than the average industry standard for 3PL usage in all the
logistic functions. Its perceptions are evident from the figures shown above and reasons

Companies
Figure 3-72 shows the top reason(s) mentioned by Anchor for outsourcing various logistics
Figure 3-72
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Anchor for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Anchor
Warehousing
Transportation
Freight Forwarding

chain and there is risk of information leakage. Also, we have a group company to
manage this

Figure 3-73 shows the needs and preference(s) mentioned by Anchor, regarding various logistics functions outsourced to 3PL companies, in 2005.
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Figure 3-73
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Anchor Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

Transportation

Strong domestic transportation netsystem with extensive network coverage work and infrastructure to reach the
uniformly reaching all parts of the coun- overall regions uniformly
try
Freight Forwarding



Anchor's needs and preferences for the 3PL services can be summarized as a solution which
immediately provides a nationwide extensive and uniform coverage network, integrated with
high level standards in information management. For a sustained trust and growth of usage
of 3PL services in future, the 3PL company aspiring to service Anchor should be able to
provide a higher level of services and efficiency in MIS activity. In addition, to fulfill the
future ambitions of exports of the company, the 3PL should also own expertise in export
related freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Anchor

Health and Beauty Care
of Anchor, as of 2005.
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Figure 3-74
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Anchor (India), 2005
Parameter
Total
Own
3PL
Others
20
18
300
300
28
22
1200
1200
100000
100000
---
---
10000
10000
---
---
25
25
---
---
---
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.8
0.5
The warehouse infrastructure metrics of Anchor reflect the strong nationwide distribution
network owned by the company, and provide clear insight for the enthusiastic 3PL companies
regarding the capabilities and strengths needed to serve Anchor. The transportation metrics
mentioned below also provide a deeper insight into the current transportation system and
required infrastructure from the 3PL companies for serving Anchor.
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Transportation Infrastructure Metrics of Anchor Health and Beauty

Care
Figure 3-75 shows the figures of transportation infrastructure metrics of Anchor, as of 2005.
Figure 3-75
Anchor (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
--
--
10
Light Trucks
25
--
--
25
100
--
--
100
Major 3PL Service Providers Used by Anchor Health and Beauty Care
Anchor does not use any of the major 3PL service providers. It uses regional service providers
such as Chinnabhai Kalidas, Ravi Road Lines, Cargo Carriers, and Himmatlal.

Anchor Health and Beauty Care is a highly conservative family owned FMCG company,
owned by one of the most successful domestic diverse industrial groups in India. However,
the company's 3PL usage is far below the industry standard, and its existing logistics practices have been incurring significantly higher costs for the company. But, considering the
reasonably good scale of operations of the group and its potential to expand into more
product segments of FMCG sector, it could become a major 3PL user if a viable solution is
offered by a capable 3PL service provider.
The 3PL companies interested in targeting this growing company with high potential logistics
needs should first strive to educate it on the value additions they provide and the true benefits of outsourcing logistics services to a 3PL. The most suitable way to build trust and induce
Anchor into usage of 3PL services is through a long term partnership model package offering
highly efficient cost achievements, reinforced by strict performance standards. The affirmative promises could include even penalties for not meeting the promised standards. Regarding
MIS needs fulfillment also, if any 3PL provider could offer a wider range services package
with a substantial reduction in overall costs, the company is likely to accept the offer.
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United
Status,
Breweries
(Holding)
Practices,
Needs
Limited3PL
and
Metrics
Overview of Logistics Status of United Breweries

UB Group is the most successful domestic company in the Indian FMCG sector's spirits and
beverages product segment, with its Kingfisher range of products. The company has also
successfully ventured into bottled water segment. The company's logistics setup is quite
formidable as far as the rural areas are concerned. The company has a strong distribution
network extensively covering all parts of the rural India and reasonably covering the urban
areas.
Due to its own strong distribution network, the company uses very low level of 3PL services
for its supply chain needs. However, it occasionally uses 3PL services in freight forwarding of
its exports. Also, the company manages majority of its warehousing operations through its
C&F agents. Its information management functions are also done in house. To fulfill its
overall transportation needs, the company uses more than 50 service providers across the
country.

to 3PL, and outsourced to others by UB Group, in 2005.
Figure 3-76
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by UB Group Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
100
Freight Forwarding
20
80
100
Logistics Function
Warehousing
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UB Group is another family owned conservative company avoiding 3PL services in the Indian
FMCG sector. The reason for this was its own strong distribution network and also the
perceived higher costs and information leakage risk. Due to this, the company's level of 3PL
logistic functions.

Companies
Figure 3-77 shows the top reason(s) mentioned by UB Group for outsourcing various logistics functions to 3PL Companies, in 2005.
Figure 3-77
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by UB Group for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by UB Group
Warehousing
Transportation
Freight Forwarding


Figure 3-78 shows the needs and preference(s) mentioned by UB Group regarding various
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Figure 3-78
3PL Markets in the Indian FMCG Sector: Needs and Preferences of UB Group Regarding
Logistics Function
Needs
Warehousing

A warehousing setup that offers us significantly higher level of efficiency

Transportation

system with extensive network coverage reaching even interior rural parts
of the country

deep rural areas where we have good
presence
Freight Forwarding

exports


MIS should provide information security and access to only authorized persons for decision-making
UB Group's needs and preferences for the 3PL services can be summarized as a solution,
which currently provides a nationwide extensive rural area coverage network with high level
standards in information management. The 3PL should also own expertise in export related
freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of United

Breweries
of UB Group, as of 2005.
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Figure 3-79
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of UB Group (India), 2005
Parameter
Total
Own
3PL
Others
29
10
19
500
500
29
10
19
2500
2500
200000
200000
---
---
30000
30000

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
50
---
---
Regional/State
10
10
--
1.0

Retail Reach
2.5
1.5
The warehouse infrastructure metrics of UB group mentioned above reflect the strong nationwide distribution network owned by the company, and provide deep insight for the 3PL
companies aspiring to serve this company, regarding the needed capabilities and strengths.
The transportation metrics mentioned below also provide a deeper insight required capabilities from the 3PL companies for providing transportation services to UB Group.
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Transportation Infrastructure Metrics of United Breweries

Figure 3-80 shows the figures of transportation infrastructure metrics of UB Group, in 2005.
Figure 3-80
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of UB
Group (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
30
--
--
30
Light Trucks
50
--
--
50
400
--
--
400
Major 3PL Service Providers Used by United Breweries
UB Group does not use any of the major 3PL service providers. It uses regional service
providers such as Eastern Transport Co.

UB Group is a family owned beverages company, credited to be the most successful domestic
company in the Indian spirits and beverages market. The company's 3PL usage is far below
the industry standard, and yet the company has managed to control its total logistics cost at
just 4 percent of its total sales value. However, considering the massive scale of operations of
the company, it could become a major 3PL user if a viable solution is offered by convincing
the company.
The 3PL service aspiring to serve this large company with high potential logistics needs
should first provide their services on a trial basis and educatre this company on the benefits
of using 3PL. This would also eliminate its negative perceptions or beliefs about 3PL For
building a higher trust in their services, the 3PL service providers can offer strict performance
standards supported by even penalties for not meeting them.
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Priya
and
Foods3PL
Status,
Practices,
Needs
Metrics
Overview of Logistics Status of Priya Foods

Priya Foods is one of the most successful domestic companies in the Indian FMCG sector's
packaged and processed foods segment, with its Priya branded range of pickles and instant
foods. The company has also successfully ventured into edible oils and confectionery
segment. The company's logistics setup extensively covers all parts of the rural India and
reasonably covers the urban areas.
The company manages majority of its warehousing operations through its C&F agents and
its information management functions in house. For its overall transportation needs, the
company uses nearly 50 service providers across the country. However, it frequently uses 3PL
services in freight forwarding of its exports.

3PL, and outsourced to others by Priya Foods, as of 2005.
Figure 3-81
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Priya Foods Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
100
Freight Forwarding
20
80
100
Logistics Function
Warehousing
Priya Foods is another conservative company in the Indian FMCG sector, avoiding 3PL services due to perceived higher costs and information leakage risk. As a result of this, the
company's level of 3PL usage is significantly lower than the average industry standard for
3PL usage in all the logistic functions.
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Companies
Figure 3-82 shows the top reason(s) mentioned by Priya Foods for outsourcing various logistics functions to 3PL companies, in 2005.
Figure 3-82
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Priya Foods for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Priya Foods
Warehousing
Transportation
Freight Forwarding


Figure 3-83 shows the needs and preference(s) mentioned by Priya Foods regarding various
Figure 3-83
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Priya Foods Regarding
Logistics Function
Needs
Warehousing

Transportation

country

and infrastructure to reach the deep
rural areas where we have good presence
Freight Forwarding



MIS should provide information security 3PLs who can provide assured informaand access to only authorized persons
tion security and integration of all
for decision-making
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Observing the company's operations and 3PL usage, Priya Foods' needs and preferences for
the 3PL services can be summarized as a solution which currently provides an extensive rural
area coverage network across the entire nation, combined with high level standards in information management. The company also prefers its prospective 3PL to own good expertise in
export related freight forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Priya

Foods
of Priya Foods, as of 2005.
Figure 3-84
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Priya Foods (India), 2005
Parameter
Total
Own
3PL
Others
29
10
19
500
500
29
10
19
2500
2500
200000
200000
---
---
30000
30000

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
50
---
---
Regional/State
10
10
---
1.0

Retail Reach
2.5
1.5
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The warehouse infrastructure metrics of Priya Foods signify the that the company owns a
strong distribution network across the nation. The 3PL companies enthusiastic to provide
services to Priya Foods can get clear insight from these metrics, regarding the infrastructure
and strengths needed to serve it. The transportation metrics related to the company also
provide a deeper insight into the current transportation system and required capabilities from
the 3PL companies for providing transportation services to Priya Foods.
Transportation Infrastructure Metrics of Priya Foods

Figure 3-85 shows the figures of transportation infrastructure metrics of Priya Foods, in
2005.
Figure 3-85
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Priya
Foods (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
30
--
--
30
Light Trucks
50
--
--
50
400
--
--
400
Major 3PL Service Providers Used by Priya Foods

Major 3PL service providers used by Priya Foods include:
International 3PLs such as Maersk, APL, and NYK for exports related logistics
Only unorganized service providers for domestic logistics
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Priya Foods is another impressive success story of a domestic company in the Indian FMCG
sector. However, the company's logistics costs are three times the industry average. This is
attributed to the huge warehousing costs associated with its raw materials that are available
only in specific seasons, and then the specialized storage of its finished products for the entire
year. Since no 3PL service provider could provide it a customized and affordable solution to
meet its needs, the company uses a very low level of these services except for the unavoidable
export related activies. Considering the massive scale of warehousing needs of the company,
it could become a major 3PL user if a viable solution is offered by a capable 3PL company.
Priya Foods also needs good transportation services to effectively manage its in-bound and
out-bound transportation. In addition, an effective MIS setup would also help the company
in improving its production and distribution planning, thereby helping in reducing its logistics cost.
The 3PL companies interested in targeting this fast growing company with high potential
logistics needs in all functions should consider their capabilities in all the above mentioned
requirements of the company. To induce Priya Foods into a large scale usage of 3PL services,
the aspiring 3PL companies can offer a long-term partnership model deal, under which the
speciailized infrastructure needed by the company can be even custom-built and offered on
an economical price. The long-term deal would prove beneficial for both the service provider
as well as Priya Foods.
C o l g at e - Pa l m o l i v e
Status,
Practices,
(India)
Needs
Limited3PL
and
Metrics
Overview of Logistics Status of Colgate-Palmolive

Colgate-Palmolive has a long and successful presence in India through its dental care products, body soaps, shampoos, and men's shaving products. The company's logistics setup is
significantly strong across the country, with a well established distribution network
uniformly covering all parts of India.
The company uses 3PL services for its warehousing and primary transportation needs. It also
occasionally uses 3PL services in freight forwarding of its imports and exports. It uses 3PL
services in half of its information management functions. For its overall transportation
needs, the company uses more than 30 service providers across the country.
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3PL, and outsourced to others by Colgate-Palmolive, in 2005.
Figure 3-86
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Colgate-Palmolive Versus the Shares Outsourced to 3PL and Others (India),
2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
30
40
Transportation
20
80
Freight Forwarding
25
75
50
50
Logistics Function
Warehousing
The company had been one of the early adopters of 3PL services in the Indian FMCG sector
due to the the guidance gained from its parent company, Colgate Palmolive (U.S.). As a result
of this, the company's level of 3PL usage is significantly higher than the average industry
standard for 3PL usage in all the logistic functions. This is clearly evident from the figures
presented above and reasons mentioned by the company for outsourcing various logistics
functions to 3PL.

Companies
Figure 3-87 shows the top reason(s) mentioned by Colgate-Palmolive for outsourcing various
logistics functions to 3PL companies, in 2005.
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Figure 3-87
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Colgate-Palmolive
(C-P) for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Colgate-Palmolive
Warehousing
Transportation
Freight Forwarding
Our increasing export to Asian countries is supported by 3PLs for bulk consignments


Figure 3-88 shows the needs and preference(s) mentioned by Colgate-Palmolive regarding
various logistics functions outsourced to 3PL companies, in 2005.
Figure 3-88
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Colgate-Palmolive
Logistics Function
Needs
Warehousing


for flexible scaling of warehousing capacity, with a reach upto rural India
Transportation

Extensive inland road transportation network to offer lowest cost service
Freight Forwarding

A provider to meet our increasing needs of

exports as our sales in Asia are growing
year on year
MIS/Other Value
Added Logistics
Operations
MIS should provide us full visibility of our

supply chain, and also several value-added
services
3PLs that can provide an end-to-end integration of our supply chain as well as
value-added services
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which currently provides an extensive urban area coverage across the nation and with scope
for steady expansion into rural areas, combined with high level expertise in export related
freight forwarding. An advanced level of MIS setup is also needed by the company to match
its growing operations.
Warehouse Infrastructure and Geographic Coverage Metrics of

Colgate-Palmolive
of Colgate-Palmolive, as of 2005.
Figure 3-89
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Colgate-Palmolive (India), 2005
Parameter
Total
Own
3PL
Others
25
20
300
300
30
15
10
1000
1000
175000
150000
200000
---
12000
12000
15000
10000
40
40
40
---
0.1
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
1.0
0.6
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The warehouse infrastructure metrics of Colgate-Palmolive signify the extensive nationwide

distribution network owned by the company, and highlight the required 3PL capabilities and
strengths to serve the company. The transportation metrics mentioned below also provide a
deeper insight for the enthusiastic 3PL companies regarding the current transportation usage
of Colgate-Palmolive and the required capabilities from the 3PL companies for offering these
services to the company.
Transportation Infrastructure Metrics of Colgate-Palmolive

Figure 3-90 shows the figures of transportation infrastructure metrics of Colgate-Palmolive,
in 2005.
Figure 3-90
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Colgate-Palmolive (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
---
Light Trucks
15
---
---
15
100
---
100
Major 3PL Service Providers Used by Colgate-Palmolive

Major 3PL service providers used by Colgate include:
SembCorp
AFL
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Colgate-Palmolive is a leading participant in the Indian dental care products industry and it
is credited to be the oldest dental care products manufacturer in the Indian FMCG sector
offered under the brand name Colgate'. The company has successfully ventured into body
soaps and men's shaving products segment also. Its distribution needs have also steadily
grown over the years and offer a perennial business for the providers. For this reason, despite
having a well established distribution network of its own, the company outsources significant
parts of its logistics functions. Currently, the company is using a large number of regional
service providers due to lack of integrated service providers with nationwide network. This
fragmented logistics management is resulting in significantly high logistics cost for the
company, to the tune of 40 percent above the industry standard. Colgate-Palmolive is
expecting a growth in its exports, and needs major support in the related logistics. The
company also has major warehouse network reconstitution plans after uniform VAT is
implemented.
multiple range of personal care products. Considering that the company has ambitious plans
to penetrate rural markets to counter the similar moves of its competitors such as HLL and
Dabur, the 3PL companies interested in approaching this company should have or need to
expand their rural network reach significantly across the entire country. The company is also
welcome to adopt an advanced MIS setup which would provide it a better effciency in
production and inventory management, and also help it in effective distribution planning.
Colgate-Palmolive is also one of the most prospective adopters of advanced and upcoming
3PL services, since it had already realized the benefits of using these services, and also due to
the encoouragement and guidance available from its parent company.
L'Oral
India
Practices,
Private
Needs
and
Limited3PL
Status,
Metrics
Overview of Logistics Status of L'Oral

LOreal's logistics setup is well established as far as the urban areas of India is concerned.
The company's distribution network in thesse areas is also better than a few other multinational FMCG companies operating in India.
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The company uses a dual supply chain model one for its premium LOreal Paris range of
products, which are directly imported and distributed, and for its regular Garnier range of
products, which are manufactured within the country and distributed. About 60 percent of
its regional depots are managed by its C&F agents. For transportation, the company uses
four major regional transport companies and several other local trucking companies.

Figure 3-91 shows the percentage breakup of logistics functions managed inhouse,
outsourced to 3PL, and outsourced to others by L'Oreal, in 2005.
Figure 3-91
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by L'Oreal Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
40
40
20
Transportation
20
80
Freight Forwarding
75
25
40
40
20
Logistics Function
Warehousing
The company had been one of the early adopters of 3PL services in the Indian FMCG sector,
as a result of the guidance gained from its parent company, LOreal of Switzerland. As a
result of this, its level of 3PL usage is significantly higher than the average industry standard
for 3PL usage in all the logistic functions.
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Companies
Figure 3-92 shows the top reason(s) mentioned by LOreal for outsourcing various logistics
Figure 3-92
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by L'Oreal for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by L'Oreal
Warehousing
Transportation
Freight Forwarding

We use 3PLs to manage MIS for our consolidation centers and also major warehouses in their control. It provides us relief from day to day record management
hassles. We are planning to use advanced value-added services from capable providers

Figure 3-93 shows the needs and preference(s) mentioned by LOreal, regarding various
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Figure 3-93
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by L'Oreal for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing


our current needs and also our
penetration into rural areas
Transportation
An efficient and reliable transportation sys- State-of-the-art multi-mode intetem with extensive network coverage
grated efficient transportation
reaching all the urban parts of the country system in synergy with our distribution network
Freight Forwarding
Expertise in freight forwarding to the coun- A provider to meet our increasing

tries where we export. Also to support us
needs of exports to Asian counin our raw material imports
tries. And also to help us in
imports of our high end products

MIS and Other Value Added Logistics Services should provide us more than relief
from information management hassles, to
the level of demand planning and reduced
inventory
3PLs should partner with us in

long term contracts and sincerely
commit their capabilities to
improve our competitive advantage
which currently provides an extensive urban area covering national network with global level
access, complemented by state-of-the-art infrastructure, technologies, and in depth skills.
Warehouse Infrastructure and Geographic Coverage Metrics of L'Oral

of L'Oreal, as of 2005.
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Figure 3-94
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of L'Oreal (India), 2005
Parameter
Total
Own
3PL
Others
25
10
15
300
50
250
28
12
13
1500
1500
100000
---
150000
---
22000
20000
25000
---

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
---
50
---
Regional/State
10
10
10
---
0.1
0.3

Retail Reach
1.0
0.6
The warehouse infrastructure metrics of L'Oreal, provide clear insight for the enthusiastic
3PL companies regarding the capabilities and strengths needed to serve the company. The
transportation metrics related to the company also provide a deeper insight into the current
transportation system and required fleet capabilities from the 3PL companies for serving
L'Oreal.
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Transportation Infrastructure Metrics of L'Oral

Figure 3-95 shows the figures of transportation infrastructure metrics of LOreal, in 2005.
Figure 3-95
L'Oreal (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
25
--
20
Light Trucks
70
--
65
300
--
50
250
Major 3PL Service Providers Used by L'Oral

Major 3PL service providers used by LOreal include:
Several international logistics companies for its frequent import logistics
Several local logistics companies for domestic logistics

LOreal had been consistently patronizing the 3PL services in the Indian FMCG sector and
gaining specific benefits out of this. In future, the company needs a wider range of services
apart from an expanded network in several semi-urban areas of the country. However, it
believes that current 3PL providers in the FMCG sector significantly lack capabilities for a
full supply chain management. Also, the company has serious concerns about the lack of
FMCG sector.
The company plans to modify its warehousing network after full implementation of uniform
VAT regime, as a part of which a significant share of these operations could be outsourced.
Hence, 3PL service providers that wish to target this company's expanding needs should
enhance their capabilities in all logistic functions and network. They also should be ready for
long term contracts involving greater commitment so as to gain larger share of this
company's logistics. LOreal is also one of the few FMCG companies which had already realized the benefits of using 3PL services and is favorable towards adopting the advanced
systems to improve its logistics status, hence capable 3PL companies can approach the
company with innovative and advanced services.
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Reckitt
Status,
&
Colman
Practices,
of
India
Needs
Limited3PL
and
Metrics
Overview of Logistics Status of Reckitt & Colman

Reckitt & Colman of India's (Reckitt) logistics setup is well established as far as the urban
areas of India are concerned. Because of its long presence in India though its generic medicine
Dettol' operations, the company's distribution network is also better than other multinational FMCG companies operating in India.
About 60 percent of Reckitt's regional depots are managed by C&F. For transportation, the
company uses four major regional transport companies and several other local trucking
companies.

outsourced to 3PL and outsourced to others by Reckitt, in 2005.
Figure 3-96
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Reckitt & Colman Versus the Shares Outsourced to 3PL and Others (India),
2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
40
40
20
Transportation
20
80
Freight Forwarding
75
25
40
40
20
Logistics Function
Warehousing
Reckitt also had been one of the pioneering adopters of 3PL services in the Indian FMCG
sector, due to the guidance gained from its parent company, Reckitt Benckiser of U.S. Hence,
its level of 3PL usage is significantly higher than the average industry standard for 3PL usage
in all the logistic functions. This is clearly evident from the figures shown above and reasons
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Companies
Figure 3-97 shows the top reason(s) mentioned by Reckitt for outsourcing various logistics
Figure 3-97
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Reckitt & Colman
(R&C) for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by R&C
Warehousing
Transportation
Freight Forwarding

We use 3PLs to manage MIS for our consolidation centers and also major warehouses in their control. It provides us relief from day to day record management
hassles. We are planning to use advanced value added services from capable providers

Figure 3-98 shows the needs and preference(s) mentioned by Reckitt, regarding various logistics functions outsourced to 3PL companies, in 2005.
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Figure 3-98
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Reckitt & Colman
Logistics Function
Needs
Warehousing


our current needs and also our
penetration into rural areas
Transportation
An efficient and reliable transportation sys- State-of-the-art multi-mode intetem with extensive network coverage reach- grated efficient transportation sysing all the urban parts of the country
tem in synergy with our
distribution network
Freight Forwarding
Expertise in freight forwarding to the coun- A provider to meet our increasing

tries where we export. Also to support us in needs of exports to Asian counour raw material imports
tries. And also to help us in
imports of our high end products

MIS and Other Value Added Logistics Services should provide us more than relief from
information management hassles, to the
level of demand planning and reduced
inventory
3PLs should partner with us in

long term contracts and sincerely
commit their capabilities to
improve our competitive advantage
Reckitt currently needs and prefers 3PL services that can provide an extensive urban area
covering nationwide network with global level access. The company prefers that this should
be complemented by state-of-the-art infrastructure, technologies and in depth skills. Also the
company pefers that the network and infrastructure should be scalable in short term to
accommodate its rural expansion efforts as well as growing exports.

Reckitt & Colman
of Reckitt, as of 2005.
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Figure 3-99
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Reckitt & Colman (India), 2005
Parameter
Total
Own
3PL
Others
25
10
15
300
50
250
28
12
13
1500
1500
100000
---
150000
---
22000
20000
25000
---

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
50
---
50
---
Regional/State
10
10
10
---
0.1
0.3

Retail Reach
1.0
0.6
The warehouse infrastructure metrics of Reckitt signify the well-established distribution

network owned by the company across the nation, and provide clear insight for the enthusiastic 3PL companies regarding the warehousing capabilities and strengths needed to serve
Reckitt. The transportation metrics mentioned below also provide a required insight into the
current transportation system and the needed capabilities from the 3PL companies for
serving Reckitt.
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Transportation Infrastructure Metrics of Reckitt & Colman

Figure 3-100 shows the figures of transportation infrastructure metrics of Reckitt, as of
2005.
Figure 3-100
Reckitt & Colman (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
25
---
20
Light Trucks
70
---
65
300
---
50
250
Major 3PL Service Providers used by Reckitt & Colman

Major 3PL service providers used by Reckitt include:
Several international logistics companies for its frequent import logistics

Reckitt has been one among the multinational FMCG companies with strong presence in
India, consistently patronizing the 3PL services in the sector and gaining specific benefits out
of this. However, despite using 3PL services in several functions, the company's logistics cost
is significantly higher (about 60 percent) than the industry average. This is attributed to the
failure of 3PL companies in providing Reckitt with the best possible solution. In future, the
company needs a wider range of services apart from an expanded network into several semiurban areas of the country. However, the company believes that current 3PL services being
offered for FMCG sector significantly lack capabilities for a full supply chain management.
Also, the company has serious concerns about the lack of skilled personnel in the Indian 3PL
companies to manage the diverse needs of the Indian FMCG sector.
Reckitt plans to modify its warehousing network after full implementation of uniform VAT
regime, as a part of which a significant share of these operations could be outsourced. Hence
3PL service providers who wish to target Reckitt's expanding needs should enhance their
capabilities in all logistic functions and network. They also should be ready for long term
contracts involving greater commitment so as to gain larger share of this company's logistics.
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Da b u r
India
Needs
and
Limited3PL
Status,
Practices,
Metrics
Overview of Logistics Status of Dabur

Dabur is a successful domestic company in the Indian FMCG sector's herbal products
segment. The company has also successfully ventured into processed foods. The company's
logistics setup is optimum to its limited market presence and focus in the product segments.
It has a strong distribution network extensively covering all parts of India.
uses 3PL services in freight forwarding of its exports. The company manages majority of its
warehousing operations through its C&F agents, and its information management functions
in house. For its overall transportation needs, the company uses more than 20 service
providers across the country.

Figure 3-101 shows the percent breakup of logistics functions managed inhouse, outsourced
to 3PL, and outsourced to others by Dabur, in 2005.
Figure 3-101
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Dabur Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
70
30
Transportation
100
Freight Forwarding
10
80
100
Logistics Function
Warehousing
Dabur had been another conservative company avoiding 3PL services in the Indian FMCG
sector, as a result of perceived higher costs and information leakage risk. Its level of 3PL
logistic functions. The same is evident from the figures shown above and reasons shown
below as mentioned by the company for outsourcing various logistics functions to 3PL.
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Companies
Figure 3-102 shows the top reason(s) mentioned by Dabur for outsourcing various logistics
Figure 3-102
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Dabur for Outsourcing
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Dabur
Warehousing
Transportation
Freight Forwarding

chain and also there is risk of information leakage. Also we have a group company
to manage this.

Figure 3-103 shows the needs and preference(s) mentioned by Dabur, regarding various logistics functions outsourced to 3PL companies, in 2005.
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Figure 3-103
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Dabur Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing

A warehousing setup that offers us sigwith extensive nationwide coverage sup- nificantly higher level of efficiency
Transportation

system with extensive network coverage uniformly reaching all parts of the
country
Freight Forwarding



information security and info for decision making

overall regions uniformly
Dabur's needs and preferences for the 3PL services can be summarized as a solution, which
currently provides a nationwide extensive uniform coverage network with high level standards in information management. The 3PL should be able to provide higher level of services
and efficiency in MIS activity. They should also own expertise in export related freight
forwarding.
Warehouse Infrastructure and Geographic Coverage Metrics of Dabur

of Dabur, as of 2005.
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Figure 3-104
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Dabur (India), 2005
Parameter
Total
Own
3PL
Others
20
18
300
300
28
22
1200
1200
100000
100000
---
---
10000
10000
---
---
25
25
---
---
---
0.3

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
0.8
0.5
Dabur's warehouse infrastructure metrics mentioned above reflect the strong nationwide
distribution network owned by the company. The enthusiastic 3PL companies can gain
insights from these metrics regarding the warehousing capabilities and strengths needed to
serve Dabur. The transportation metrics mentioned below also provide a clear insight into
Dabur's current transportation system and required fleet capabilities from the 3PL companies
for serving the company.
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Transportation Infrastructure Metrics of Dabur

Figure 3-105 shows the figures of transportation infrastructure metrics of Dabur, as of 2005.
Figure 3-105
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Dabur
(India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
10
---
---
10
Light Trucks
25
---
---
25
100
---
---
100
Major 3PL Service Providers Used by Dabur

Major 3PL service providers used by Dabur include:
SembCorp
Uses several local service providers such as Transcorp and Karnataka Roadlines

Dabur is another conservative family owned FMCG company, which is owned by a diverse
industrial group with an impressive success story of being one of the most successful
domestic industrial groups in India. The company's 3PL usage is far below the industry
standard. But interestingly its existing logistics practices have been incurring significantly
lower costs for the company, about 20 percent lesser than the average industry standard. This
could be attributed to its well established and efficient distribution setup, and effective
management of production schedules. However, considering a reasonably good scale of operations of the company, it could become a major 3PL user only if a viable solution is offered at
a cost lesser than that incurred by the company at present. Majority of 3PL service companies operating in India currently might not be able to offer such a viable solution, considering
their lack of complete understanding of the industry as well as the lack of nationwide
infrastructure.
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The 3PL companies interested in targeting this large company with high potential logistics
needs should first understand the strenghts of its existing logistics setup, and try to offer a
better solution. The most suitable way to induce Dabur into usage of 3PL services as well as
offer a cost efficient solution is through a long term partnership model package, with strict
performance standards supported by even penalties for not meeting the promised standards.
Regarding MIS needs fulfillment also, if any 3PL provider could offer a wider range services
package with a substantial reduction in overall costs, the company is likely to accept the
offer.
Marico Limited3PL Status, Practices, Needs

and
Metrics
Overview of Logistics Status of Marico

Marico Limited (Marico) is the most successful domestic company in the Indian FMCG
sector's haircare product segment, with its Parachute' range of products. Apart from this,
Marico also has ventured into baby oil segment. The company's logistics setup is very strong
and spread uniformly across urban and rural areas of the country. The company has an
extensive distribution network covering all parts of the India.
The company uses reasonable level of 3PL services for its transportation and warehousing
needs. It also uses 3PL services in freight forwarding of its exports. The company manages
part of its warehousing operations through its C&F agents, and part of its information
management functions in house. Rest of the warehousing and information management is
outsourced to 3PL. For its overall transportation needs, the company uses more than
20 service providers across the country.

outsourced to 3PL, and outsourced to others by Marico, in 2005.
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Figure 3-106
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Marico Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
25
75
Freight Forwarding
70
30
40
60
Logistics Function
Warehousing
Marico had been one of the early adopters of 3PL services among the domestic companies in
Indian FMCG sector. Its level of 3PL usage is higher than the average industry standard for
3PL usage in all the logistic functions. The same is evident from the figures shown above and
reasons mentioned by the company for outsourcing various logistics functions to 3PL.

Companies
Figure 3-107 shows the top reason(s) mentioned by Marico for outsourcing various logistics
Figure 3-107
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Marico for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Marico
Warehousing
It offers relief from risky investments in warehousing infrastructure and also asset
flexibility
Transportation
warehouses
Freight Forwarding

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Figure 3-108 shows the needs and preference(s) mentioned by Marico, regarding various
Figure 3-108
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Marico Regarding Logistics Functions Outsourced to 3PL Companies (India), 2005
Logistics Function
Needs
Warehousing


significantly higher level of efficiency
Transportation

country
Strong domestic transportation network and infrastructure with uniform reach in the urban and rural
areas
Freight Forwarding

A provider to efficiently handle our

regular imports and increasing needs
of exports


informed decisions
3PLs who can provide value added

services apart from basic MIS
Marico's needs and preferences for the 3PL services can be summarized as a solution, which
currently provides an extensive uniform coverage network across the nation, with high level
standards in information management. The company also prefers its 3PL to own expertise in
export import related freight forwarding. Marico believes that a well established transportation network owned by the 3PL would be an added advantage.
Warehouse Infrastructure and Geographic Coverage Metrics of Marico

of Marico, as of 2005.
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Figure 3-109
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Marico (India), 2005
Parameter
Total
Own
3PL
Others
28
10
18
400
400
40
12
28
1500
1500
160000
150000
180000
---
20000
20000
20000
---
45
50
40
---
---
---
0.4

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
1.5
1.1
Marico's warehouse infrastructure metrics signify the formidable distribution network

owned by the company, and provide deeper insights for the enthusiastic 3PL companies
regarding the capabilities and strengths needed to offer warehousing services to Marico. The
transportation metrics mentioned below also provide a clear insight into the current transportation system of Marico and required capabilities from the 3PL companies to serve the
company.
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Transportation Infrastructure Metrics of Marico

Figure 3-110 shows the figures of transportation infrastructure metrics of Marico, as of
2005.
Figure 3-110
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Marico (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
20
---
---
20
Light Trucks
40
---
---
40
250
---
---
250
Major 3PL Service Providers Used by Marico

Major 3PL service providers used by Marico include:
DHLExel
SembCorp
Services of several local logistics companies

Marico is considered as a balanced mix of domestic and multinational operations, which
achieved significant success in a wide range of segments in the Indian FMCG sector. The
company has a nationwide uniform presence signifying a similar kind of required presence
for its logistics service providers. It has been proactive in adopting the 3PL services in all its
logistics functions, and has plans for further usage of these services if the providers can offer
more affordable price. Apart from this, the company has also initiated plans for reconstitution of its warehousing operations as and when fully uniform VAT is implemented across the
country. It has also been an early adopter of ERP solutions to provide more visibility
throughout the organization. These advanced information technology solutions have helped
it to formulate market strategies by providing better understanding of market conditions.
However, despite a well established logistics setup and the reasonable usage of 3PL services
from the leading 3PL companies, Marico's logistics costs are almost twice the industry
standard. This signifies the failure of its existing 3PL service providers in offering the best
possible and most suitable services. Simultaneously, it offers a very attractive opportunity for
other 3PL companies to gain this company as a client by offering a better solution.
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3PL service providers targeting Marico should offer it a long term and cost-efficient service
package so as to encourage the company in its proactive outsourcing to 3PLs. Being ready
with the needed exhaustive warehousing capabilities by the time of full implementation of
VAT would also benefit the interested 3PLs in successfully gaining the company's logistics
business. Apart from the basic MIS services, 3PL companies targeting Marico should be able
to offer a wide range of value-added services.
Himalaya
Status,
Health
and
Practices,
Pharmaceuticals3PL
Needs
and
Metrics
Overview of Logistics Status of Himalaya

Himalaya Health and Pharmaceuticals (Himalaya) is the most successful domestic company
in the Indian FMCG sector's ayurvedic, personal soaps, and cosmetics product segment,
including its herbal range of products. Apart from this, Himalaya also has growing presence
in the international markets. The company's logistics setup is quite formidable in urban areas
of the country. It is considered to be the pioneer in the Indian FMCG companies that have
own retailing outlets. The company owns an extensive retail outlet network in urban areas
and a considerable distribution network covering all parts of the India.
It uses reasonable level of 3PL services for its transportation and warehousing needs. It also
uses 3PL services in freight forwarding of its exports. The company manages part of its warehousing operations through its C&F agents, and part of its information management
functions in house. Rest of the warehousing and information management is outsourced to
across the country.

to 3PL, and outsourced to others by Himalaya, in 2005.
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Figure 3-111
3PL Markets in the Indian FMCG Sector: Comparison of Share of Logistics Functions Managed In-house by Himalaya Versus the Shares Outsourced to 3PL and Others (India), 2005
Managed
In-house (%)
Outsourced
to 3PL (%)
Outsourced
to Others (%)
30
70
Transportation
25
75
Freight Forwarding
70
30
40
60
Logistics Function
Warehousing
It had been one of the early adopters of 3PL services from the domestic companies in Indian
FMCG sector, as a result of its exposure to the international markets. Its level of 3PL usage is
considerably higher than the average industry standard for 3PL usage in all the logistic functions. The same is evident from the figures shown above and reasons shown below as

Companies
Figure 3-112 shows the top reason(s) mentioned by Himalaya for outsourcing various logistics functions to 3PL companies, in 2005.
Figure 3-112
3PL Markets in the Indian FMCG Sector: Top Reasons Mentioned by Himalaya for Outsourcing Various Logistics Functions to 3PL Companies (India), 2005
Logistics Function
Top Reason for Outsourcing to 3PL Usage as Mentioned by Himalaya
Warehousing
It Offers relief from risky investments in warehousing infrastructure and also asset
flexibility
Transportation
warehouses.
Freight Forwarding
Our important import and export consignments are handled by 3PL.

own infrastructure and manpower.
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Figure 3-113 shows the needs and preference(s) mentioned by Himalaya, regarding various
Figure 3-113
3PL Markets in the Indian FMCG Sector: Needs and Preferences of Himalaya Regarding
Logistics Function
Needs
Warehousing

with extensive nationwide coverage sup- significantly higher level of efficiency
Transportation

country
Strong domestic transportation network and infrastructure with uniform reach in the urban and rural
areas
Freight Forwarding

forwarding needs related to imports and
our growing exports
A provider to efficiently handle our

regular imports and increasing needs
of exports


informed decisions
3PLs who can provide value added

services apart from basic MIS
Himalaya's needs and preferences for the 3PL services can be summarized as a solution,
which currently provides a uniform and extensive nationwide coverage, with extensive access
to global markets. Himalaya prefers its 3PL to own strong expertise in export related freight
forwarding, to support its growing exports. It also expects its 3PL service provider to have a
well established transportation network apart from a reasonable information management
setup.

Himalaya
of Himalaya, as of 2005.
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Figure 3-114
3PL Markets in the Indian FMCG Sector: Metrics for Warehouse Infrastructure and Geographic Coverage of Himalaya (India), 2005
Parameter
Total
Own
3PL
Others
28
10
18
400
400
40
12
28
1500
1500
160000
150000
180000
---
20000
20000
20000
---
45
50
40
---
---
---
0.4

Master
Regional/State
District/City
Master
Regional/State
District/City
Master
Regional/State

Master
Regional/State

Retail Reach
1.5
1.1
The warehouse infrastructure metrics mentioned for Himalaya provide clear insight for the
enthusiastic 3PL companies regarding the capabilities and strengths needed to offer warehousing services to Himalaya. The transportation metrics mentioned below also provide a
deeper insight into the current transportation system and required capabilities from the 3PL
companies for serving Himalaya.
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Transportation Infrastructure Metrics of Himalaya

Figure 3-115 shows the figures of transportation infrastructure metrics of Himalaya, as of
2005.
Figure 3-115
3PL Markets in the Indian FMCG Sector: Metrics for Transportation Infrastructure of Himalaya (India), 2005
Parameter
Total
Own
3PL
Others

Large Trucks
20
---
---
20
Light Trucks
40
---
---
40
250
---
---
250
Major 3PL Service Providers Used by Himalaya

Major 3PL service providers used by Himalaya include:
Several international logistics companies for its frequent export logistics

Himalaya is considered as a major success story of an Indian FMCG company at an international level. The company has a nationwide uniform presence and a growing level of global
presence signifying the requirement of a similar presence for its logistics service providers. It
has been proactive in adopting the 3PL services in all its logistics functions, and has plans for
further usage of these services if the providers can offer more affordable price. Apart from
this, the company has also initiated plans for reconstitution of its warehousing operations as
and when fully uniform VAT is implemented across the country. The company has also been
an early adopter of ERP solutions to provide more visibility throughout its supply chain. This
technology adoption has also helped the company to formulate improved market strategies
by providing better understanding of market conditions.
3PL service providers targeting Himalaya should offer it a long term affordable package so as
to encourage the company in its proactive outsourcing to 3PLs. Being ready with the needed
exhaustive warehousing capabilities by the time of full implementation of VAT would also
benefit the interested 3PLs in successfully gaining this company's logistics business. Apart
from the basic MIS services, 3PL companies targeting Himalaya should be able to offer a
wide range of value-added services.
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4
Competitive Analysis of the 3PL Providers in
the Indian FMCG Sector
3PL
Industry
Size
Industry Size in terms of Value and Number of Participants

Though 3PL's introduction in India can be traced back to late 1990s, it had grown into a
considerable sized industry only by the turn of the century. This industry had been experiencing a steady growth since the start of 21st century. The Indian 3PL industry revenues were
estimated to be worth US$890.3 million in 2005, and are expected to grow at a CAGR of
21.9 percent during the period 2005 to 2012.
As of 2005, the total number of 3PL companies operating in India were more than 400. Of
these total participants, half are estimated to be actively serving the Indian FMCG sector and
rest of the participants are estimated to be occasional service providers.
3PL
Industry
Structure
Industry Structure and Tiers of Competition

3PL industry in the Indian FMCG sector is highly fragmented, with local small participants
controlling the larger share of the market. There are numerous logistics service providers
with varying capabilities across the country. Particularly, the transportation service segment
is firmly in the hands of small trucking companies and individual truck owners, who control
more than 75 percent of the total transportation market.
The total 3PL industry in India can be broadly segmented into 3 distinct tiersNational
major 3PLs, Regional 3PLs, and Small remote 3PLs. Out of the total number of companies,
only about 30 have nationwide presence and are considered National majors. Of the rest,
about 80 companies are estimated to have good regional presence and are considered
Regional 3PLs. The remaining companies have small presence in remote areas and are considered Small remote 3PLs.
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3PL
Industry
Life
Cy c l e
Indian 3PL Industry's Life Cycle during the Period 2000-2015

Indian 3PL industry is relatively very young compared to the global 3PL industry, and is still
in the evolving stage. However, due to the presence of several major international 3PL
companies, the industry is evolving at a significantly faster pace than those in other developing markets. As all the participants in the industry provide services to the FMCG sector,
the total 3PL industry's evolution is expected to be impacting the FMCG sector.
Chart 4.1 shows the estimated growth of number of 3PL service provider companies in India
during 2000 to 2015.
Chart 4.1
3PL Markets in the Indian FMCG Sector: Industry Life CycleGrowth of Number of 3PL
Service Provider Companies (India), 2000-2015
Rapid
Growth
M aturity
Decline
Growth
Steady
Growth
2000
2001 2002 2003 2004 2005
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
Since the turn of 21st century, Indian 3PL industry had swiftly evolved from normal growth
phase to rapid growth within two years. Such a swift transition was a result of transformation of numerous existing transportation and warehousing companies into 3PL service
providers. This phase is expected to continue until 2007, with more number of similar
companies jumping into the 3PL band wagon. After 2007, the industry is expected to shift
back to normal growth phase, while consolidation of the industry is expected to set in. As a
result of this, the industry is expected to attain maturity growth phase by 2010, and then
enter the growth declining phase by 2012, as the pace of consolidation increases.
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3PL
Market
in
the
Indian
FMCG
Sector
Life
Cy c l e
Life Cycle of 3PL Market in the Indian FMCG Sector during the Period
2000-2015
In tune with the evolution of the industry, Indian 3PL market is also considered to be relatively young, but one of the most promising and potential markets across the world. The 3PL
market in the Indian FMCG sector is also considered to be one of the highly potential market
segments in this total market, considering the high scale and perennial logistics needs of the
sector.
Chart 4.2 shows the estimated life cycle of 3PL market in the Indian FMCG sector, in terms
of growth of number of 3PL users and level of usage in the Indian FMCG sector during
2000 to 2015.
Chart 4.2
3PL Markets in the Indian FMCG Sector: Market Life CycleGrowth in Number of 3PL
Service End-user Companies (India), 2000-2015
Steady
Growth
Rapid
Growth
Steady
Growth
Growth
Slow
Growth
2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
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In India, with FMCG sector being one of the early adopters of the 3PL services, the 3PL
market in this sector had been growing at a steady pace since the starting in mid-1990s.
However, the market is expected to enter a rapid growth phase from 2007, when the warehousing practices of the sector are expected to begin undergoing a complete transformation
as a result of VAT's full implementation. The market is expected to return to a steady growth
phase after 2010, by when all the warehousing practices would be stabilized, and is expected
to be in the growth phase even by 2015. This steady growth in the long term is expected due
to the increasing rural logistics needs of the FMCG sector and the steady organic growth in
its operations in the urban areas.
Market
Share
Comparison
and
Breakup
Market Share Breakup by Category of 3PL Providers

The market share breakup for the entire 3PL industry in India is difficult to estimate considering the high level of market fragmentation, and also since the detailed revenue figures for
most of the regional and remote 3PL companies are not available. Even some national major
3PL companies do not divulge their revenues, making it even more difficult to estimate their
share in the market. However, among the national major 3PL companies, for which atleast
revenue figures and estimates are available, the 10 major 3PL providers in the overall Indian
FMCG sector areDHL-Exel Supply Chain, Sembcorp Logistics, Reliance Logistics, Gati,
TCI Supply Chain Solutions, Om Logistics, AFL Logistics, Safexpress, Patel Logistics, and
Dynamic Logistics.
Among the three types of 3PL companies serving in the Indian FMCG sector, the small
remote 3PLs control half of the market, followed by regional 3PLs. The national major 3PLs
account for the lowest share of the market. This dominance of small and regional 3PLs is
attributed to the diverse region specific logistics needs of FMCG companies, which are more
effectively fulfilled by the local 3PLs having greater familiarity and experience of operation
in those regions.
Chart 4.3 shows the market shares owned by different types of 3PL companies in the overall
3PL market in the Indian FMCG sector in 2005.
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Chart 4.3
3PL Markets in the Indian FMCG Sector: Market Share Breakup by 3PL Company Type
(India), 2005
20%
50%
30%
National M ajor 3PLs
Regional 3PLs
Small Remote 3PLs
Market Share Comparison of Top 10 3PL Providers in the Indian

FMCG Sector
Figure 4-1 and Chart 4.4 shows the market share breakup of the segment owned by National
Major 3PL companies in the 3PL market in the Indian FMCG sector in 2005.
Figure 4-1
3PL Markets in the Indian FMCG Sector: Market Share Breakup of 3PL Market Segment
Market Share
Company Name
(%)
DHLExel Supply Chain
11.0
SembCorp Logistics
10.5
Reliance Logistics
8.0
TCI Supply Chain Solutions
7.5
Gati Logistics
7.0
Om Logistics
6.6
AFL Logistics
6.0
Safexpress
5.5
Patel Logistics
5.2
Dynamic Logistics
5.0
Others
27.7
TOTAL
100.0
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Chart 4.4
3PL Markets in the Indian FMCG Sector: Market Share Breakup of 3PL Market Segment
11%
DHL - Exel
27.7%
SembCorp Logistics
10.5%
Reliance Logistics
TCI Supply Chain Solutions
Gati Logistics
8%
Om Logistics
AFL Logistics
5%
Safexpress
7.5%
5.2%
Patel Logistics
Dynamic Logistics
7%
5.5%
6%
Others
6.6%
Services
Comparison
of
Major
3PL
Service
Providers
Services Comparison by Logistic Function

As of 2005, a lion's share of 3PL companies in India use traditional technologies and provide
mostly stand-alone services such as transportation, warehousing, clearing, and freight
forwarding. Also, all the national major 3PL companies have focused or concentrated their
operations only in major cities of the country, making it difficult for FMCG companies to use
their services in rural areas. On the contrary, more than 60.0 percent of the FMCG sector's
market is in the rural areas and hence goods need to be transported and stored even in
remote rural areas. Because of this, the FMCG sector's logistics needs in rural areas are
fulfilled by regional 3PL companies and sometimes even those operating in remote areas of
the country. In majority of cases, due to the lack of a 3PL provider in the desired geographic
region, logistics functions are outsourced to small trucking companies or even individual
truckers.
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Hence, there is a greater need for a deeper penetration of 3PL companies targeting the Indian
FMCG sector into regional logistics markets by expanding the network and infrastructure,
and provide integrated supply chain solutions for the Indian FMCG sector. A couple of 3PL
companies have tried to solve this problem by adopting a 4th party logistics (4PL) service
model, but it had proved to be 2 to 3 times costlier for the FMCG clients, making them shy
away from such services.
Resultantly, all the major 3PL companies have initiated efforts to expand their own infrastructure and network across the country, but considering the lack of easy finances and
existing legal hassles, it could take atleast five years before their presence becomes visible in
the regional markets.
Figure 4-2 shows the comparison of services of the Top 10 National Major 3PL companies in
the 3PL markets in the Indian FMCG sector in 2005.
Figure 4-2
3PL Markets in the Indian FMCG Sector: Services Comparison of Top 10 National Major
3PL Companies (India), 2005
Range of Services Offered for FMCG Sector in each Function
Freight Forwarding
Transportation
DHLExel Supply Chain
Distribution Consolidation and

Mega warehouse
Management
Partial-Primary
Transportation
from Factory to
Regional Warehouse
Complete Export
Import Logistics
Management
MIS, Back Office

Operations, Procurement Logistic,
Reverse Logistics
HLL, P&G
SembCorp Logistics
Warehouse Management and Storage Solutions
Partial-Primary
Transportation
from Factory to
Regional Warehouse
Complete export
Import Logistics
Management
MIS, Customer
Support, Packaging Solutions
P&G, Colgate Palmolive, Henkel
Reliance Logistics
Warehousing and
Distribution Management
Multi-modal Primary Transportation Management
ExportImport
Logistics Support
Customized MIS
Services
HLL, ITC, Godrej,

Parle
TCI Supply Chain

Solutions
Warehousing Services
Primary and Secondary Transportation Services

upto Distribution
Centres
Standard Freight
Forwarding Services
MIS, e-Logistics,
Kitting, Reverse
Logistics
Nestle, Amul, Cadbury, Karnataka

Soaps and Detergents Ltd., Glaxo
SmithKline Beecham
Gati
Customized Warehousing Solutions

upto Distribution
Centres
Customs clearance
and Cargo Management Services
MIS solutions,
Returns Management, Supply
Chain Consulting
Emami, Wrigley's
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MIS/Others
Major FMCG Clients
Warehousing
Company Name
4-7
3PL Markets in the Indian FMCG Sector: Services Comparison of Top 10 National Major
3PL Companies (India), 2005
Range of Services Offered for FMCG Sector in each Function
Freight Forwarding
Major FMCG Clients
Warehousing
Transportation
Om Logistics
Standard Warehouse Management
Primary and Secondary Transportation

Management upto
Distribution Centres
Customs clearance
Standard MIS
Services
ITC Foods, Glaxo

SmithKline Beecham, PepsiCo,
Godrej, Cadilla
AFL Logistics
Warehousing and
Distribution Services
Multi-modal Primary Transportation Management
Standard Freight
Forwarding Services
MIS, Sales Promotion
HLL, JL Morrison, Venky's, Johnson & Johnson,

Colgate Palmolive
Safexpress
Centralized Warehouse Management
Primary and Secondary Transportation

Management upto
Distribution Centres
Customs clearance
Standard MIS
Services, Consulting
Sara Lee TTK, Gillette
Patel Logistics
Basic Warehousing
and Distribution
Services

upto Distribution
Centres
Basic Freight Forwarding Services

through Partners
Basic MIS
Parle, EmamiJohnson & Johnson,

ITC, Wipro
Dynamic Logistics
Warehousing and
Storage Solutions
Partial-Primary
Transportation
Management
Standard Freight
Forwarding Services
Technology Solutions
Nestle, Coca-Cola,
Lipton, HLL
Company Name
MIS/Others
An unbiased analysis of the services compared above leads to a conclusion that as of 2005,
regional 3PL companies and small remote 3PL companies have a higher level of capability to
fulfill the domestic logistics needs of the Indian FMCG sector, whereas the national major
3PL companies are well suited for international logistics needs. The possession of infrastructure to provide secondary transportation and extensive warehousing in rural areas is
resulting in this market domination of domestically grown regional and remote 3PL companies. However, these regional and remote 3PL companies need to expand their expertise in
advanced information management, global level freight forwarding, and several value-added
services to gain the expertise of providing a complete 3PL solution for the Indian FMCG
sector's evolving needs.
On the contrary, the national 3PL companies need to rapidly expand their network into more
interior parts of the country from their current focus on major cities, and also build or
acquire a large-sized fleet to gain the expertise of fulfilling the complete logistics needs of the
Indian FMCG sector.
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Profiles of the 10 Major

the Indian FMCG Sector
3PL
Providers
in
DHL-Exel Supply Chain

With a global leadership in the logistics industry, DHL-Exel Supply Chain has got the capability to provide a complete solution for warehousing, export-import logistics, and
information management needs of the Indian FMCG sector. The company has also got significant mileage through its partnerships with leading domestic logistics companies, such as
AFL and BlueDart. It had been successfully managing major warehouses of India's leading
FMCG companies such as HLL and P&G. It has also been providing primary transportation
management through its partners. As of 2005, the company holds a market share of approximately 11.0 percent in the 3PL market owned by the national major 3PLs in the Indian
FMCG sector.
Leveraging the expertise gained from all these associations, currently, the company is offering
a customized 3PL package suitable for the Indian FMCG sector, promising to achieve economies of scale with the use of efficient technologies. However, the company's presence is
largely limited to major cities and it needs to expand its network extensively to fulfill the
complete logistics needs of FMCG sector upto the rural areas.
Building more partnerships similar to AFL is an option for the company, however, for effective tapping of FMCG logistics market and long term retaining of the clientele, acquisition of
regional logistics providers or starting its own new operations is suggested for the company.
SembCorp Logistics
With a highly successful track record in the Asian continent, SembCorp Logistics is considered to be the most committed international logistics service provider toward India. Its huge
investments in state-of-the-art logistics parks and customized supply chain solutions resulted
in capturing several FMCG companies as clients. The company had been successfully
managing the warehousing operations of P&G, Colgate-Palmolive, and Henkel. It also has a
limited fleet through which primary transportation of its clients is managed. SembCorp had
been the leading logistics service provider for the Indian FMCG sector during 2003-2004. As
of 2005, the company holds a market share of approximately 10.5 percent in the 3PL market
owned by the national major 3PLs in the Indian FMCG sector.
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Combining its international expertise and Indian experience, the company is offering integrated supply chain solutions for the FMCG sector. However, Sembcorp's presence is also
largely concentrated in specific cities in India and it needs to expand its network extensively
to fulfill the complete logistics needs of its clients.
Building more logistics parks in strategic regional hub cities across the country could help the
company in future to effectively tap the huge warehousing services demand resulting due to
VAT implementation. A compatible expansion of its fleet or acquisition of a couple of well
established regional transportation companies could help the company in further consolidating its position.
Reliance Logistics
Owned by the country's largest industrial group, Reliance Logistics has unique dual advantages over other 3PL providers. Firstly, it is having a well established country-wide network
through operations of its other group companies offering ready presence in all the desired
geographic regions. Secondly, it has a huge financial support ready from the large parent
group in case of any large scale expansion or acquisition to gain a competitive edge in the
market. The company already has significant infrastructure for both warehousing and transportation services and had been successfully providing a full range of 3PL services to leading
FMCG companies such as HLL, ITC, Godrej, and Parle. As of 2005, the company holds a
market share of approximately 8.0 percent in the 3PL market owned by the national major
3PLs in the Indian FMCG sector.
The company currently has the capability to offer a customized solution for all basic logistic
needs as well as to fulfill the complete domestic logistics needs of the Indian FMCG sector.
A steady expansion of its existing infrastructure and quick gaining of expertise in international logistics could help the company to capture a large share of the future 3PL demand
from the Indian FMCG sector and possibly make it the leader in this market.
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TCI Supply Chain Solutions (TCISCS)

TCISCS is one of the pioneering logistics service providers in India with extensive network
and a high level of understanding of the Indian FMCG industry's logistics needs. The parent
company TCI had been one of the leading transportation and distribution services provider
in the country, whose capabilities and infrastructure got readily added to TCISCS from the
beginning. The company had been fulfilling the logistics needs of several FMCG companies
such as Nestle, Amul, Cadbury, Glaxo SmithKline Beecham, and Karnataka Soaps and Detergents Ltd. As of 2005, the company holds a market share of approximately 7.5 percent in the
3PL markets owned by the national major 3PLs in the Indian FMCG sector.
Currently, the company has capability to fulfill complete transportation, warehousing, and
information management needs of the FMCG sector in large parts of the country. The
company is also claiming the capability to offer several value-added services such as e-Logistics and Kitting. However, it needs to increase its international logistics service expertise
significantly.
The company is also offering a unique solution of temperature controlled transportation
service, which is useful for the packaged foods and beverages, the fast growing segment of
Indian FMCG sector.
Considering its current capabilities, TCI can be rated as one of the most suitable 3PL service
provider for the domestic logistics needs of Indian FMCG sector. A steady expansion of its
existing infrastructure and quick gaining of expertise in international logistics could help the
company to capture a large share of the future 3PL demand from the Indian FMCG sector,
and possibly make it the market leader.
Gati
Gati is also one of the highly successful domestic logistics service providers in India with an
impressive track record of growth in service capability as well as network and infrastructure.
The company has also made a mark for itself as an early and efficient provider of 3PL services in India. Currently, the company is offering services to FMCG companies such as Emami
and Wrigley's, and is aggressively targeting the sector for its future revenue growth. As of
2005, the company holds a market share of approximately 7.0 percent in the 3PL market
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Currently, the company has the capability to handle the entire supply chain management of
an Indian FMCG company, including the international logistics needs. Apart from all the
basic services, it also claims to offer several value-added services such as returns management, and providing professional consulting to develop a customized efficient supply chain
model for each of their clients.
Leveraging its infrastructure and network, Gati is offering an integrated logistics package
with instant ready distribution and warehousing network across the country.
With its overall level of considerable capabilities, Gati can be rated as one of the most suitable 3PL service providers for both the domestic and international logistics needs of Indian
FMCG sector. A steady expansion of its existing infrastructure and network in international
logistics could help the company to capture a large share of the future 3PL demand from the
Indian FMCG sector, and possibly make it the market leader.
Om Logistics
Om Logistics is a unit of another oldest logistics service providers in India, Om Group. The
group has a significant level of operations in diverse logistics fields such as transportation,
cargo handling, freight forwarding, MIS, and warehousing. With such ready expertise and
infrastructure, It gained the expertise to fulfill majority of the logistics needs of Indian
FMCG sector through 3PL services. Currently, the company offers services to several leading
FMCG companies such as ITC Foods, Glaxo SmithKline Beecham, PepsiCo, Godrej, and
Cadilla. As of 2005, it holds a market share of approximately 6.6 percent in the 3PL market
The company has the capability to fulfill all the transportation, warehousing, freight
forwarding, and MIS needs of the Indian FMCG sector, including the international logistics
needs. However, the company's network strength is not uniformly spread across the country
and it needs to develop its presence significantly in the southern part of the country.
With a highly successful client base, it can gain a significant share of the growing 3PL market
in the Indian FMCG sector if it can expand its network and infrastructure in all the
geographic regions not covered by it across the country at present, and also steadily scaling
up its warehousing capacities. Otherwise it could be at a disadvantage in losing out market
share to its competitors.
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AFL Logistics
AFL is one of the pioneering logistics service providers in India, with an excellent understanding of the market as well as a strong nationwide network and infrastructure. However,
despite the capability to provide complete supply chain solution for the Indian FMCG sector,
the company could not garner a lion's share in the 3PL market in the Indian FMCG sector
due to its relatively less focus on this market. Currently, the company provides services to
HLL, Johnson & Johnson, JL Morrison, and Venky's. As of 2005, the company holds a
market share of approximately 6.0 percent in the 3PL markets owned by the national major
3PLs in the Indian FMCG sector.
AFL has a high level of capability in multimodal transportation management, warehousing
and distribution services, freight forwarding, MIS, and value-added services such as sales
promotion, kitting, banking services, and customer support, making it one of the most suitable 3PL service providers for the Indian FMCG sector. The company is offering an
end-to-end supply chain management solution with integrated domestic and international
logistics services for the FMCG sector.
An increased focus on this sector and sufficient expansion of infrastructure could help AFL
to capture a large share of the future 3PL demand from the Indian FMCG sector and improve
its competitive position in this market.
Safexpress
Safexpress is also one of the popular domestic logistics service providers in India with good
service expertise and network as well as infrastructure setup. However, despite the capability
to provide complete supply chain solution for the Indian FMCG sector, it could not garner a
major share in the 3PL market in the Indian FMCG sector due to its relatively low focus on
this market. Currently, the company provides services to a couple of leading FMCG companies such as Sara Lee TTK and Gillette. As of 2005, the company holds a market share of
approximately 5.5 percent in the 3PL market owned by the national major 3PLs in the Indian
FMCG sector.
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The company has the capability to offer advanced warehousing services, extensive transportation services, complete MIS services, and even consulting services to develop a customized
efficient supply chain model for the FMCG sector. Currently, it offers a special package
called corporate warehousing model, that offers clients centralized warehousing operations
to maximize cost savings in the form of uniform tax in the states.
An increased focus on this sector and sufficient expansion of infrastructure could help Safexpress to expand its share in 3PL market in the Indian FMCG sector and improve its
competitive position in this market.
Patel Logistics
Patel Logistics is also a unit of another oldest logistics service majors in India, Patel Group.
Patel group also has large credentials in logistics market, such as transportation and warehousing. Backed by such credentials and a ready network and infrastructure, It is capable
enough to fulfill basic logistics needs of Indian FMCG sector through 3PL services.
Currently, the company provides services to leading FMCG companies such as ITC, Wipro,
Parle, Emami, and Johnson & Johnson. As of 2005, the company holds a market share of
approximately 5.2 percent in the 3PL markets owned by the national major 3PLs in the
Indian FMCG sector.
The company has the capability to fulfill the complete domestic logistics needs of the Indian
FMCG sector, such as transportation, warehousing, and basic MIS needs. However, it does
not have sufficient expertise in freight forwarding or any other advanced international logistics functions. Moreover, the company's network strength is not uniformly spread across the
country and it needs to develop its presence significantly in the southern part of the country.
An expanded network and infrastructure in the geographic regions across the country where
it does not have operations at present, steady scaling up of its warehousing capacities, and
quick gaining of international logistics expertise could improve the company's competitive
position, otherwise it could be at a disadvantage and also lose its current position in the
market.
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Dynamic Logistics
Dynamic Logistics is another popular domestic 3PL company with a steady growth in its
service capability and network as well as client base. It is also one among the early 3PL
service providers in India. The company provides services to several leading FMCG companies such as HLL, Nestle, Coca-Cola, and Lipton. As of 2005, the company holds a market
share of approximately 5.0 percent in the 3PL markets owned by the national major 3PLs in
the Indian FMCG sector.
Dynamic Logistics owns the capability to provide a wide range of logistics services such as
Supply Chain Management, Warehousing, Transportation Services, Technology Solutions,
Freight Forwarding, and Storage. It claims to have capability to provide high level of international logistics expertise through its associates. However, Dynamic Logistics lacks the level of
required capacities in warehousing and a wide presence across the country. It is also weaker
than its competitors in providing multi-modal transportation solutions.
Leveraging its experience and expertise, It is offering a customized end-to-end logistics solution optimized through simulation for the FMCG sector.
A steady growth in its network, warehousing, and transportation infrastructure across the
country could improve its competitive position in the market, otherwise it could be at a
disadvantage of losing out market share to its competitors in future.
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5
Recommendations and Growth Strategies for
3PL Providers in the Indian FMCG Sector
Opportunities
FMCG
for
the
3PL
in
the
Indian
Sector
Market Potential of Various Types of 3PL Services

Currently, the 3PL providers in India are offering services to fulfill all the basic logistics
needs such as warehousing, transportation, freight forwarding, and information management
of the FMCG sector. The overall market for these services is expected to grow at a CAGR of
17.6 percent from 2005 to 2012, which signifies a good potential market.
However, a few specific services are expected to have a higher market potential than the basic
services in the 3PL market in the Indian FMCG sector.
Figure 5-1 shows the top 10 services that have a higher market potential than the basic services in the 3PL market in the Indian FMCG sector in the next 5-7 years, ranked in the order
of their market potential.
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Figure 5-1
3PL Markets in the Indian FMCG Sector: Top 10 3PL Services Ranked in the Order of their
Market Potential (India), 2005
Rank
Service
Inbound/Outbound Warehousing
Inventory Management
Fleet Management & Consolidation
Import/Export Logistics Management
Distribution (Physical placement of goods)
Customer Service/Support
Order Processing, Picking, Fulfillment
Marketing and Sales Promotion
Labeling and Packaging
10
Rate Negotiation
Market Potential of Various Types of 3PL Services in Short Medium

and Long-Term
Although, all the 10 services mentioned above have a higher market potential than the basic
services in the 3PL market in the Indian FMCG sector, these services have a varying potential
levels among themselves as witnessed during 2006 to 2012.
Figure 5-2 shows the detailed market potential of the top 10 services, having a higher market
potential than the basic services in the 3PL markets in the Indian FMCG sector from 2006 to
2012.
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Figure 5-2
3PL Markets in the Indian FMCG Sector: Top 10 3PL Services with High Market Potential
(India), 2006-2012
Rank
Service
1-2 Years
3-4 Years
5-7 Years
Inbound/Outbound Warehousing
High
Very High
Very High
Inventory Management
High
High
High
Fleet Management & Consolidation
Medium/High
High
Very High
Import /Export Logistics Management
Medium/High
High
Very High
Distribution (Physical placement of goods)
Medium/High
High
Very High
Customer Service/Support
Medium/High
Medium/High
High
Order Processing, Picking, Fulfillment
Medium/High
High
Very High
Marketing and Sales Promotion
Medium/High
Medium/High
High
Labeling and Packaging
Medium/High
High
Very High
10
Rate Negotiation
Medium/High
Medium/High
High
Business
Model
Suggested Business Model

Based on the preferences, expectations, and concerns of the Indian FMCG sector regarding
the 3PL service companies, the following business model is suggested for a higher adoption
level of 3PL services in this sector.
3PL service companies need to build a long term partnership-based business model covering
the entire supply chain for the Indian FMCG sector, rather than using a pure client-vendor
relationship model. Since FMCG sector has a perennially high level of logistics activity due to
the large scale movement of goods between multiple intermediaries in its supply chain, a
close relationship between the FMCG company and the 3PL company, enabled through the
partnership model, would help both the companies to work together with a higher level of
commitment and trust in each other.
This partnership model is also the most suitable approach for penetration of 3PL services
further into this sector, considering the high level of negative attitude and perception about
3PLs.
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The long term association ensured by this model would encourage both the participants,
(specifically the 3PL companies) to invest in better infrastructure and technology that would
result in improved efficiencies of the logistics functions at all levels.
Also, working together would lead to development of standard operating procedures, reduction in performance errors, and would also improve expertise of manpower.
Pricing
and
Positioning
Suggested Pricing Strategy

Currently, the universal opinion across the FMCG sector regarding the pricing of 3PL services is that it is Mostly Unrealistic'. At present, 3PL companies do not have a specific pricing
strategy for the Indian FMCG sector. The standard quantity oriented pricing strategy used
for other sectors such as automotive and electronics is also applied for the FMCG sector, but
considering the high-volume low-value high-movement characteristic of the FMCG industry,
this is proving to be a serious mismatch. The prices charged are turning out to be beyond the
affordability level of majority of the Indian FMCG companies.
The suggested 3PL pricing strategy for the Indian FMCG sector should be based on a rational
weighted average of the three components, volume, value, and movement. Since these three
could differ for each FMCG company based on its supply chain model, the 3PL service
provider for a FMCG company should thoroughly evaluate the level of each component in its
supply chain and arrive at a unit price fixed for each component. Thus an affordable and
customized pricing could be given to each client, leading to a high level of 3PL adoption.
Suggested Positioning Strategy

It is highly desirable that 3PL companies act more as external facilitators, yet be integrated
partners in their positioning as a service providers for the Indian FMCG sector. That is they
should simultaneously share the responsibility of executing the functions and achieving the
desired results, while providing help and guidance as an external company.
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Acquisitions
and
Mergers
Suggested Strategy for Acquisitions and Mergers

Industry consolidation at a global level in 3PL industry is already taking place on a high
note, and it is likely that Indian 3PL companies follow suit in the next few years. Since there
are very few 3PL companies in India with nation wide presence and well established network,
it is advisable that 3PL companies looking for an acquisition or merger should ensure that
the target company is a true complementing resource for their capabilities in services,
industry sector expertise, specific regional presence, and so on.
Strategic
Alliances
Joint
Ve n t u r e s
and
Pa rt n e rs h i p s
Suggested Strategy for Forming Alliances Joint Ventures and

Partnerships
It is highly recommended for the 3PL companies that wish to offer services to the Indian
FMCG sector to build strategic alliances and if needed joint ventures to gain a particular
asset or accessibility or capability that is necessary for providing 3PL services to the FMCG
sector.
All the leading intermediaries that contribute to any part of the entire FMCG industry functions would be the recommended alliance partner for the 3PL company. Examples could be
Leading and reputed transportation service provider, the leading and reputed customs broker,
the leading and reputed marketing promotions company, the leading and reputed accounting
services company, and the leading and reputed information technology solutions company, all
serving the Indian FMCG sector.
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Recommendations
Recommendations for 3PL Service Providers

Indian FMCG logistics is a complex system and 3PLs have to understand this complexity
before offering services to the FMCG sector.
It is important for 3PLs to deliver results that impact business objectives of their FMCG
client companies in order to gain higher business from Indian FMCG sector
3PLs should work hard on an urgent basis to increase the depth and scope of their
services by customizing their packages for Indian FMCG sector
Since multinational FMCG companies are more in favor to adopt 3PL services in all of
their logistics functions, the Indian 3PL service companies should improve their expertise
with these companies, and then pass on the benefits to the entire industry leading to
overall market's 3PL adoption growth
Indian 3PL companies should aggressively train their existing employees or recruit
professional logistics graduates for efficiently managing the FMCG supply chain. This
would eventually eliminate the major concern for the Indian FMCG sector about the 3PL
companies lacking skills and professionalism
The lack of thoroughly understanding the Indian bureaucratic procedures associated with
the FMCG supply chain by the Indian 3PLs is a major concern for the Indian FMCG
sector in using 3PL services.
To effectively tap the existing demand by Indian FMCG sector for 3PL services in the
rural areas, to have a complete logistics solution for all its supply chain needs, the 3PL
companies should heavily invest in transportation and warehousing infrastructure in the
rural areas. Also, considering that the logistics needs in these areas would involve storage
and movement of large bundled quantities of smaller packs of goods, which have to be
collected and distributed across the desired destinations, 3PL companies should develop
high level of expertise in packing, unpacking, merge-in-transit, part-to-full-to-part load
handling, and so on.
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6
Database of Key Industry Participants
Market
Pa rt i c i pa n t s E n d
users
Major Participants in the Indian FMCG Sector

Presented below are the names and contact
Phone: 91-22-28266000
details of major participant companies in
Website: www.pg-india.com
the Indian FMCG Sector.

RECKITT & COLMAN OF
H I N D U S TA N L E V E R L I M I T E D
INDIA LIMITED
Hindustan Lever House,
Enkay Centre
165/166, Backbay Reclamation,
2nd Floor, Vanijya Nikunj,
Mumbai - 400020 India
Udyog Vihar Phase V,
Phone: 91-22-3983 3375 / 3311
Gurgaon 1122 016, Haryana, India
Website: www.hll.com
Phone: 91 (0) 124 639 8200 29

Website: www.reckitt.com/about/global.cfm
C O L G AT E - PA L M O L I V E I N D I A
LIMITED
DA B U R I N D I A L I M I T E D
Colgate Research Centre,
Kaushambi, Ghaziabad - 201010,
Main Street, Hiranandani Gardens,
Uttar Pradesh, India
Powai, Mumbai - 400 076. India
Phone: 91 (0120) 3982000
Phone: 91-22-3983 3375 / 3311
Website: www.dabur.com
Website:www.colgate.co.in
NESTLE INDIA LIMITED
P R O C T E R & G A M B L E H E A LT H
AND HYGIENE INDIA
Nestl House,
Jacaranda Marg, M Block,
P&G Plaza,
DLF City Phase II,
Cardinal Gracias Road, Chakala, Andheri
Gurgaon 122 002 - Haryana, India
(E),
Phone: 91 124 238 93 00
Mumbai - 400099 Maharashtra, India.
Website: www.nestle.co.in
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Website: www.amul.com
NIRMA LIMITED
Nirma House,
TATA T E A L I M I T E D
Ashram Road, Ahmedabad,

Gujarat - 380009, India
1 Bishop Lefroy Road,
Phone: 91-79-27546565 - 74
Calcutta 700 020, India
Website: www.nirma.co.in
Phone: 91-33-2281 3891

Website: www.tatatea.com
GODREJ CONSUMER
P RO DUC T S L I M I T E D.
PA RL E P RO DU C T S
Pirojshanagar,
Nirlon House,
Eastern Expresss Highway,
254-B, Dr. Annie Besant Road,
Vikhroli, Mumbai - 400079, India.
Worli, Mumbai - 400 025,
Phone: 91-22-25188010, 25188020
Maharashtra, India
Website: www.godrejcp.com
Phone: 91-22-56916911
Website: www.parleproducts.com
MARICO INDUSTRIES
L I M I T E D.
GLAXO SMITHKLINE
C O N S U M E R H E A LT H C A R E
Rang Sharda,
INDIA
K. C Marg, Bandra Reclamation,

Bandra (W), Mumbai - 400 050, India
DLF Plaza Tower,
Phone: 91-22-56480480
DLF City Phase I, Gurgaon
Website: www.maricoindia.com
Haryana - 122002, India

Phone: 91-124-254 0700
WIPRO CONSUMER CARE AND
Website: www.gsk-ch.in
LIGHTING
HENKEL INDIA LIMITED
Wipro Campus,
Doddakannelli, Sarjapur Road,
TPL House, First Floor,
Bangalore-560 035, Karnataka, India
3 Cenotaph Road, Teynampet,
Phone: 91-80-28440001
Chennai 600 018, India
Website: www.wiprocorporate.com/
Phone: 91-44-24330089
consumercare/index.htm
Website: www.henkel-india.com
AMUL
C A D B U RY I N D I A L I M I T E D
Gujarat Cooperative Milk Marketing
Cadbury House ,
Federation Limited,
19 Bhulabhai Desai Road,
PO Box 10, Amul Dairy Road,
Mumbai, Maharashtra, India
Anand 388 001, Gujarat, India
Phone: 91-22-4939558
Phone: 91-(2692) 258506, 258507, 258508,
Website: www.cadbury.com/india
258509
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A N C H O R H E A LT H A N D
No 12, Cenotaph Road,
B E A U T Y C A R E P R I VAT E
Chennai - 18, India
LIMITED
Phone: 91-44-24317550
Website: www.cavinkare.com
Basushree, Plot No G-9,

Cross Road A, Marol-MIDC,
Andher (E), Mumbai-400 093, India
Phone: 91-22-30418888
Website: www.anchor-world.com
N U T R I N E C O N F E C T I O N E RY
C O M PA N Y L I M IT E D
B.V. Reddy Colony,
P.O.Box No. 38,
Chittoor - 517 001 (A.P.),
COCA-COLA INDIA
INDIA
Enkay Towers,
Phone: 0091-8572-29969 to 29976
Udyog Vihar, Gurgaon,
Website: http:/www.nutrinesweets.com/
Haryana 122106, India
index.html
Phone: 91-124-234 8041/8571

Website: www.coca-colaindia.com
MODI REVLON INDIA

1400, Modi Tower,
PEPSICO INDIA
98, Nehru Place,

3B, DLF Corporate Park,
New Delhi - 110019, India
S Block, Qutub Enclave,
Phone: 91-11-628 6589
Gurgaon, Haryana, India
Website: www.modigroup.com
Phone: 91-124-2355880
JYOTHI LABORATORIES LIMITED
Website: www.pepsico.com/india
#43, Shivshakti Industrial Estate,

Andheri Kurla Road, Marol,
ITC LIMITED
Mumbai - 400059 India

Phone: 91-22-28502470/28520283/
37 J.L.Nehru Road,
28520289
Kolkata - 700071, India
Website: www.jyothylaboratories.com
Phone: 91-33-22889371
Website: www.itcportal.com
UNITED BREWERIES GROUP

(HOLDING) LIMITED
P R I YA F O O D S
UB Anchorage, 5th Floor,
Eenadu Complex, Somajiguda,
100/1, Richmond Road,
Hyderabad - 500 082.
Bangalore - 560 025, India.
A.P. - India.
Phone: 91-40-23323717/23324727/
23220446/23220421
Phone: 91-80-22272806/22272807/
22272808
Website: www.theubgroup.com/
Website: www.priyafoods.com
www.kingfisherworld.com
C A V I N K A R EP R I V A T EL I M I T E D
Cavin Ville,
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L ' O R E A L I N D I A P R I VA T E
BAMBINO AGRO (FOODS)
LIMITED
INDUSTRIES LIMITED
2nd Floor, Peninsula Towers,
Surya Towers, No. 4E,
Ganpatrao Kadam Marg,
S P Road, Secunderabad, India
Lower Parel, Mumbai 400 013
Phone: 91-40-27816611/2/3
India
Website: www.bambinofood.com
Phone: 91-22-24983000
Website: www.loreal.co.in
E V E R E A DY I N D U S T R I E S I N D I A
LIMITED
H I M A L AY A H E A LT H A N D
PHARMACEUTICALS
2, Rainey Park,
Kolkata - 700 019
Makali, Bangalore - 562 123
West Bengal, India
India
Phone: 91-33-2475 1961
Phone: 91-80-2371 4444
Website: www.evereadyindustries.com
Website: www.himalayahearthcare.com
L U X O R I N T E R N AT I O N A L
JOHNSON & JOHNSON
CONSUMER CARE INDIA
17, Okhla Industrial Estate,

Phase - III,
30, Forjett Street,
New Delhi 110 020
Mumbai 400 036 India
INDIA
Phone: 91-22 - 5664 6464
Phone: 91-11-26384144/26848891/
Website: www.jnjindia.com
26849211
Website: www.luxorpen.com
R U C H I S OYA I N D U S T R I E S
LIMITED
EMAMI GROUP
301 Mahakosh House,
18, R N Mukherjee Road,
7/5 South Tukoganj,
Kolkata 700001
Nath Mandir Road,
West Bengal, India
Indore, (M.P) - 452001 India
Phone: 91-033-22482679/2748/4416/9602/
Phone: 91-(0731) 2513281-82-83
5190/7281/7284/6064
Website: www.ruchisoya.com
Website: www.emamigroup.com
A M WAY I N D I A E N T E R P R I S E S
A-5 Kaiash Colony
New Delhi 110 048 India
Phone: 91-11-2648 9636
Website: www.amwayindia.com ;
www.amway-in.com
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Market
Pa rt i c i pa n t s 3 P L
Service
Providers
Major 3PL Service Providers to the Indian FMCG Sector

Presented below are the names and contact
Website: www.tcil.com
details of major 3PL service providers to the

Indian FMCG Sector
G AT I L I M I T E D
D H L - E X E L S U P P LY C H A I N
SOLUTIONS INDIA
H.No: 1-7-293,M.G.Road,
Secunderabad - 500 003.
A.P., India
8th Floor, Leela Galleria,
Phone: 91-40-2784 4284
Andheri Kurla Road, Andheri (East),
Website: www.gati.com
Mumbai-400 059, India

Phone: 91-22-5695 5000
OM LOGISTICS LIMITED
Website: www.exel.com/exel/home/regions/
130, Transport Center
asiapacific/india
Ring Road, Near Punjabi Bagh Flyover,

New Delhi 110035 India
SEMBCORP LOGISTICS
( I N D I A ) P R I VA T E L I M I T E D
Phone: 91-11-5433222/5116143
Website: http://omlogistics.co.in
2nd floor, No.51, Montieth Road

Egmore, Chennai 600 008, India
AFL LOGISTICS LIMITED
Phone: 91-44-28542000
AFL House,
Website: www.semblogindia.com
Lok Bharati Complex,

Marol Maroshi Road,
RELIANCE LOGISTICS
Andheri (East),
LIMITED
Mumbai 400 059. India
17 ST Road, near Khira Industrial Estate,
Phone: 91-22-5646 3500
off SV Road, Santacruz (W)
Website: www.afl.co.in
Mumbai 400 054, India

Phone: 91-22 - 30611700
S A F E X P R E S S P R I VAT E
Website: www.reliancelogistics.com
LIMITED
Safex Cargo Complex,
T C I S U P P LY C H A I N
National Highway No. 8.
SOLUTIONS
Mahipalpur Extension
TCI House,
New Delhi - 110 037 India
69, Institutional Area
Phone: 91-11-26783281 (10 lines)
Sector-32, Gurgaon-122001
Website: http://www.safexpress.com/
Haryana, India
home.asp
Phone: 91-124-2381603 to 07
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Andheri East, Mumbai
PAT E L L O G I S T I C S
400 093 INDIA

A Unit of Patel Roadways Limited
Phone: 91-22-2832 2345/347 ; 2832 5454/
Patel House,
1238 ;
Plot No 48,
2832 1431/1161 ; 2832 0892/0392 ; 2831
Gazdhar Bandh,
1727/3739
North Avenue, Santa Cruz (W),
Website: www.go2uti.com
Mumbai 400 054, India

Phone: 91-22-2605 0021/ 2605 3915/ 2605
2915
Website: www.patel-roadways.com
A RC L O G I S T I C S
Surya Towers, 3rd Floor,
105 S.P.Road, Secunderabad - 500 003,
DY N A M I C L O G I S T I C S P R I VA T E
A.P., INDIA
LIMITED
Phone: 91-40-27843582 / 27841603 /

27845400 / 27847770
14, Motilal Talera Road,
Website: www.arclimited.com
Pune 411 001, Maharashtra, India

Phone: 91-20-26113572 / 26113573
Website: www.dynamiclogistics.com
PROLOGIX
Dr. Unadkat's Dispensary,
S C H E N K E R I N D I A P R I VAT E
Ground Floor
LIMITED
M.C. Chagla Road, Baman Wada,

Andheri (East), Mumbai 400097,
93-94, Kapashera
Maharashtra, India
New Delhi-110 037. India.
Phone: 91-22-30972348
Phone: 91-11-5102 5102
Website: http://www.prologix.org/index.jsp
Website: www.schenker-india.com
MAERSK LOGISTICS INDIA
P R I VAT E L I M I T E D
No.77, Pottipatti Plaza, Ground floor,
Nungambakkam, High road,
Chennai 600 034 India
Phone: 91- 44- 5522 0000
Website: www.maersk-logistics.com/
sw1251.asp
U T WO R L DW I D E I N D I A
P R I VAT E L I M I T E D
No. 461, 462, 471 & 472, 6th & 7th Floor
Andheri Kurla Road
#4C79-18
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7
Ta b u l a t i o n
of
India's
Economic
Growth,
Infrastructure, FMCG Industry Structure and

Tr a d e
Figures
Tabulation of India's Economic Growth and Infrastructure Figures

Figure 7-1 presents the comparative tabulation of economic and infrastructural figures of
India such as the GDP, infrastructure, airports, road network, rail network, airports, pipeline
network, and marine capacities.
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7-1
Figure 7-1
Decision Support Database: Tabulation of Economic Growth and Infrastructural Figures

(India), 2005
Airports Heliports
Total Airports and

Heliports
International Airports
International Seaports
International
ports
Total
Domestic Domestic Sea
Sea Ports Ports by State
Total Sea
Ports
Infrastructure
334
27
361 Bangalore,
Chaeenai
Hyderabad,
Kochi,
Kolkata,
Mumbai,
New Delhi
and
Thiruvananthapuram
Airports
Road Network
12 Chennai,
Cochin,
Ennore, Jawaharlal Nehru,
Kandla, Kolkata, Mormugao, Mumbai,
New Mangalore, Paradip,
Tuticorin and
Visakhapatnam
188 Andhra
Pradesh (13)
Andaman &
Nicobar (23)
Daman & Diu
(2)
Goa (5)
Gujarat (40)
Karnataka
(10)
Kerala (13)
Lakshadweep
(10)
Maharashtra
(54)
Orissa (2)
Pondicherry
(1)
Tamil Nadu
(15)
200
Paved Runways
Unpaved Runways
235
39
Type
Kilometres
Paved Roadways
2.41 million
Un Paved Roadways
1.44 million
Total Roadways Network
3.85 million
Note: India's road network is the second largest in the world after US with 6.4 million km, and ahead
of China with 1.8 million km
Rail Network
Type
Kilometres
Broad Guage (1.5 m)
45,718
Metre Guage (1.0 m)
14,406
Narrow Guage (0.75 m)
3,106
Electrified (16,693 km)

Total Railway Network
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63,230
7-2
Pipeline Network
Type
Kilometres
Gas
6,171
Liquid Petroleum Gas
1,195
Oil
5,613
Refined Products
5,567
Total Pipeline Network

Merchant Marine Capacity
18,546
Type
Number
Foreign Owned
10
Registered in Other Countries
30
Domestic Owned
299
Total Sea Ports
339
Domestic Merchant Marine Split
Type
Number
Roll On / Roll Off
Petroleum Tanker
91
Passenger
Passenger / Cargo
Container
Liquified Gas
14
CombinationOre/Oil
Chemical Tanker
13
Cargo
75
Bulk Carrier
85
Note: All figures atre rounded. Source: Frost & Sullivan
These figures are useful in ascertaining the capability of India in offering a conducive environment for logistics activities.
Tabulation of Indian FMCG Industry Structure by Company Type and

Product Segment
Figure 7-2 presents the tabulation of Indian FMCG industry's structure by type of company
type and product segment.
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Figure 7-2
Decision Support Database: Tabulation of the Indian FMCG Industry Structure (India), 2005
INDIAN FMCG INDUSTRY STRUCTURE BY COMPANY TYPE
Type
Number
Revenue Share (%)
Multi National Companies with National Presence
50
55.0
Multi National Companies with Regional Presence
10
5.0
Domestic Companies with National Presence
80
20.0
Domestic Companies with Regional Presence
150
10.0
Domestic Companies with Remote Presence
500
5.0
Unorganized and Unregistered Proprietary Firms (Appx)
10,000
5.0
Total Number of Companies in Industry
10,790
100.0
Volume Share (%)
Revenue Share (%)
Personal Care Products
10.0
30.0
House Hold Care Products
25.0
20.0
Branded and Packaged Food and Beverages
50.0
25.0
Spirits and Tobacco Products
10.0
20.0
5.0
5.0
100.0
100.0
INDIAN FMCG INDUSTRY STRUCTURE BY PRODUCT SEGMENT

Type
Miscellaneous Products
Total
These figures are useful in understanding the potential market for logistics in the Indian
FMCG sector. It also provides the logistics companies a detailed view of types of companies
in different tiers that can be targeted for business expansion.
Tabulation of the Indian FMCG Sector International Trade and

Transportation Figures
Figure 7-3 presents the tabulation of Indian FMCG industry's international trade, major
importers and exporters, overall transportation volumes, and breakup by mode of transportation in 2005.
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Figure 7-3
Decision Support Database: Tabulation of Indian FMCG Trade and Transportation Figures
(India), 2005
INDIAN FMCG INDUSTRY INTERNATIONAL TRADE FIGURES (2005)
Measure
Value US$ Billion
India's Total Imports
113.12
FMCG Industry Imports
2.4
Major FMCG Importers
Hindustan Lever Limited, Procter & Gamble, Nestle, Tata Tea, Cadbury, Britannia Industries, Colgate-Palmolive, Godrej Consumer Products Limited., Lreal, Amway, Modi Revlon, Sara Lee, Henkel Spic India Limited.,
Heinz, Coca-Cola, PepsiCo, ITC, Reckitt Benckiser, Johson & Johnson
Measure
Value US$ Billion
India's Total Exports
79.59
FMCG Industry Exports
0.45
Major FMCG Exporters
Hindustan Lever Limited, Colgate-Palmolive, Procter & Gamble, Dabur, Himalaya, ITC
INDIAN FMCG INDUSTRY TRANSPORTATION VOLUMES (IN MILLION TONNES)2005
Type
Inbound Transport
Outbound Transport
800
500
15
10
815
510
Domestic Market Related

International Market Related
Total
INDIAN FMCG TRANSPORTATION BREAKUP BY MODE (2005)
Mode
Revenue Share (%)
Road
75
Rail
15
Sea
Air
Total
100
These figures are useful in understanding the potential market for transportation and import
and export related logistics in the Indian FMCG sector. They also provide the logistics
companies an insight into potential for logistics in inbound and outbound transportation
services in the domestic and international market related activity of Indian FMCG sector. The
figures also provide information about the leading importers and exporters in the Indian
FMCG sector, that are capable enough to be targeted by the logistics companies to expand
their business. The important modes of transportation, that should be focused on by the
logistics companies to effectively tap the 3PL markets in the Indian FMCG sector are also
provided in these figures.
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Strategic Analysis of 3PL Markets in the Indian

Frost & Sullivan takes no responsibility for any incorrect

For information regarding permission, write:

Frost & Sullivan

2006 Frost & Sullivan

Introduction to FMCG Sector in India

Introduction to Logistics Industry in India

Introduction to Third Party Logistics (3PL) Industry in India

Overview of 3PL Usage in the Indian FMCG Sector

Market Overview and Research Findings

End-user 3PL Usage and Practices

Competitive Analysis of 3PL Service Providers in the Indian FMCG Sector

Challenges for the 3PL Industry in the Indian FMCG Sector

Intense Competition in FMCG Sector Transforms Logistics into a Critical Function

Government's Favorable Attitude Toward 3PLs Helps in their Growth

2006 Frost & Sullivan

Introduction and Overview of the Indian FMCG sector

Introduction to Logistics in the Indian FMCG Sector

Evolution of 3PL Market in the Indian FMCG Sector

Awareness and Perception about 3PL in the Indian FMCG Sector

Scope of the Study

3PL Scenario in the Indian FMCG Sector

Overall 3PL Usage in the Logistics Functions

3PL Usage in Different Logistics Functions

3PL Usage in Warehousing

3PL Usage in Transportation

3PL Usage in Freight Forwarding

3PL Usage in MIS and Other Value Added Logistics Operations

3PL Solutions Offered for the Indian FMCG Sector

Business Models of 3PL Providers for the Indian FMCG Sector

Awareness and Attitudes about 3PL in the Indian FMCG Sector

Awareness about 3PL in the Indian FMCG Sector

Perceptions about 3PL in the Indian FMCG Sector

Attitudes towards 3PL in the Indian FMCG Sector

Expectations from 3PL in the Indian FMCG Sector

Preferences Regarding 3PL in the Overall Indian FMCG Sector

Concerns about 3PL in the Indian FMCG Sector

2006 Frost & Sullivan

Market Size and Revenue Forecasts

The Total Logistics Market in Indian FMCG Sector

Current Size of the 3PL Market in the Indian FMCG Sector

Estimated Share of 3PL Market in the Entire FMCG Logistics Market

Revenue Forecasts Breakdown by Different Logistics Functions

3PL in Freight Forwarding

3PL in MIS/Other Value Added Logistics Services

Competitive Analysis and Industry Structure

Competitive Scenario of the Indian 3PL Market

3PL Industry Structure

Major 3PL Providers in the Overall Indian FMCG Sector

Market Share Breakup by Type of 3PL Company

Industry Challenges and Market Drivers and Restraints

Challenges for the 3PL Providers in the Indian FMCG Sector

Limited Capability of Majority 3PL Companies to Offer Complete Logistics Services

Lack of Skilled Professionals in 3PL Industry to Provide Required Solution

High Concentration of Transportation Market with Individual Truckers

Market Drivers of the 3PL Market in the Indian FMCG Sector

Increasing Realization of 3PL Benefits in FMCG Sector with

Government's Initiatives to Improve Infrastructure

High Potential for 3PL as a Result of VAT

Government's Favorable Attitude Toward 3PLs as Part of BPO Industry Promotion

Increasing Competition among FMCG Companies Needing Good Logistics

2006 Frost & Sullivan

Poor Infrastructure of India in All forms of Transportation Limits 3PL Growth