LogisticsTimes

www.logisticstimes.net February 2011 ` 50

SECURITY Securing the Global SC

RETAIL Mom & Pop stores

PROFILE Sanjiv Kathuria

EXCLUSIVE INTERVIEW

'We want to have first mover advantage'

Taarek Hinedi, MD (India Operations) FedEx
COVER FEATURE

What's holding back cold chain business?

CONTRIBUTORS:

Sanjay Aggarwal Rhea Vazirani Mahendra Swarup Saurabh Agarwal

TABLE FOR TWO

The Fettered
S K Sharma (left) & Pawanexh Kohli discuss the road blocks

Cold Chain

Logistics Times
All about Transportation, Distribution & Infrastructure
Volume 1: Issue No.10 * February 2011
Editor in Chief Raj Misra rajmisra@logisticstimes.net Editor Ritwik Sinha ritwik@logisticstimes.net Consulting Editor Ramesh Kumar ramesh@logisticstimes.net Mumbai Bureau Rahul Kumar rahul@logisticstimes.net Sub Editor Neha Richariya Photographer Anil Baral Design Consultant S. Athar Hussain Designer Kausar Syed Circulation & Distribution Kamruddin Sai Legal Advisor Rakesh Garg
Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Vinod Singhal Brady Family Professor of Operations Management, Georgia Institute of Technology, College of Management Kate Vitasek Faculty, Centre for Executive Education The University of Tennessee Prof. K S Pawar Nottingham University Business School Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Mgt Sanjay Upendram Founder & Chairman, Amarthi Management Consulting Swaran Singh Soni Consultant (Oil Industry) Arif Siddiqui Chairman, Coign Consulting

CONTENTS

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COVER FEATURE
The Fettered Cold Chain

Sanjay Aggarwal

Rhea Vazirani

Mahendra Swarup

Saurabh Agarwal

Table for two

Marketing & Sales Outthink Strategies Ph: 65177214, 26412476, 9818097385 Email: sales@logisticstimes.net Printer & Publisher Deepa Misra for

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RETAIL

Mom & Pop stores

38

10
INTERVIEW

SECURITY

Securing the Global SC

Taarek Hinedi

PROFILE

48

Sanjiv Kathuria

EDIT NOTE

A Frozen Affair
India is the second largest producer of fruits and vegetables in the world. Now this is a fact which could have ideally commanded a huge round of applause from all those who have uninching faith in the Indian economic renaissance as unfolded since early 90s. But is it really the case? Do we really hear the din of accolades on this feat? The answer unfortunately is no. What we precisely instead have is a state of deafening silence. The inefcient supply chain in handling fruits and vegetables is another of those sob stories which still poses a big question mark on our economic management skills. In fact, what could have turned out to be a huge asset for national economy keeps on lingering as a serious weak spot. Cold chains which lie as the fulcrum of an effective supply chain infrastructure in dealing with fruits and vegetables remains a grossly ignored area. Its not only an issue of storage, other functional modalities like facilitating seamless movement of refrigerated vehicles which has done wonders in countries like China is presently best considered to be a far fetched idea in the country, if not totally utopian. Result: every year we have to suffer nearly 30-40 percent of wastage in fruits and vegetables. Barring a few instances, the much required private entrepreneurship in ensuring smooth ow of goods from the farmgate to at least retail point is altogether missing and governments support to the sector by way of providing subsidies has not paid off. There are serious accusations of these subsidies falling in the hands with no expertise in cold chain management. Its not merely a case being dened by the clich of colossal wastage now, it rather requires a much stronger disparaging superlative probably criminal wastage. In our cover feature this month, we turn the spotlight on cold chain and leading industry representatives and experts make no qualm in underlining that the development of cold chain network, more or less, has remained a frozen affair. The disquieting fact is: probably the hopes of a structured growth of these facilities in the near to medium run does not seem to be a very bright proposition as of now because of strong inherent structural hurdles. After lying low for quite sometime, it has turned out to be a season of signicant moves for FedEx in the Indian market since the beginning of the second half last year. First, it opened a third hub in India and then it moved on to acquire some vibrant units of AFL. And then as recently as last month, it announced direct connectivity between two vibrant destinations in India and China. The company is subtly making some decisive moves, part of a larger design which Tareek Hinedi, Managing Director (India Operations) explains in a candid interview. The desire to excel at all costs seems to be the driving force of the protagonist whom we feature in the prole section this time. Sanjiv Kathuria, one of the most visible faces of TNT in India tells his story of emancipating from the 60s-70s environment of Dilli 6 and nally landing up in the top echelon of the Indian logistics space. There are several interesting twists and turns in the tale which includes learning some bedrock rules in enterprise management and, of course, learning them well.

Waiting for your feedback. Ritwik Sinha ritwik@logisticstimes.net

LOG STIC TIMES May 2010 LOGISTICS TIME May 2010 LOGISTICS TIMES May 2 10 O OG T CS MES a ES

NEWS BRIEFS

Rs 10k crore project for Chennai port

Infrastructure Woes
Serious infrastructure impediments would turn out to be a serious challenge for the Indian economy to touch the coveted double-digit growth gures. This is the key nding of a survey conducted by noted global consultancy agency PricewaterhouseCoopers (PwC) which was released during recently held World Economic Forum (WEF) in Davos. The survey ndings are based on responses from 1,201 chief executives from 69 countries. A majority of those surveyed opined that government leadership in building infrastructure is critical for ensuring competitiveness of countries. ... 88 per cent of CEOs (in India) told us the inadequacy of basic infrastructure was a threat to growth, said the PwC report which anticipates an investment to the tune of a staggering $1 trillion in the infrastructure sector in India between 2012 to 2017. Out of this, nearly 50 percent is expected to be pumped in by the private sector. The report further emphasizes that India is likely to achieve about 9 per cent growth rate during 2010-11 and is aiming to breach the double-digit barrier in the coming years. Meanwhile, a major plus emerging for Indian economy from the report is that global companies are increasingly looking at Indian market as a source hub for their business requirements. According to the survey, about 15 per cent of the global CEOs covered in the report are willing to source their supplies from India, considering the countrys cost competitiveness.

The Union Ministry of Shipping has indicated that projects worth Rs 10,000 crore will be taken at the Chennai Port in different stages. The proposed investments includes connectivity projects, container terminal and others. After laying foundation stone for the Rs 600 crore Chennai port Ennore road connectivity project last month , G K Vasan, Union Minister for Shipping, Government of India said that 29 projects, with an outlay of Rs 10,000 crore will be taken at the Chennai Port in various stages. SAIL-IRCON MOU

Strengthening India-APAC linkage

FedEx Express last month announced the launch of a new ight establishing direct connections between India and the FedEx Asia Pacic hub at Baiyun International Airport, Guangzhou, Southern China. The new ight will offer Indian businesses the benet of signicant additional outbound capacity to Asia in addition to strengthening connectivity between major cities in India and Asia. The ight provides greater connectivity between Delhi and Asia, offering unprecedented access to further enable the rapidly evolving economic integration between India and Asia. In addition, the launch will further boost the increasing trade between India and the Asia Pacic region. The APAC region is Indias largest region for trade and contributes to around 27 percent of Indias exports and 32 percent of Indias imports. In addition, China is Indias largest trading partner, with bilateral trade expected to cross $60 billion this year compared to $42.42 billion in FY 2009-2010. The new dedicated A310 ight connects Guangzhou Mumbai New Delhi Guangzhou ve times a week. With the launch of the new service, the total weekly frequency of the freighters operated by FedEx in the Indian market has now mounted to 31.

Steel Authority of India Ltd has recently informed Bombay Stock Exchange (BSE) that the company has signed a memorandum of understanding (MoU) with IRCON International Ltd., a PSU under the Ministry of Railways, for jointly working on rail infrastructure projects both in India and abroad. The MoU is the rst step by SAIL and IRCON towards joining hands for efcient execution of public-public and public-private partnership projects of the Indian Railways, as well as participating in rail infrastructure projects in developing countries where presently there is no infrastructure for evacuation of raw materials.

LOGISTICS TIMES February 2011

Nhava Sheva- Durban LCL

In a signicant development, DHL last month commenced a new direct Less than Container Load1 (LCL) service from Nhava Sheva, Mumbai in India to Durban, South Africa. Operated by Danmar Lines, DHLs in-house carrier the new service will facilitate trade between India and South Africa and offer customers reliable, quick and cost-effective services between the two ports. With trade between India and Africa having risen almost fourfold in the last ve years, from US$9.9 billion in 2004-05 to US$39 billion in 2008-092, DHL Global Forwarding sees vast potential in the India-Africa trade lane. Christoph Remund, Chief Executive Ofcer, DHL Global Forwarding India, said, The launch of our direct India to Durban LCL service reects our commitment to customers who have increasing business activities in both markets. The company has allocated signicant resources to facilitate growth in the India-Africa trade lane by setting up dedicated India Desks in ten African countries to help businesses there, with plans to establish additional Desks this year. Africa is emerging as a key market, with freight volumes between India and Africa expected to grow signicantly in the coming years. With expertise in several key sectors, including oil and gas, telecommunications and IT, we are well-positioned to leverage our capabilities in Africa and further increase our LCL volumes this year, said Clas Thorell, Head of LCL Management Asia Pacic, DHL Global Forwarding.

27% jump in PAT Transport Corporation of India Ltd (TCI) recently announced its nancial results for the quarter ended December 31, 2010. The companys total revenue for Q3 registered a growth of 16.71 percent rising to Rs. 445 crore from Rs. 381 crore in the same period last year. The companys total revenue for the nine months ending December 31, 2010, rose by 21.78 percent to Rs. 1281.29 crore from Rs. 1052.17 crore in the same period last year. The companys PAT rose by 26.67 crore to Rs. 38.57 crore from Rs. 30.45 crore in the same period last year.

Taking coastal route

Indian developer in Indonesia

Indias leading infrastructure developer GVK Power and Infrastructure Limited (GVKPIL), recently signed two Memorandums of Understanding (MoUs) with the Government of Indonesia to develop green eld international airports in North Bali and Yogyakarta, Java. The MoU for the Bali airport is a three-way agreement between Badan Koordinasi Penanaman Modal (BKPM - a board set up by the Government of Indonesia for the facilitation of domestic and foreign investment), PT Pembangunan Bali Mandiri (a special purpose vehicle for airport development) and GVKPIL. The MoU for the Java airport is an agreement between Angkasa Pura I (the Government of Indonesia owned airport operations and management company), BKPM and GVKPIL. The scope of the agreements provides exclusivity to GVKPIL and includes planning, design and development, operations and management of the airports along with all associated infrastructure, land and commercial development. Commenting on the deal, Dr. G V Krishna Reddy, Chairman, GVKPIL said: The signing of these MoUs marks a very signicant milestone for GVK. Our capabilities, expertise and strong track record in the airports sector is well established in India. We are very excited by the opportunity to create new landmarks in Bali and Java and we are condent that this agreement will yield signicant synergies for all parties involved and help Indonesia in realizing its growing potential as a key destination in the region.

According to a news report, Indias largest car manufacturer Maruti Suzuki, has restarted trial runs to transport its cars through the coastal route. And the company helping the car giant in successfully executing this trial run is Adanis logistics arm. We did some trial runs on the Gurgaon/Manesar-Mundra-Kochi route to understand the transportation ow and timeliness for the domestic vehicles. The trial runs on the route have again been started few months back with the intent to further study the operations and logistical efciencies. In this second phase, we have transported a small number of vehicles to Kochi via this route, a spokesperson from Maruti was quoted as saying in the report.

LOGISTICS TIMES February 2011

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INTERVIEW

For FedEx in India, last few months have marked some significant development including one acquisition underlining companys strong desire to add more punch to its Indian operations. Last month, the company announced direct flight between India and China which it believes is a critical piece in its strategy for India since it brings together two of the growth hotspots in the world. Taarek Hinedi, Managing Director (India Operations), FedEx spoke with Ritwik Sinha on the sidelines of the press conference to announce India China service in Delhi last month and explained the larger design which the company has in its mind.

We want
LOGISTICS TIMES February 2011

to have first mover advantage

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LOGISTICS TIMES February 2011

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INTERVIEW

Till the middle of the last year, it was widely believed that FedEx has been lying low for quite sometime but would soon be showing aggression as far as Indian operations is concerned. In recent months, there have indeed been some concrete developments and new initiatives at your end. So has that moment of showing aggression arrived?

global rivals present here in India with their respective strengths. In their comparison, how would you explain the differentiator in your deliverables?

We have been striving to enhance our services and offerings in India and this is something which does not happen overnight. Even the India-China ight which we have announced, this is one step ahead of many others here in India. So I would say that moment has not arrived because there is a lot more ahead of us that we are working in terms of improving our services and getting closer to the customers.
I am using the term aggression in the context of some recent initiatives. Recently, you added Bangalore as a gateway hub for your operations in India, then you acquired three divisions of AFL and now this flight connecting India with a vibrant location in China.

We provide our top end services in India as in any other country in the world and we are operating our own aircrafts in the Indian market which most of our competitors dont have. With our capability, we are in a position to have our own custodial control. And with custodial control, we also have a control on services level that we deliver to our customers. Look at the facilities. We have our own ofces at a lot of airports around India, we have customs in-house, hubs that support the service level and once the cargo leaves India, they go into hubs and gateways in Asia, Europe, and United States and again there are fantastic service level available there. So that is how we are able to control and deliver the expectations which our customers have from us. And this is a big differentiator vis--vis our competitors.
You now have a frequency of 31 weekly flights from India. How much of tonnage capacity this actually translates into?

bringing on the table additional trucking capabilities. So they have been able to complement what we have been doing or what we plan to do in India. With the complementation of those services that we would be adding over a period of next few months, we would be able to further expand our services to the customers. Warehousing, distribution, etc, these services would attain new scale.
AFLs acquisition is it also driven by the idea of making you strong in surface express? This is a growing segment in India and in strategic terms could be linked to spruce up your international operations out of this country?

Let me put this question very bluntly. You have practically got all your
LOGISTICS TIMES February 2011

the new requirements are coming from.

As a company, we are keen to take rst mover advantage. We believe that with our network and aircrafts and with the connectivity that we provide, we are capable of differentiating our services in this market and customers will be using those services to enhance their businesses. We see a huge business opportunity between India and Asia-Pacic region. And you cant solely do it any longer on passenger aircrafts or the slower mode of transportation. So we have taken this rst step. And you are right. We did it in Mumbai in 1997 when we became the rst express cargo carrier in India. We reached to Delhi in 2005 and six months back, we began services in Bangalore. So these are three gateways right now. Our strength is unparallel, nobody can match us on the international network with three gateways.

Its roughly around 1400 tonnes a week right now. Its a good number and as demands mount, we would certainly add more capacity in different directions depending where the new requirements are coming from.
I would like to understand from you regarding AFLs acquisition. What were those assumptions which made you to conclude that this is a perfect fit for FedEx?

FedEx is always wanting to be a market leader. Yes, we want to be a market differentiator in our services. We are always on the cutting edge of trying to do things differently. And whatever modes come in our way to deliver faster, we are bound to adopt it. Whether it comes through trucking, aircraft, road network,etc a balance between all these modes is needed. It is not just one mode or the other. Different modes allow us to provide us different kinds of products to our customers whether its slower moving road transport services or express transportation in the air. We try to strike a right balance.
Are you looking at opening any other gateway in the near run apart from the three which you already have in India?

We found AFL to be able to provide FedEx an expansion of our service network. They are able to give us express logistics capabilities and they are

We are always evaluating opportunity across India. There are no announcements which we can make right now but I can assure you that we are always looking at customers requirement and demand and the right time in terms of when to make those moves.
This new service linking India to

We would certainly add more capacity

in different directions depending where

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The ight we have just launched is subscribing to the fact that there is a strong tradelane between the two countries and we want to bring those tradelanes together. Roughly $100 billion of business is expected in this tradelane over a period of next ve years. So we want to have the rst mover advantage. We would like Indian businesses to take advantage of the reduced transit time and improved services.
In your presentation, I noticed an interesting trend. I believe you started doing everything from Mumbai. But now I notice you have more flights from Delhi (as many as 15) than Mumbai. What could be the rationale behind this shift? Am I safe in my conclusion that you are focusing more on north Indian market now?

time and improved services.

We are always evaluating the volumes which are coming into our systems. And we always have forecast and trends going forward so that we can plan two-three years in advance to be able to support the Indian transportation requirement.
There are some concerns on the absorption of people of AFL units which you have acquired. Earlier, a senior official had told us that things would be sorted out by February. I would like to understand from you, how are things moving forward on that front?

many countries in the world to make sure that their products are there in the international market. Our planes are carrying those products to different parts of the world. Engineering goods, machinery, spare parts, pharmaceuticals you name anything and they are probably carried by our network.
Are you also providing any linkage between India and the middleeast destinations? There has been a significant surge in the air cargo business volume between these routes in the recent years?

No, it does not mean we are focusing more on the north Indian market. It means we are catering to the north Indian market on a larger scale now than what we used to do in the past. We are catering to three major pockets in India right now, the most recent being the addition of Bangalore. Till early last year, goods from Bangalore used to be transported to Mumbai and then connected to the international ight. Now that has changed and we are able to cater to three major areas of India. In North India, now there are more ights because it has emerged as a manufacturing hotspot and there is more capacity required in this zone. But again, our decisions are volume and demand driven. If more ights are required in Mumbai, we would enhance the capacity. Same holds true of South.
South India has emerged as a promising hub with industrial activities surging significantly especially in Andhra Pradesh and Tamil Nadu. Does it entail that you would have to opt for more gateways down south in the near run?

We have integration teams from two sides working on it right now. There are no plans which we can discuss at this stage. But once those plans are available, we will have something concrete to share.
In terms of strategic importance, where does India figure in FedExs list of priority, especially among Asian markets?

Yes, absolutely. We do provide linkages from our Mumbai gateway. We have a ight for Dubai. And it just does not connect to Dubai but goods are redistributed to the other parts of the middle-east. If the demand mounts, we would think of enhancing the capacity on the route. We have been connected to Dubai for a long time.
Finally, what is that larger picture which FedEx has in mind for its Indian operations? Two years down the line, what is the kind of scale you see yourself attaining here? Will you be disappointed if your weekly frequency number does not go up to 50? You have a weekly frequency of over 130 in China.

India is equally important to us much like many key markets around the globe. India is one of the fastest growing economies within the FedEx system. That is reected in the fact that we are adding more capacity between India and other regions of the world. We are trying to make sure that we become the carrier of choice in India just as we are trying in some other countries as well.
You are focused on outbound and taking the freight from India to other parts of the world. What are those items which you need to focus more given the kind of expertise which Indian economy has developed? Or in terms of product profile, how is India different from other markets?

We can get heavier weights out of India because of manufacturing that takes place. India is competing with

It is not about the number of ights. The larger picture is more about connectivity, services standard and bringing the transit time closer. That is our ultimate goal bringing more of the world closer to India and vice-versa. If we continue to bring the economies close, we have fullled our main objective. We want to be carrier of choice, we want to be enabler of choice and we want to be employer of choice. And with those three things achieved, believe me we would be doing right things as a company.
LOGISTICS TIMES February 2011

China. As a global logistics major, have you begun to subscribe to the theory that this is a high growth zone and this is a pocket where you need to increasingly put your resources?

take advantage of the reduced transit

We would like Indian businesses to

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COVER FEATURE - COLD CHAIN

The Fettered

Cold Chain
Lack of policy framework which are progressive in the true sense of term, absence of sufficient private entrepreneurial drive in taking up the challenge of ensuring seamless movement of goods from farmgate to at least retail point, LSPs aversion in really getting into this line of business, Indian retailers still remaining pre-occupied with the front end, and absence of FDI regulations which can really facilitate global specialists to step in. The sum total of these trends define the much needed cold chain infrastructure in the country in no uncertain terms in the fettered and frozen state crying for freedom from inertia. Will it really show the strong signs of turn around on the desired lines with demand of processed and packaged food further mounting in the future? Industry leaders and experts present their take while explaining what is holding back cold chain industry and how it is a case of lost opportunity for everyone.

Encourage responsible players

Sanjay Aggarwal Chairman & Managing Director Dev Bhumi Cold Chain
o understand the possibilities in the cold chain business in the country, it is important to have a look at our agricultural strength especially in fruits and vegetables. You would be surprised to know, that with less than half a percent of surface area in the
LOGISTICS TIMES February 2011

world, this country produces 10-12 percent of the worlds fruits and vegetables. That too at dismally low yields. Take the case of apples. We produce ve and a half tones per hectare. The European and American average is 60 tonnes per hectare. The good orchids in those countries even produce

100 tonnes per hectare. The point is: our land is very fertile and if we can spruce up our scale of production to the international levels, we can in fact feed two such worlds. This at a time when the food security is a big global issue. If you look at the world, there are grapes being produced in Saudia Arabia

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which is not a t place for the production of this fruit. But they are desalinating the sea water and growing grapes there. Thats a lot of effort but leaves a big carbon footprint. I think, nature has already indicated where man should do what. All we have to do is to fall in sync with the indications of nature and use the resources for global solutions. In that, India will nd a very prominent place. River Ganges, this one single river brings down three billion tonnes of mineral every year from the Himalyas and spread it on the plains of India. This is a great blessing. Other countries are not blessed by the nature but blessed by the government support primarily in the form of right policies. They are subsiding their farmers. How China is producing so much at extremely low pricing level? Its all because of governments long-term support. Now coming to the cold chain. The moot point is: how have we developed this storage system over the millennia? To begin with, we might not be having state-of-the-art cold chains as in developed markets, but we do have a working supply chain system. Every one in India after all still gets his fruits and vegetables delivered to him. But then distribution occurs at a very heavy cost. 40 percent of our fruits and vegetables by some estimate is lost in our supply chain. And why that happens is because there is no credible cold chain system to speak of. There are, of course, inherent problems. Our farmers are so small that they cant afford to bring in the cold chain. The average land holding in India is less than one hectare. In America, you have farmers with 6,000 hectares of land holding. They can afford to think about cold chain whereas for our farmers, it would be a pipe dream. So our farmers have to perforce depend upon commission agents. One farmers production cant even ll a truck. Sometimes it takes ve-ten farmers to ll a truck to send his produce to the market. He literally is a slave to the commission agent who arranges for truck, collects their produce and take it to the market. And the commission agent does not care what spoils. He gets his commission on whatever he manages to nally sell. So he lets that 40 percent to go waste. The net result is: the huge wastage in the supply

chain is borne by the farmers. You can well imagine, if 40 percent of any familys income goes down the drain, how can the family prosper? That is the pitiable situation we nd ourselves in. I have often mentioned in many forums that when government announces any subsidy, it has all the good intentions to promote cold chain. But the large part of these subsidies are garnered by people who have no role to play in increasing the earning of the farmers. We must encourage those units which take the title of the produce at the farmgate. We are one such entity today. We are working in that direction wherein we go and buy the produce at the farmgate and farmers are paid 100 percent and then distribution is our responsibility. Now what happens in such kind of arrangement? The moment I buy at the farmers doorstep, I am stuck with all the losses which may happen because of inadequacy in supply chain. Those produce belongs to me. I have to carry them very safely and, therefore, I need the cold chain. As an entrepreneur I need to put in the best technology which I can source from anywhere in the world. This is what we need. We need people to take the responsibility. We need companies in this value chain which can put their money where their mouth is. Private entrepreneurs who have the experience in this domain know the challenges and they know managing and creating cold chain infrastructure is not a cakewalk. They know its a difcult ballgame even with 50 percent or 75 percent subsidy to make the business viable. But there are a lot of entrepreneurs who have no experience in the domain but are simply lured by the subsidy. Thats where a lot of our resources go waste. We have to target it and bet on the right people. The great disconnect between the center and the state governments is also signicantly adding to the problem. The central government is announcing schemes to help creation of such infrastructure but the state government machinery does not understand and they do not co-operate. One of the suggestions we have forwarded

to the government is that cold chain should be treated as agricultural industry so that we can buy agricultural land and not industrial land which is so expensive. If cold chain is brought under the purview of agriculture, then there would be many benets like cheaper credit and cheap electricity and this would solve many problems to make our business viable. This kind of targeted approach would help. Given the retail boom as this country has seen especially in last ve years, there was a general feeling that it would give a push to the cold chain sector. But I am afraid, that is not precisely what has happened. The retail is a whole different animal and it primarily means front end. Retailers have a lot of their own challenges as it is not easy to be a front end. They have to pump a lot of money and efforts to make that front end work. And retailers more or less have remained preoccupied with managing the front end and have not got involved with the back end in a major way. Its still being handled by specialized players like us but organized players in this segment are few and far between. There needs to be a whole lot of new set of players with serious intent to pitch in. I am, however, optimistic about the future of the cold chain in the near to medium term. And this would primarily be driven by the growing demand. In next ve years, I see things happening much faster than what has happened in last 15 years. But it would certainly require a change in the mindset of the government. Though its intentions are good in terms of creation of a robust cold chain infrastructure in the country, but the implementation of those intentions leave a lot to be desired. I will again come back to the disbursal of subsidy. They dont recognize that their subsidy should be targeted to the right players and they dont recognize that they should give repeat subsidies to the players who are doing good jobs. They should denitely be encouraging new entrants. But this should not be done at the cost of discouraging the committed players.
LOGISTICS TIMES February 2011

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COVER FEATURE - COLD CHAIN

The Next Frontier?

Rhea Vazirani Managing Director Robinson Global Logistics Pvt. Ltd.
talking about beeng up the cold chain supply. In fact in December 2010, at a seminar oragnised by Confederation of Indian Industries (CII), the government announced the National Centre for Cold Chain Development (NCCD) will be in operation soon. Contrary to the popular belief, cold chain is not merely refrigeration of perishable commodities. Cold chain is a logistics system that provides a series of facilities to maintain ideal storage conditions for perishables from the point of origin to the point of consumption in the food supply chain. The chain needs to start at the farm level post harvest, pre-cooling, etc. and reaches to the consumer or at least to the retail outlets. A well organized and efcient cold chain reduces spoilage, retains the quality of the harvested products and guarantees a cost efcient delivery to the consumer. A signicant aspect of the system is that if any of the links is missing or weak, the whole system might fail. Commodity Capacity (lakh tonnes) 92.82 7.63 1.07 0.09 0.73 0.15 0.68 0.36

Well, it had to happen. Sooner or later the government had to put its hand up in despair in failing to control vegetables prices. Today its onions, tomorrow it could be vegetables. As economy gets freed, its the market forces read supply and demand that will increasingly determine prices. Once again, the focus is back on cold supply chain in India. Almost like shutting the door after the horses have bolted, from the nance ministry to commerce ministry to agriculture ministry, they have suddenly woken to the fact that Indias cold chain supply leaves a lot to be desired. Its not a new topic either.
LOGISTICS TIMES February 2011

For the past several years, seminars, workshops, committees have been Commodity Potato Multi purpose Fruits and Vegetables Meat Fish Meat & Fish Milk & Dairy Products Others

Commodity wise distribution of cold storage capacity

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The Cold chain logistics infrastructure generally consists of: Pre-cooling facilities Cold Storages Refrigerated Carriers Packaging Warehousing Information Management systems (Traceability and Tracking etc.) Indias cold storage story dates back as far back as 1938, when a unit was set up in Meerut for storing potatoes. Potatoes still dominate the countrys cold storage scenario accounting for as much as 92 per cent. There has hardly been any signicant change in the past 70 years. Overall, our cold storages can store around 22 million metric ton. Of this, Uttar Pradesh and West Bengal have 65 percent of the installed capacity. While we have one case of McDonalds in India which uses smart temperature-controlled supply

and distribution, we also have many companies whose food stock is met with rejection in Europe. The estimated annual production of fruits and vegetables in the country is about 130 million tonnes accounting for 18 per cent of our agricultural output. Moreover, the lack of cold storage and cold chain facilities are becoming major bottlenecks in tapping the vast potential. The cold storage facilities now available are mostly for a single commodity like potato, orange, apple, grapes, pomegranates, owers, etc. which results in poor capacity utilization. Out of the above 3443 cold storage units, 2975 are in private sector, 303 are in co operative sector and the rest are in public sector. Clearly, this is not at all adequate, as Indias vast produce rot due to lack of cold storage resulting in increased cost of the same produce. Except for a few examples, India has a totally un-integrated cold supply chain. In

some pockets, individual entrepreneurs have ventured into the cold storage business. Most of these are of poor technical design and do not adhere to the international standards of storing and stacking. Overall, the cold chain supply chain industry in India appears like the next big wave that never lashed. The technology used continues to be archaic. Many cold warehouses are nothing but a large shack cooled by some equipment. Temperature zoning, air curtains, air locks, etc. are not being used effectively or at all. Regulations in cold storage infrastructure allow 100 percent Foreign Direct Investment (FDI). This consists of coolers, warehouses, reefer trucks, retail locations, chillers, etc. The Union Budget of 2010-11 also provided for accelerated depreciation among other benets. Yet very little FDI or local investments have come in. The cold chain industry
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COVER FEATURE - COLD CHAIN

cover in the region, solar/ UV radiation in region, and of course, marketability. Care of post-mortem (sh, meat) food items is relatively simpler. But even for high value post-mortem food items, cold chain means impeccable care at every stage. My rm RGL imports many high-value post mortem food items. To maintain a prolonged shelf life of these items, extreme care is required right from unloading of these items from containers to transporting the same to our warehouses through reefer trucks to maintaining distinct temperatures for each of the items and ensuring that temperature uctuations do not occur. That means a stringent and proper planning for storage areas, breathing air ows and a host of nuances that need to be adhered to very stringently. My experience is that even if the technology can be cost effectively acquired and operated with regularity, the management skill to order proper quantities and enforce proper cold chain practices throughout the chain has to develop. Since fuel and electricity costs in India are higher than in other places, it is all that more important to be tight operators there than anywhere else for the cold chain industry to ourish. We do have enormous fascination with technology in India and little respect for real management. Cold storage is still in a nascent stage and thus evolving. The viability has to come both from consumers and from the service providers. In India, less than

LOGISTICS TIMES February 2011

is currently around Rs 15,000 crore and is expected to touch Rs 40,000 crore by 2015. Why is it then that foreign investment in cold chain is conspicuously amiss? Among many other infrastructure bottlenecks that inhibit FDI, the issue also lies in lack of understanding of an integrated cold supply chain management in our country. The refrigeration expert or refrigeration supplier is mistakenly identied as the Cold Chain expert! This has been the common error when identifying expertise to establish a viable and optimal cold chain. One should be aware that refrigeration is only one albeit an important one component of the complete cold chain. Expertise in cold chain management means applying refrigeration as a technology to facilitate preservation and care of perishables in the closed cold chain loop. It calls for a deep understanding on efcient energy use, optimal choice of the care to be applied, efcient mode of transfer of products from farm to consumer, appropriate and selective choice of equipment and application, primarily the complete process that is the back bone of the entire cold chain. Moisture loss is one of the main causes of deterioration that reduces the quality of fruits and vegetables. Refrigeration inherently dries the air. Special techniques must be employed to maintain humidity levels in a store both vegetables and meats/sh.Very little or no consideration is given to the fact that fresh vegetable are living and continue to undergo life processes when stored. They need to breathe even during the cooling period. They create carbon dioxide and other gases that require regular purging, otherwise they will die or wilt. Cold spaces are intended for term storage of produce yet to be sold. They are an important aspect in bringing revenue to those who harvest the produce. Cold rooms cannot be simply large-size refrigerators. The most crucial erroneous installations are those dealing with living perishable produce vegetables. For vegetables and fruits, it is important to consider the weather and wind patterns in the area, average cloud

The cold chain

supply chain industry in India appears like the next big wave that never lashed. The technology used continues to be archaic.

two per cent of the fruits and vegetables produced are processed as against 65 per cent in the US and 70 per cent in Brazil, as per farm ministry estimates. Moreover, wastage of fruits and vegetables due to poor post-harvest management and lack of cold chain facilities have been estimated to cost up to Rs 500 billion annually, as reported in the fth and nal report of the National Commission of Farmers. Finance Minister Pranab Mukherjee has announced a number of schemes to attract investment in this sector as he wants to bring down difference between the farm gate prices, wholesale prices and retail prices. He also said that, External Commercial Borrowings will henceforth be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat. And to further ease the problem, he has exempted customs duty on crucial refrigeration units needed to produce refrigerated vehicles. He also allows extending of hiring private warehouses by state run Food Corp to seven years from ve years to meet the storage decit. The potential for cold chain development in India is huge, rate of food processing in India is low and is growing, waste in the perishable F&B category is a key point that needs to be addressed, and there are a number of other sectors apart from food which also rely on reliable cold chain development, expected market size for cold chain services in India is projected to reach US$ 10 billion in the next ve years. But none of this would really work till we improve not just our physical infrastructure but also social and economic infrastructure. A typical truck driver need to stop 49 times during his 2,400-km journey from Kolkata to Delhi because of bad roads, innumerable toll gates which operate on different billing systems, and corrupt ofcials, causing delays and an unproductive journey. The best of cold supply management will not make things efcient till these bottlenecks are eased.

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COVER FEATURE - COLD CHAIN

Chicken & egg story

Mahendra Swarup President, Indian Private Equity & Venture Capital Association (IVCA)
From the private equity and venture capitalists point of view, logistics sector is gradually emerging as a hot destination for investment. We already know that a lot of investments are going into the infrastructure. And this naturally leads to the desire or necessity of creation of very strong ancillary industry around that hard infrastructure. For instance, if you have roads and highways, you need to create supply chain management infrastructure segments like large warehousing, cold storages, cold chains, etc. This is how things evolve and work in a fast growing economy. But if we specically speak about cold chains as a distinctive and independent segment, I am afraid not much investment are really going into it. Despite enormous potential, the packaged and processed food industry has not taken off in a major way due to lack of investment in supply chain management on the cold chain and cold storage side. There is no perceptible respite in the huge amount of wastage between the farm gate to the market level and this primarily owes to the fact that the cold chain area has remained neglected. That too when its a well recognized fact that a robust network of cold chain infrastructure in the country could be panacea for so many things. If you are talking about enhancing the income level of the agrarian society, then supply chain management and investments in cold chain would make a lot of impact. If you are talking of controlling ination in the food item, then again supply chain and investments in this kind of infrastructure could act as that desired critical differentiator. One of the reasons why the large format
LOGISTICS TIMES February 2011

retailing has not been able to grow as fast as it could have in the country especially in groceries and food and services where most of the players are active is because of lack of investments in cold chain. Cold chain actually is not only restricted to storage or refrigerated trucks but also at the retail end. In the immediate economic history of the country, the rst set of enterprises who thought of putting investment in cold chain were the beverage retailers when they came in. But unfortunately such a drive remained restricted to a very limited level mostly in the dairy and ice cream industries. Frozen food industry which is a very high percentage of the sale of any retail business in food and groceries has grown at a very low pace. And that is because investments in cold chain have been low. However, as economic growth moves to a new orbit which would also result in a greater emphasis or thrust on processed and frozen food production, investments in the cold chain would have to dramatically increase. There are no two ways about it. Here we need to analyze the present equation. Cold chain is a relatively new concept in India. And its quality management requires a different set of competencies. It can not be seen as that typical transportation and warehousing business. Cold chain management involves a lot of technology and knowhow as management of different kind of perishables need different applications or different technological insights. The knowledge level and technological knwohow, I guess, is not enough in India. There is an urgrnt need to get technology partners, people who have experience. The good news is: there is a strong

possibility of leading large format retailers like Walmart and Carrefour eventually operating on a full edged basis in not so distant future and they have superior technology and knowledge in developing the cold chain. No doubt, some Indian retailers have emerged big time on the horizon in last four-ve years. But I dont think they have the knowhow and the knowledge to really develop and create the backend requirements like cold chain. Comparatively, the global giants who have been operating for decades in so many countries have developed well-dened competence for backward integration. If we look at the simple business equation in investment terms, then cold chains entail high investments. So given the fact that processed and food industry has not grown to a commendable scale in the country as one would have wished, the return on capital is probably not justied. The retail presence has to actually grow many fold before the large investments in cold chains can be justied. Its that typical chicken and egg story right now in terms of what comes rst. The big cold chain players are not coming to the country because there is not enough market. Their arrival would only be propelled by the restriction less positioning of global giants. For this FDI provisions in retail would need to be liberalised. Till that happens, I dont think there would be big ticket investment in the cold chain. Piecemeal capacity creation would be always there since so many logistics parks are now being talked about and there cold chains need to be a specic component to broad base the offerings of that unit. .

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COVER FEATURE - COLD CHAIN

Accredition, a must
Saurabh Agarwal Vice Chairman Indian Institute of Finance

Galloping ination has forced the government and civil society to consider various alternative strategies. One of the strategies is to create enough space for preserving and storing perishable and other important items including agricultural products, processed frozen foods and medicines. Another strategy contemplated is to give freedom to farmers to choose their intermediary to access the consumer market, as in some states it is compulsory for farmers to sell the produce to local committees. This will open a wave of opportunities for private sector participation. However, private entrepreneurs to be successful will have to focus on better storage and distribution through cold chain. Cold storage must adopt rst in and rst out method rather than last in rst out especially for horticulture and medicines. EOQ method of managing stored products should be followed whereby the storage should be around the EOQ and should lie between maximum and minimum. The maximum and minimum have to be decided depending upon the particular supply chain and demand urgency for the product. Controlling ination by improving productivity, storage and transport of agricultural produce requires to be supplemented with efcient cold chain network. I will just refer to a case study. Vishwas Kachare is a farmer in Telanwadi who in a period of 30 years has been able to shift from a small hut to a 40,000 sq ft farm house. Starting from 27 acres of barren land to his current day orchids of more than 300 acres, he has been able to exhibit
LOGISTICS TIMES February 2011

how we want our farmers to progress. And he achieved it by integration of horticulture, cold storage and packaging house. Hence, for managing supply chain it is important to ape what international retail giants like Walmart, Carrefour and others are doing for importing fruits and vegetables. Pre and post harvest tie ups between farmers and companies can help reduce the wastages in the supply chain. For this, states governments can come forward and provide subsidies, as is being done by Maharashtra government where 100 percent subsidy is given to set up horticulture and the provision is aligned

with the employment guarantee scheme. Similar incentives in the area of cold chain are a must for it to progress and grow. There exists tremendous export opportunities which can only be accessed if there exists a strong cold chain network. The benets agricultural fruit exports has brought to Indian farmers is observed in a number of case studies one of which is cited above. The potential revenue of fruit exports itself is around Rs. 1500 crores. Lower oxygen and increased carbon dioxide levels provides the right cold storage atmosphere for longer shelf life of horticulture. Infrastructure with

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such atmospheric conditions needs to be created at a much faster speed. Initiatives like that of Mother Dairys Safal whereby sorting of fruits and vegetables into different categories and packing is done with the help of farmers have signicantly reduced the time lag and burden on existing cold chain infrastructure. Technology will have a major role to manage the critical gaps in demand and supply of cold storage. For this, one can learn a lot from the case study of the Public Distribution tracking system followed at Krishnagiri district (Tamil Nadu). Use of Global positioning system (GPS), better electronic weighing systems, local language billing machines and General Packet Radio Services (GPRS) for updating the details on the central server are some of the key innovations being used for preventing corruption and better availability to villagers. Innovations like these must become part of the cold chain network. Government is aware and well seized with the issues relating to cold storage. Government is taking necessary steps in this direction but to accelerate the rate of growth, India requires involvement of private sector and newer technology both in terms of nancing and capacity

building and faster movement and exibility. National Horticulture Mission (NHM) was launched in 2005-06 for providing better storage facilities for fruits and vegetables. In 2010, we have approximately 898 pack houses, 46 cold storages, 14 refrigerated vans, 7 wholesale markets and 45 rural markets under the mission. The mission needs to be implemented with greater speed to meet the increasing needs of burgeoning population. Cold storage receipt nancing by accredited cold storages is one area which needs to be developed. Accreditation of cold storages is another area which requires governments attention. This will help farmers/manufacturers act as price negotiators rather than price takers with the help of cold storage receipts. Hence, the authorities should focus on promoting creditable cold storage receipts and its negotiability across nancial institutions. The regulators will also have to provide awareness among farmers/manufacturers of the possible downside risks associated with this speculative activity. Initiatives like Garuda which is a nationwide grid computing initiative aggregating supercomputing and storage resources nationwide needs to be expanded and

private sector participation or public private partnership in this area needs to be implemented. Financing cold chain infrastructure requires incentives for equity nancing, debt nancing and by nancial development institutions. Special incentives need to be provided for raising money through either private equity or through the Small and Medium Enterprises Exchange (SME exchange). For tapping international nancial markets, large cold storages may apply to multilateral institutions, export credit agencies (ECA), external commercial borrowing (ECBs), syndicated loans, private placement, global depository receipts, weather derivatives and other hybrid instruments. This area, largely ignored in past requires a lot of attention. Politicians, policy makers, businessmen, chambers and academicians should come together to promote research and development of cold chain network and ensure that there is ample storage facilities created in the next ve year plan. A country of 1.2 billion dependent on weather God needs ample storage facilities to meet risks and contingencies associated with supply chain. This would also generate employment and promote growth.

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TABLE FOR TWO

S K Sharma Managaing Director Global AgriSystem

Straight from the horses mouth

PAWANEXH KOHLI (PK): Good afternoon, Mr. Sharma. We all know about this huge issue of agricultural wastage which is being generally spoken about. How would you explain the experience of Global AgriSystem in tackling this issue and what could be extent of wastage which actually happens in the agriculture business? S K SHARMA (SKS): Good afternoon, Pawanexh. You rightly touched upon the issue of wastage. We have been hearing about it but now as a company which is providing supply chain solutions in fruits and vegetables, we know that where it hurts. And believe me, it hurts very hard. In the recently held CII
LOGISTICS TIMES February 2011

summit on cold chain, people including the eminent economist like Montek Singh Ahluwalia were asking where from this figure of high wastage has come. But from our experience, we can say that these numbers are definitive in nature. For instance, we are involved in the carrots trade and our wastage starts at 10 percent around the beginning of the season and it goes to as high as 50 percent by the end of the season. And it all happens because of the poor storage system. As a company, we are working in the direction of reducing the wastage by creating the required infrastructure and our plan is to create a pan-India network. We already have eight facilities where we

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Pawanexh Kohli Chief Cold Chain Solutions Officer Gati

With the key objective of understanding the basic problems which companies dealing in agriculture and cold chain have to grapple on a regular basis, Logistics Times conducted an exclusive table for two session wherein S K Sharma, Managaing Director, Global AgriSystem and Pawanexh Kohli, Chief Cold Chain Solutions Officer, Gati came together and discussed various strands of the core issue of creating a vibrant cold chain regime in the country which would mean a win,win equation for every stakeholder in the agrarian business. The participants did not just debate the existing faultlines in the existing cold chain infrastructure but also pointed out the solutions which can be infused through a collaborative effort. Excerpts:
do the contract farming, post-harvest management, storage etc. And we have four distribution centers in metropolitan cities. So now we have a network of four odd branches and we are setting up four more. In terms of volume, this year we would be handling about one hundred thousand metric tonnes of fruits and vegetables. Out of this, 25-30 percent of the volume would be handled through cold chains. One of the challenges and you represent the logistics side of the cold chain and I will share with you, India has about 25,000 cold vehicles and number of cold storage units is very high- 5400. But the right kind of cold chains do not exist. Fruits and vegetables suffer from the lack of right kind of logistical infrastructure in terms of cold storages and refrigerated vehicles, etc. And whatever facilities are there, they come at a very expensive price. I can share with you our experience with carrots last year. We spent as much as Rs 7-8 per kg in the transportation of carrots to the south Indian market. The wastage within the transportation system was reduced from 35 percent to less than 15 percent. But it still did not compensate for the expenditure incurred. That propels me to ask you as a logistics services provider, how much of time you reckon it would take to provide the cold chain services on demand in the country?
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TABLE FOR TWO

PK: It would largely depend on how market reacts to the products that move into the cold chain. Governments focus throughout has been on the wastage and benefits which could be delivered to the farmers. By reducing wastage obviously farmers would have more to sell. However, the logistics services provider, in fact, has been the post facto player in the entire Indian scenario. Nobody shook hands with them and nobody partnered with them to take logistics services standard vis-vis cold chain to the higher level. Sadly governments focus in agriculture has been to provide subsidies. Now as a logistics player which is always fighting for profits and margins (you already know how little margins are in the distribution business), we would, of course, like to be part of the agriculture growth story in India. We are sure that the government has a vision to bring in a better regime for movement of agri-products. The government should work more on the development of a longterm plan for the evacuation mode the produce reaching the market from the farm gate. The focus should not just be on improving the production mode. How would that happen? How do I see logistics services provider becoming a part of promoting cold chain infrastructure? Not necessarily through capital subsidy to the companies like Gati which are willing to participate. But they can link incentives say at the tax level, in streamlining the entire route, maybe by way of subsidy on energy consumption if we commit to provide service to the agriculture sector, etc. I provide cold chain service to chocolate, meat, fish, dairy and also agriculture but agriculture is my last priority because there is least amount of money involved. As a company, you need some viability gap funding and we would need our gaps to be filled up. So if the government says you would move agriculture produce and for that component of agricultural component, you would not be taxed, there could be two possibilities. I would either become too greedy and move all my resources to serve clients like you or as a strategist would seek to balance out my portfolio- may be 10 percent or 20 percent of my business would be aligned with agriculture. But I would definitely look for business which would be linked to agriculture and it will in turn benefit the farmers. If you can evacuate your produce safely and quickly to the market, then obviously some of the benefits would be rolled back to farmers. I think this is one thing the government should look into. SKS: Pawanexh, I think you have touched a very interesting point of the comparative advantage which logistics providers would get from different sectors and if there is no incentive for them in the agriculture and horticulture sectors, then probably focus would be lower. I would like to emphasis on another dimension. And that is inefficiency in the system which is killing both logistics services provider and the end user. PK: This ultimately boils down to the larger intend of the cold chain. Yes, I agree with it completely because that is the next incentive. If I move agriculture produce and I am assured with something like green card which China has recently started. That is if my vehicle is carrying horticulture produce, it will not be stopped at any toll or check point and it will move in the green
LOGISTICS TIMES February 2011

corridor which is fast track and has linkage with the entire country. Just imagine what will it do? My fuel is saved, your product is saved, and we have saved a lot of time in the transportation. Thats the next step the government should take. SKS: The issue is if there are inefficiencies in the system, then we have to join hands. That is: all the stakeholders in the industry. First of all, we have to identify those inefficiencies. You talked of the backhaul which can be provided by being a panIndia network company. I will tell you something interesting. We are planning to operate a daily refer vehicle from Delhi to Bangalore and in the reverse side also. See what will happen. We will send apples between December to February from Delhi and will be bringing in coloured capsicum and other vegetables from Bangalore. And then from April onwards till September, we will be sending carrots from Delhi and will be transporting flowers from the southern markets. PK: So you have every season mapped with varying products all coming from one organization. SKS: Yes. We are present in northern and southern India and so this module becomes very complimentary. So those inefficiencies of backhaul would be taken care of. We have recently undertaken a study on this subject and we have found that capacity utilization of refrigerated vehicles is just 65 percent. 50 percent of vehicle from the starting point goes full but for the backhaul, it goes to any other destination to pick up the cargo which is dead mileage or it will take the dry cargo from there which would be less in capacity. So if the capacity utilization is enhanced to say 80 or 90 percent, then cost efficiency would go up on one side. The second inefficiency as you pointed out through the China example, in the recent CII cold chain summit we recommended that fruits and vegetables should be treated very differently and vehicles carrying them should be given the green card. Chinas story has just come up and there are reports that fast movement has resulted in a cost saving of 10-15 percent. PK: Yes, absolutely. And it has happened only because of the fast track. SKS: You know that if a vehicle starts from here and goes to Bangalore, it takes six days. The distance is like 2300 km and it should be covered in four days. So we are wasting two days on an expensive transportation system. So much of additional fuel is burnt. And we are under utilizing the vehicle for two more days. So that way if these inefficiencies are sorted out, then only we can think of a better regime. PK: I feel that the governments vision is to benefit the larger electorate the farmers in the real India. And they need the support of private players like us to drive that vision. So they must facilitate in some way. But if I say that I will work with you throughout but the market today is not offsetting your Rs 8 additional cost on carrot despite you bringing down the wastage by 10-15 percent, then you cant keep on paying for losses forever. So the government has to work this equation out afresh. And work it out in such a way that the real benefit should go back to rural India. They must incentivise through process and procedure and not just through capital subsidy. The other

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thing we are very much worried about in cold chain is: there is no insurance for perishable cargo. I am also dependent on machine and that machine at any time can fail. And when that happens, the entire debit is on us. SKS: We have suffered on account of this problem. In one instance, two of our trucks were stuck up and they could not get the replacement of the equipment in time and the entire produce was lost. PK: In such instances, the entire cost has to be borne by service providers. And this is another concern which is resulting into hesitancy for a lot of LSPs for making aggressive moves in the cold chain. SKS: We have spoken with insurance companies on this issue but their response is: they do not have the parameters to assess the failure of the machine deployed in cold chain operations. And, therefore, the issue is in a state of limbo. PK: I think, they dont understand. And my suggestion would be that all interested parties myself as a transport services provider, yourself as a produce owner and, of course, the government because they have the larger motivation and vision to bring the difference in the agriculture trade they should develop a corpus wherein I would also willingly contribute. And it would not be a corpus of only money. It would be a corpus of domain skills as well. There should be a panel comprising people like me, you and somebody from the government and build our own insurance mechanism. IRDA could write some rules for us and we can develop some schemes on our own. Imagine how much this step can attract to bring LSPs closer to the agricultural sector. If I am insured, it could result in all efforts to reach out to the agrarian market. And this would benefit the farmers immensely. Today farmers cant take the risk of going out to far fetched places to sell his produce because there is risk involved and he sells it to local aggregators. But I am a service provider willing to take that risk because of insurance coverage. So the government, if it really wants to push the market and the farmgate and bring them together, they have to fix this biggest flaw which is unavailibilty of insurance for perishable goods. The typical insurance company does not do that. They did not do that in the marine sphere as well. So what did all ship owners do? They built up what is called the PNI club. They contributed money together and Llyods Insurance was first to realize this. We can work on a similar model. For instance, out of the astronomical sum which the government is spending on pure infrastructure, it could create a small start up corpus for cold chain. It could just be a Rs 20 crore corpus where private players would also be contributing. And if I contribute a certain amount, an equal amount of perishable goods coverage would be ensured by that warchest. Also since we will have a panel of vested parties as the controllers of that insurance corpus, we would also be able to collaborate together. Tomorrow if we find that repeatedly a companys refrigeration system fails, that will be blacklisted. Such a system would ensure the seamless coalescing of information. Four-five such innovative ideas need to be adopted to drive the entire industry which would also ensure

that benefits are delivered at the farmgates. But here everybody is looking at equipment buying and selling, everybody is looking at building base infrastructure not realizing that every economy is based on ensuring the reach of the saleable product to the market and you have to tie the entire link. SKS: I think, you have touched a very interesting topic. So far the focus of both industry and the government has been on hard infrastructure the assets. But assets without requisite knowhow, the software, knowledge and strategy. It is ultimately these components which would make sum total correct. We are also noticing a lot of demand emerging out of metropolitan cities throughout the year and those traditional rules of seasonality are getting diluted. With the increasing size of the cities, there needs to be adequate capacity to produce in one place on which a lot of effort is going. But at the same time, efforts need to be made to ensure that the produce is made available at the right time and at the right place. I think, the recent crisis in onion is a case in the point where a difference in five percent production has created a havoc. Just five percent drop in production has resulted in seven times escalation in the price of onion. Also the fruits and vegetables marketing has to be different from the way it is happening today. In that context, allowing FDI in fruits and vegetables is not a bad idea. PK: The government must promote that. Because one of the reasons which has been propounded in favour of FDI in multi-brand retail is it will help the agriculture sector. But if they are not willing to open multi-brand and the objective is to help the agriculture sector, then they can promote single-brand companies in F & B retail. We do not have single brand or multibrand F & B retail in the country. SKS: It would do a world of good for cold chain in the country. There are a host of reputed firms globally working in this domain. Somebody like Cold Storage company of Singapore. Its a reputed firm and companies like these would be quite keen to come in the country provided there is a supportive environment. PK: And that would be much in alignment with government strategy. You dont want to affect Kirana store but at the same time you want to help farmers. So the answer is F & B retail even as it is toughest supply chain to manage and requires expertise of the highest order. SKS: Briefly if I have to sum up the pre-requisites to promote cold chain, there are two things which come to my mind. Firstly, the produce has to reach to the consumers at the right time and at the right pricing point, etc. But also the food safety issue. Most of the food that is coming today particularly not temperature controlled is a potential health hazard. Our cities are becoming bigger, more food will come and there would be a greater scope of risk. PK: Absolutely, more scope of pandemics, epidemics, etc. SKS: So cold chain promotion has to be also seen by the government as a tool to ensure supply of safe food to the masses. PK: Cold chain automatically means a superior supply chain right from the selection level. It also means alongwith if FDI in F & B retail happens, more branded foods with better safeguards. Yes, I totally agree that it will push through the governments agenda of food safety.
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FORECAST

Full of Promise
The year 2011 is full of promises and may turn out be a watershed year for SCM in India. Ongoing initiatives and trends along with better infrastructure and ICT enablers are expected to result in demand-supply networks, with shared technology and systems, extended decision rights and non-territorial services. Industry consortia will perhaps go for intra-nets. On policy front, it may further see the Government moving from a regulators role to a facilitators role, predicts Prof. Samir K Srivastava of IIM-Lucknow
The last few years have been dening years for supply chain management (SCM) in India. SCM growth is inuenced by regulatory and economic environment as well as by existing and upcoming resources and infrastructure. Foreign companies are keen to explore in India, as it is a great place for outsourcing, licensing, franchising, joint ventures, and tax benets like R&D credits and income tax exemptions in special economic zones. Our infrastructure comprising roads, railways, airports, seaports, information & communications technologies (ICT) and energy production is growing rapidly to match that of the developed countries. The growing Indian economy and expanding supply chains have started positively reinforcing each other. Gradually, economies of scale/scope for supply chain entities to experience win-win scenarios are showing up. Implementation of GST (Goods and Services Tax) is likely to make supply chains in India more responsive and costLOGISTICS TIMES February 2011

effective. On basis of these emergent trends, the year 2011 promises to provide a further impetus to the growth and development of SCM.

Govt Initiative
Industry and academic estimates put SCM spend in India at approximately 14% of the Gross Domestic Product (GDP). Global estimates for this vary and are around 14% of GDP in China and about 9% of GDP in the US. Indian government spending on supply chain and logistics infrastructure is estimated to reach INR 200 billion in 2012. Signicant money is being pumped into new and improved infrastructure: the highways, airports, terminal expansion. Indian Railways are already in rst phase of constructing a double-decked dedicated freight corridor. Their present policy focuses on accelerating the development of network for freight terminals with private investment to integrate rail transport

with supply chain. Government has already permitted 15 other players (private train container operators) to run container trains. Further, Indian Railways has nalised two schemes to attract private investment in rolling stock and terminals. These are the special freight train operator (SFTO) and private freight terminal (PFT) schemes. The SFTO scheme intends to increase the railways share in non-conventional trafc such as bulk alumina, y ash and bulk fertilisers. The PFT scheme aims to enable rapid development of a network of freight terminals to integrate rail transport with the supply chain for providing efcient logistics to end-users. The Maharashtra Industrial Development Corporation is developing 15 truck terminals across the State to improve the transport and supply chain network. The proposed truck terminals will also serve as an integrated and modern facility with amenities such as truck parking, transit and transhipment for goods and trucks, facilities for the crew,

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transport agency ofces, vehicle repairs and maintenance activities. Eight other terminals will come up in the next phase.

Private Initiative
Private players too have taken many initiatives in infrastructure enhancement. DHL Global Forwarding plans to establish Indias rst free-trade warehousing zone at Sriperumbudur with an investment of INR 450 million to provide customers the advantages of a duty free zone with infrastructure of high quality. Arshiya Internationals 165-acre state-of-theart Free Trade & Warehousing Zone (FTWZ) at Panvel near Mumbai being located near the container terminal of the Jawaharlal Nehru Port Trust will lead to higher prots, lower costs and higher efciency for its customers. Arshiya plans to set up ve such FTWZs in the country, ve distriParks and a 75train pan-India rail charter. It intends to infuse INR 200 billions into the business over the next ve to six years. Shreyas Shipping and Logistics plans to invest INR 1 billion to expand its shipping, warehousing and inland transportation capacities. It will also set up warehousing facilities at 8-10 locations across India to increase its trailer strength which currently stands at 8 to 100 in phases to enhance its inland transportation capacity. Future Supply Chain Solutions, the logistics arm of Future Group, plans to invest INR 5 billion over the next two years to develop infrastructure and expand its supply chain network. Safexpress has set up an ultramodern logistics park at Rudrapur. This is the companys 10th logistics park within one year and the company takes only 1.8 days for deliveries across India from here. Recently, Gati has partnered with Meridian Mobile to offer third-party logistics solutions like procurement, warehousing, inventory management, demand-supply support and analytics, distribution and reverse logistics. Similar policy initiatives have been started in other sectors. For example, the Department of Industrial Policy and Promotion (DIPP), has rmed up plans for foreign direct investments (FDI) in multi- brand retail. DIPPs idea is to create

jobs in rural India before allowing FDIs to venture into multi-brand retailing. So, foreign direct investors will rst have to set up back-end logistics such as cash-andcarry outlets, sourcing centres and entire supply chain before entering retailing. A study by CRISIL estimates that India needs to invest INR 650 billion to reduce wastage of fresh farm produce during transit. It takes into account the number of cold storage facilities and refrigerated trucks that will be required for storage and movement of fruits and vegetables from the farms to retail stores. According to CRISIL, opening up of retail trade for foreign investments will attract more funds for an efcient supply chain as organised retail of fruits and vegetables is less than one percent of the total sales of the farm produce. The level of supply chain collaboration and partnerships in supply chains is increasing. Future Supply Chains (FSC), the supply chain vehicle of the Future Group, is betting big on its new business divisions such as express transportation, distribution and international logistics to drive growth. The Future group is also planning to more than double the number of its Food Bazaar and Big Bazaar outlets after revamping its INR 10 billion Pantaloons business. It is planning to operate 500 outlets of the two formats together by 2012 from the current 135 Big Bazaar and 70 Food Bazaar stores. Bharat Forge Ltd (BFL) has decided to set up integrated power equipment facilities in order to address supply and logistical problems across the value chain of power equipment manufacturing to blunt the Chinese edge. BFL has stated that it intends to have manufacturing facilities for the entire supply chain ranging from basic raw materials such as steel through semi-nished products to nished power equipment. BFLs proposed plants are expected to reduce production cost and facilitate speedy implementation of power projects. There is a discernible trend of consolidation among various sectors and rms. Madura Garments consolidated four of its companies - Madura Garments Lifestyle Brands, Peter England Menswear

Brands, Peter England Fashion & Retail and Madura Garments Exports - under Madura Fashion & Lifestyle (MF&L) in Oct 2010. MF&L expects to double its turnover in 2011-2012. The company plans to move from a fabric-led to a demand- led supply chain a paradigm shift in approach. It has clustered its merchandise ranging from core products on one end to purely fashion-based products on the other. It has also invested 1-2 percent of its topline to fund ICT infrastructure and business analytics for real-time visibility on stock positions. Besides internal organic growth, Joint Ventures (JVs) and acquisitions have been used for inorganic consolidation. Gati Limited prefers JVs over acquisitions and plans to expand business to INR 2 billion in cold chain management segment by 2013. The JVs can be in the form of ratio of partnership investments or ratio of prot-sharing and are planned to be operated under Gatis cold and ambient supply chain division, Gati RedSun. On the other hand, FedEx has acquired AFL and its afliate, Unifreight India. The acquisition has provided the global cargo rm FedEx with added capabilities and a robust ground network in India.

Financial SCs
Financial supply chains provide the backbone for most supply chains and need to be managed efciently. The aim of many supply chain partnerships is to assist industries, traders and farmers in nancing their capital requirements at all stages of the supply chain. YES Bank and National Collateral Management Services Ltd (NCMSL) have partnered to provide collateral management and warehousing services. The partnership will facilitate Yes Bank to avail NCMSLs services like working capital nancing in commodity based industries, particularly agro based ones. The investment for Future Supply Chain Solutions expansion will be funded through a mix of debt and equity infusion from Fung Capital of Hong Kong, which holds 26 percent stake in Future Supply Chain Solutions. Tata Motors has entered into a tie-up with IndusInd Bank to
LOGISTICS TIMES February 2011

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FORECAST

provide nance to the dealers of Tata Motors to meet their working capital needs.

Reverse Logistics
Reverse logistics is another area capable of becoming a major route to cost optimisation with the growth of the Indian economy. The reverse logistics market in India is valued around INR 800 billion currently and is expected to grow rapidly in the future. Reliance Venture Asset Management (R-Venture) has completed the rst round of venture funding in Reverse Logistics. The other investors in this round of funding in Reverse Logistics are Kleiner Perkins Caueld & Byers and Sherpalo. There is a growing trend towards development and application of ICT across industries and sectors. There have been many novel applications of mobile telephony and web-based technologies. GSI India, arm of GSI Brussels, the worlds most widely used supply-chain standards system, has initiated talks with the Food Safety & Standards Authority of India to implement Internet and mobile phone-linked standard systems for alerts and product recall for the foods and pharmaceuticals industry. This will help consumers and retailers identify food and medicine contamination early in the supply chain. It will also provide data that can be transferred seamlessly between different levels of the supply chain to enable them to tackle the problem immediately. Bilcare has introduced nanotechnology based new anti-counterfeit technology capable of tracking and tracing a product through the supply chain till it retails. The company has signed deals with global and domestic pharmaceutical companies and is deploying it in leading pharmaceutical and agrochemical companies in India to protect their brands. Four Soft signed a contract with Aratrans Transport and Logistics Services of Dubai for providing its global freight forwarding and contract warehousing applications on software as a service model. Take Supply Chain, a division of Take Solutions, launched its new software as a
LOGISTICS TIMES February 2011

service (SaaS) platform called OneSCM. It is designed to deliver online supplier management to medium and large businesses and will enable manufacturers and distributors to facilitate supplier response transactions against the purchase order schedules. It will also provide shipment execution functionality such as part tracking numbers, barcode label printing and shipments. Gati intends to provide cold chain solutions, including temperature sensitive storage and product life cycle management solutions through its arm RedSun.

supply chain and human resources. Reliance Retail currently has 1000 stores, of which 70 percent are value format stores like Reliance Super, Reliance Fresh and Reliance Hyper.

Courses & Training

Another notable trend is the increased focus on SCM & logistics related courses and training on offer from management and training Institutes. While these schools are doing their bit, other stakeholders are not much behind. For example, Future Human Development Ltd (FHDL) of the Future Group and education company Everonn Education of Chennai have entered into a 50:50 JV to provide training in organised retail. Coffee retail chain Cafe Coffee Day (CCD) has come up with a new strategy for its supply chain model to cut cost and give customers fresher food. It is investing in food handling, storage, assembling equipment and training of its personnel to make its model more viable and efcient. Food is assembled and gets nishing touch at the cafes. This postponement strategy is expected to help CCD save on supply cost, as semi nished food can travel long distances and will require signicantly reduced frequent delivery. It will also reduce food wastage. There have been signicant forays in area of Sustainable Supply Chains. India has adopted a National Plan of Action on Climate Change as a positive step towards mitigating carbon emission levels. Improving energy efciency and adopting clean coal technology is a central theme in this strategy. Union budget 2010-11 has a series of green initiatives designed to boost environment-friendly energy and emission-free transport. Further, the government wants to use energyefcient technology and all future power plants may be based on supercritical technology.
NEXT ISSUE Bumps Ahead! Vijay Bhalaki, Director, Athena Infonomics India and Research Fellow, Center for Asia Studies

Supplier Side
Supplier development has been the hallmark of SCM in automotive sector in which India is emerging as a global hub. SPX India has started a Supplier Development Program aimed at growing the overall structure of auto component companies India. Further, the United Nations Industrial Development Organisation (UNIDO) has released UNIDO SPX (subcontracting and partnership exchange), a database of over 700 automobile ancillary and component manufacturers spanning the main auto hubs of Chennai, Delhi and Pune. It contains technical information for industrial sub- contracting, supply chain management and partnerships between buyers and suppliers. It will help optimise production capabilities of the automobile rms to source requirements of components from these manufacturers located in the small and medium sector. Genpact has signed a ve-year contract with Carnation Auto, the multibrand auto sales and service centre, to design and manage its core processes like nance and accounting, customer relationship management, procurement and supply chain management. Carnation operates 18 auto solution centres in India. Efcient SCM also requires trained and capable human resources. Reliance Retail has appointed about 10 professionals from Tesco Lotus of Thailand for its value retail formats, and 25 more are expected to join it. These professionals would head functions like operations, commercial, information technology,

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Not on a confident note

R C Dubey President ACTO

For private container train operators in the country, just signed off year has been a spell of extreme satisfaction. On all critical growth parameters, their 2010 report card certainly has some brownie points. Look at the numbers. By our estimate, the private container train operators increased their share by 20 percent last year. There has been a signicant addition in their eet size 110 rakes as against 40 in 2009. Today on a cumulative basis, private container train operators have nearly 50 percent of the eet size of market leader Concor. There were a spate of new terminal openings in NCR as well as nearly half a dozen mostly in states like Madhya Pradesh, Maharastra, Rajasthan and Gujarat. No doubt, 2010 has been a happening year for the private train freight business, not only in terms of business growth but also infrastructure addition which obviously has long-term implications. Needless to say, the buoyant economic mood has acted as the catalyst for these positive developments. But we are told (as several projections are pointing out), there would be no let up in economic buoyancy in 2011 as well. So does it mean players in the fray moving onto a new year with a greater sense of condence? I am afraid, that does not seem to be the case precisely. Early December, the railways ministry imposed embargo on a set of commodities for private train operators and this has come as a major dampener. At a time, when 25 rakes are still lying idle

in the country this is an uncalled for action. We are discussing this issue with the ministry as this move is being viewed as a serious hurdle by the industry. There are other serious issues which the private train operators would have to grapple with in 2011. There would denitely be a pressure of volume as the GDP growth of eight percent results in a growth of 11.5 to 12 percent in the transportation business. And we are told that GDP would be growing at a much higher rate than eight percent, so that means volumes up by a signicant margin for private container train operators. While managing the growth is the larger macro-issue, we would be expecting some denite moves in the direction of streamling of private container train operations. That is offering solutions especially as per the demand and requirement of customers who rather provider smaller lots of goods. Meeting their demands would be challenge and it would be interesting to watch how players respond to this challenge by setting up the much-required aggregation centers in the country. Railways last year also facilitated private players to enter into the private freight terminals and private freight train segments. There could be some decisive action on these fronts as well. Designing new wagons attuned to the transportation demand of a specic commodity is also an area where we could see some initial moves from the industry. (As told to Ritwik Sinha)

LT PROMOTION
Faridabad-based Nano Cranes Pvt. Ltd. which has recently launched the unique one tonner hydraulic mobile crane is fast strengthening its dealership network. The mobile cranes which are billed to be first of its kind in the world is making inroads in the large markets of Uttar Pradesh and Uttarakhand adding more new dealers for sales & service support to the customers in these states. Their contact details are: 1. Lucknow - Q. A. Naqvi - 9839001471 - Kanpur Road, Daroga Khera, Near ITRC Gheru Campus, Lucknow, U.P- 226008 2. Raibarielly - Mr. Vinod K. Bajpai - 941511814, Doorva Associated, 551, Civil Lines, Raibarielly, U.P - 229001 For promote information, the company has also provided a help line number- 08059101000. Meanwhile, Nano cranes, a part of Urastun Group- a leading auto component manufacturer, is expanding its clientele base at a swift speed. Recently, leading logistics company, Indo Arya, New Delhi also bought some units of Nano Cranes. LSPs, in fact, are one of the prime targets for this revolutionary product since it combines low operational cost and ease of use in the compact package.

LOGISTICS TIMES February 2011

RAILWAY FREIGHT

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RETURNABLE PACKAGING

Environmental-friendly!
Using the CHEP solution means fewer truck movements due to lower equipment relocations, which has a direct impact on reducing greenhouse gases. Says Chep India President Pranil Vadgama
Our world is changing. Companies are increasingly evaluating the environmental impacts of their supply chains and scrutinizing raw materials used in production as a part of their commitment to protecting and preserving the environment. Efforts are being made by industry, government and businesses to protect and preserve valuable natural resources and continue to look for supply chain best-practices which are ecological. Consumers are becoming more conscious and the young generation in particular are very much clued-up on environmental sustainable options in their decision making process. CHEPs returnable plastic crate system for produce has been found to deliver environmental performance and nancial value in the supply chain by an independent lifecycle study from RMIT University Melbourne, Australia. The study found the CHEP system generated signicant benets for customers compared with a single-use corrugated cardboard packaging system in Australia. Based on the results of the study, the estimated benets on a daily basis are: more than 175 tonnes of greenhouse gas emissions saved; more than 1.2 million litres of water saved; and more than 20 tonnes of solid waste avoided. The study complies with the ISO 14044 methodology for environmental systems and has been reviewed by two independent industry experts. The assessment took into account the environmental impact of the entire product and system lifecycle, including inputs to manufacture and the full end of life
LOGISTICS TIMES February 2011

processes for both packaging systems. The key results from the study highlight the sustainability efciencies of the CHEP system when compared with a single-use corrugated cardboard system. The efciencies identied include: greenhouse gas emissions were 70% less than a single use corrugated cardboard system; 95% less solid waste than the single use corrugated cardboard system because of a reduction in manufacturing process waste, even if all cardboard is recycled after use; it takes 85% less water to wash the CHEP Crates than is required for the manufacture and recycling of a single-use corrugated cardboard system. In India we are witnessing and seeing the same level of advocacy, focus and interest from the Industry. CHEP already provides returnable plastic crates in the Automotive Industry replacing the conventional cardboard packaging where benets are already being realized by Auto Component suppliers and OEMs across India. Using the CHEP solution means fewer truck movements due to lower equipment relocations, which has a direct impact on reducing greenhouse gases. We are currently in the process of working and validating with CII on a specic calculator which would also be able to calculate the amount of Co2 reduced in the manufacture of a car based on CHEPs returnable packaging system. The CHEP system of pooling where standard returnable packaging is shared across multiple customers is highly environmentally sustainable. For example fewer trees are felled in pallet pooling as individual entities would no longer need to purchase their own pallets but join

part of a pool in sharing those resources. This has no longer become a concept in India but a reality with almost 150 entities across India adopting pooling. Every new CHEP pallet purchased is already containing 23% of recycled wood through the use of composite blocks. As a result of the latter CHEP saves each year some 356,000 pine trees from deforestation or some 890 hectares of forests. These non cut trees produce each year an extra 23,293 tonnes of oxygen and will absorb some 320.0 thousand tonnes of carbon dioxide (CO) over the next 10 years. At CHEPs plants we use composite blocks from recycled wood for all pallet block repairs by which process CHEP will have saved the environment over a period of 10 years the deforestation of some 1.5 million trees or the equivalent of 3,750 hectares of forest producing some 891K tonnes of oxygen and allowing a carbon sink of 1,350K tonnes. CHEP pallets are exclusively produced from the renewable resource of high quality pine and spruce timber stemming from sustainable well managed European forests, which grow each year by an area the size of Cyprus (8,000 square kms / 800,000 ha). The CO production through the manufacturing of a wooden CHEP pallet is negative (40 kg of CO emission saving per pallet)! This is to be compared with an actual production of 230 kg CO if the pallet were to be from plastic or even up to 1,350 kg of CO if being made out of aluminum. The focus and level of attention on the Environment will only increase. The only question is will you become a leader or a follower?

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RETAIL

Preserving the
Mom & Pop stores
It is important to preserve the mom & pop stores (general trade) from the economic and social standpoints. From an economic view point, with globalization, we are very connected in the rest of the country. If there is any crisis in the world, we get affected. It is therefore important to preserve the general trade so that we have a strong internal ecosystem to balance off impact from the global economy, enunciates Ng Li Wah, CEO of Logistics Consulting Asia (LCA), writing for the first time in an Indian publication.
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From the social point of view, do you really want to lose the neighborhood relationship with the mom and pop stores that are also convenience of it? The General Trade ecosystem comprises of the manufacturers, distributors and retail outlets. All these three parties play a key component in ensuring that when the consumers go to the local shop to purchase something, they get the right product in the right condition i.e., very fresh at the right price. That is what it is all about. With the global retain chains (modern trade) penetration into the emerging markets (India, Indonesia, and Malaysia), they have eroded into the general trades sales, in the years some of the general trade have disappeared or are disappearing. However, today its not too bad in Malaysia; typically 50% of the goods are still delivered through the general trade. Manufacturers have been very focused in making sure that they supply to the modern trade and delivering good services to the modern trade. What we are essentially saying to the manufacturers are that Well, hang on a minute, you livelihood is also very much dependant on the general trade. In fact, if you continue to focus on the modern trade and allow only the modern trade to thrive, your margins are going to erode. Take a very good example, just compare between Malaysia and Singapore, whereby Singapore is predominantly through the modern trade, you will nd that most manufacturers margins, in terms of selling in Singapore is signicantly lower than margins in Malaysia. The reason is because of the general trade protecting the manufacturers margins in Malaysia, whereby the manufacturers here are not totally dependent on modern trade outlets. If the modern trade has the bigger power, they will come back to you and demand a lower margin, demanding cheaper prices. It is therefore in the interest of the manufacturers to make sure that the general trade continues to thrive and the way to do that is to give a lot more focus to their supply chain across the general trade network.

From the distributors point of view, they really need to start to look at their businesses.
Win-win situation
Manufactures typically sell through distributors; therefore they have to focus on the distributors development standpoint. If manufacturers have done any work on the General Trade side to date, it is too much focus on themselves, they have forgotten that in terms of developing the General Trade outlets, its going to comprise of systems, processes and also business roles. What manufacturers need to focus on is winwin for all across the network. Its not just about what they want but also what the distributors need. Manufacturers have to ensure that when the distributors require 100 packets of a certain product, they supplied in full and on time. From the manufacturers point of view, to get their products to the consumer, its actually a supply chain. The distributors are also part of the supply chain. The key focus to begin with, is to make sure that when the consumer goes to a retail outlet for a particular product at any point of time, the product is available on the shelf for the consumer because if the product is not available, you will have the loss of sales. The rst thing they need to focus on is to eliminate loss of sales. Manufacturers need to look at the process between the distributors to the outlets, every time when the outlet needs a particular product; manufacturers must ensure that the distributors are able to supply it. For the distributors to be able to supply it, they must ensure that they are carrying the right inventory, have the right processes, operations, and the right system to manage their process. In order for the distributors to achieve that, it is important for the manufacturers to supply the right products to the distributors as well. So each and every time when the distributors order a particular product, the manufacturers must ensure that they supply 100% in full and on time, in good condition. At the manufacturer level, they also got to have the right inventory. To ensure they got the right inventory, there has to be right demand and supply planning. It is not a straightforward process. Can it be achieve? Yes, it can. When you achieve it, you will see that the rewards are delivered throughout the supply chain, the retailers benet, the distributors benet, the manufacturers benet, and ultimately the consumers benet.

Task on hand
Some of the mom and pop stores can do with a facelift like painting the shop and displaying the products properly. They can also learn from supermarkets and large chains that have all the think tanks to work out the best store selling tactics. The neighborhood shops have a rsthand relationship with the customers; they should continue with their personalized service, increase their range but also manage their inventory well. They should know how much to have in store and when to re-order instead of relying on a vague feeling. Also invest in a point of sales system that will have gather this information and better manage your inventory. From the distributors point of view, they really need to start to look at their businesses. Today, they operate in their familys own way, whereby its all about relationships, and family members are all in the business. The distributors are the main integration point between the manufacturers and the consumers. If they say its not their responsibility or
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RETAIL

just waiting for manufacturers to take initiative, or when nally manufacturers do take initiative and they dont put the effort in to drive change in their organization, then it is difcult to see how they will survive in the long term. Other barriers to change include fear, lack of exposure and awareness. They mom & pop stores dont really know how to change or what is it that they really need to do. Sometimes when we are coming out its easy for us to say but when you are face with day to day challenges, with the problems and challenges, sometimes its hard to step back and look at the bigger picture. This is one of the reasons why we are urging manufacturers to step in and put in a lot more effort and investment into helping the general trade. Manufacturers make the investment in systems but a lot of effort has to come from distributors as well because of the manpower required. They have to drive through changes in their organization. There has got to be a mindset change in the way they operate. They can no
LOGISTICS TIMES February 2011

longer operate in their traditional way but to change and drive efciency in their organization, to reduce cost and inventory.

The UK story
In places like UK and other develop countries, people have realized its a mistake that the mom and pop stores have disappeared. A good story is that when I visited a friend in Deal in UK, a picturesque town a few years back. During that time, one of the modern trade retail chain came in to this town and took away the local shops and replace them with the large supermarkets and express stores. After a short while of being there, in a matter of couple of years, they realize its not as protable. Worse still, when the economy started to slow down and they were not making enough prot, they pulled out. The local community was left stranded. They have to travel a long way in order to buy the daily necessities. What the local community did was that they come together to help start up the local shops

again. Since then, they make an effort to make sure the local shops survive. You are hearing a lot of stories like that. A British friend tells me she recently wrote to her MP asking how it had come about that the only grocery stores within 10km of her home were now a Tesco supermarket and 3 Tesco Express outlets. This is a scenario of beautiful villages, no mom & pop shop, no core to the village.

Asian Developments
Indonesian distributors are more progressive than Malaysian distributors. Malaysian distributors are more conservative and very much into cost savings, not wanting to spend. Indonesian distributors are more prepared to invest and it could be because the population there is so much bigger, hence the economies of scale. This is the same case in other countries with dense population such as India and China. * This is an adaptation of the interview Ng Li Wah
gave to BFM, English busness radio station in Malaysia few weeks ago.

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SECURITY

Securing the Global Supply Chain

By working together, the world can make great strides in 2011. Just as the nations of the world were able to achieve consensus on international aviation security, and make historic progress in securing a vital global system so too we can make global supply chain security stronger, smarter and more resilient, argues Janet Napolitano, Secretary of Homeland Security, USA

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In todays world, the very nature of travel, trade, and commerce means that one vulnerability or gap anywhere across the globe has the ability to affect economic activity thousands of miles away. A consumer here in Brussels can go online and buy a gift that is assembled in Mexico, from parts that were manufactured in China, own across the Atlantic; and inspected at a port in the U.K. before nally arriving by rail and truck at its nal destination here in Brussels. This complex supply chain that consumers and businesses in the US and around the world rely on every day illustrates our interconnected nature and our vulnerability to those who may seek to disrupt global commerce. That vulnerability to those who would leverage our interconnectedness to do us harm was demonstrated by an attempted terrorist attack on Christmas Day 2009. The attack was launched by a Nigerian man who had been educated in Britain, was in contact with terrorists in Yemen, had bought a plane ticket in Ghana, boarded in Nigeria, switched ights in Amsterdam, and was in Canadian airspace when he attempted to blow up an American commercial jet that carried people from at least 17 countries. The world responded quickly and deliberately to address security gaps revealed by this attack. Throughout 2010, the Department of Homeland Security worked with the International

Civil Aviation Organization, or ICAO, and many other international partners on a global initiative to strengthen the international aviation system against evolving terrorist threats. I led a delegation that attended ve regional aviation summits across ve continents, each of which produced regional declarations to strengthen security. And in October, 190 countries adopted a historic Declaration on Aviation Security at the ICAO Triennial Assembly, forging a new foundation for a truly global aviation security system with new standards for technology, information sharing, and cooperation. In those days immediately following the 2009 Christmas attempt, we also challenged ourselves to nd potential gaps in the air cargo system. Working with the private sector and our international allies, we took concrete steps to address air cargo throughout 2010 steps that helped thwart the plot to send cargo lled with explosives through Europe and the Middle East to the United States. This work on both passenger and cargo security in the aviation sector will continue in 2011. But there is another complex system where vulnerabilities exist: the global supply chain that moves goods across the world. That system is a powerful engine of commerce, jobs, and prosperity. Yet a range of increasingly unpredictable and potentially catastrophic threats - from

terrorist acts to natural disasters - presents substantial danger to this system. Regardless of where a potential event might occur, the ripple effect of a signicant disruption to this critical global system could potentially impact not just the United States, but the international community at large. The reality is that securing the global supply chain is integral to securing both the lives of people around the world, and maintaining the stability of the global economy. With this in mind, our responsibility the responsibility of governments and companies around the world is to do all we can to keep the complex system from being exploited or disrupted by terrorists. Today, I am announcing that, in partnership with the World Customs Organization and others, we will lead an international effort to enlist other nations, international bodies, and the private sector to strengthen the security and resiliency of the global supply chain. Together, we must make progress in three areas. The rst is preventing terrorists from exploiting the supply chain to plan and execute attacks. The second is identifying and protecting the most critical elements of the supply chain system like transportation hubs - from attack or disruption. And the third is bolstering the resiliency of the global supply chain that if a terrorist attack or natural disaster does occur, the supply chain can recover quickly, and any disruption minimized.
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SECURITY
Preventing Terrorist Attacks Controlling Precursor Chemicals
Our rst focus is to prevent terrorists from using the supply chain to illegally transport or gain access to materials such as the precursor chemicals that are used in improvised explosive devices, or other potentially dangerous materials that could be used in an attack. Governments across the globe can and must work together more closely to track the movements of products and technologies that can be used to make weapons across international borders. This means improved international standards, expanding joint investigations and interdiction operations, and strengthening how we target and screen potentially dangerous shipments across the globe. In 2010, the international community made signicant progress on this front through Project Global Shield, launched
LOGISTICS TIMES February 2011

by DHS with the WCO, as well as the UN Ofce on Drugs and Crime, and Interpol. As part of Global Shield, since November, more than 60 participating countries have been sharing information with each other about the export of 14 precursor chemicals used in IEDs. This notication helps countries across the world ensure that chemicals entering their borders are being used in safe and legal ways. It also helps customs agencies detect whether any chemical shipments are missing. Global Shield has already been successful in both interdicting a number of suspicious shipments as well as providing investigative leads on the smuggling of precursor chemicals into Afghanistan and Pakistan. In 2011, DHS, the WCO, Interpol, and the UN Ofce on Drugs and Crime, and other countries will continue to work together to build on the success of Project Global Shield and expand this model to more countries across the world. We must

continue to raise international screening standards by agreeing on and expanding upon risk-based targeting that customs agencies use to focus their resources on the most dangerous shipments. We also have to continue to develop and deploy state-of-the-art technologies that can better track illicit goods such as precursor chemicals, and detect them when agents come into contact with them. And, we must work together to improve the capacities of countries around the world to ensure that well-developed, wellequipped customs agencies are able to do their jobs everywhere along the global supply chain. As part of this effort, DHS will work with other U.S. government agencies like the State and Defense Departments to expand technical assistance and training to partner countries. Last week I was in Afghanistan, where I met with Afghan leadership on ways to build the capacity of civilian Afghan law enforcement to

41

control dangerous precursor chemicals crossing their borders. Over the past year, DHS has quintupled the number of U.S. customs and border agents in Afghanistan, providing training and assistance to local security ofcials. And over the next year, we will more than double that number. In all, we have hundreds of aviation and customs ofcers stationed around the world, working with host countries to secure the international supply chain. These efforts extend to the U.S. side of the supply chain as well. At the Department of Homeland Security, there are a number of steps that we are pursuing domestically in 2011 to do our part. First, pursuant to an Executive Order signed by President Obama, we are creating a rst of its kind center to coordinate all U.S. government efforts regarding the issue of potentially dangerous exports. This will enhance information sharing among the many agencies that play a role and strengthen the targeting abilities and technology at the disposal of U.S. agencies. Well also work to establish the regulatory and statutory mechanisms needed to implement a government-wide statistical tracking system for export control enforcement activities. And well also work with institutions across America, ranging from hospitals and laboratories to and beauty supply companies to prevent the diversion of chemicals for use by terrorists.

Securing the Infrastructure of the Global Supply Chain

While we work to make sure that precursor chemicals arent illegally trafcked, we also need to strengthen the critical infrastructure of the global supply chain across all modes of transport air, land, and sea from attack or disruption. Consider the consequences such an attack could have. Beyond the immediate impact of a potential attack on passengers, transportation workers and other innocent people, the longerterm consequences of a disabled supply chain could quickly snowball and impact economies around the world. One consequence, for example, could be that people across the world would nd empty store shelves for food; serious shortages in needed medical supplies; or signicant increases in the cost of energy. Our focus must be on building the capacity of governments including our own to strengthen the security of the system as a whole, and to focus on the most critical hubs and elements of the supply chains infrastructure. DHS, in conjunction with other U.S. government agencies, will work to assist our partners in getting the training and technology they need in order to secure the components that are integral to the global network. We are also working with our private sector and international partners to acquire advance information before

goods are loaded onto planes, container ships, or trucks- so we can identify and screen items based on risk and intelligence. Knowing what the package or shipment contains, where it came from and who has handled it prior to departure will enhance our ability to make sure that high-risk shipments can be detected and inspected before they are on their way.

Bolstering the Resiliency of the Supply Chain

In spite of these efforts, we know that nothing is ever 100 percent and that risks can always materialize. And so we must ensure the global supply chain can rebound quickly and ultimately, with as little permanent disruption as possible. Global trade cant grind to a halt as governments and industry gure out what to do. Trade needs to be up and running with bolstered security, if needed as soon as possible after any kind of event. In 2011, we will strengthen global planning on trade resumption. We need to know ahead of time how to recover quickly from such a disruption, and how we can step up security without putting unnecessary burdens on the supply chain. To do this, DHS will seek to link our trade resumption planning across all modes of transportation, working together with the World Customs Organization, the International Maritime Organization, and the International Civil Aviation Organization. .

LOGISTICS TIMES February 2011

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HEALTHCARE SUPPLY CHAIN

Prof Akhil Chandra believes that it is not true that supply chain concepts can be applied largely to manufacturing operations and are not applicable to service operations. Like every enterprise, hospitals and health systems are equally under pressure to control their rising costs of supplies primarily locked up in inventories consisting of pharmacy, surgery, medicines and drugs and yet maintain their ultimate obligation in providing timely, efficient and effective treatments to their customers (patients). The supply chain costs represent today the second largest expenditure category of hospitals operating expenses next to costly manpower.

no exception
Healthcare sector is one of the largest and fastest growing sectors in the world. For this phenomenal growth, the prominent key drivers are: Globalization and the advancement of information and communication technologies; Control and automation techniques embedded in different and changing governance systems. Supply chain management techniques which have successfully been employed almost throughout the segments of industry are employed in health care sector also. Like other segments, here also these techniques have successfully been employed to match supply and demand so as to supply the material in the right quantity, at the place and at right price. A popular notion is that supply chain concepts can be applied largely to manufacturing operations and are not applicable to service operations. But this is not true..Like every Enterprise, hospitals and health systems are equally under pressure to control their rising costs of supplies primarily locked up in inventories consisting of pharmacy,
LOGISTICS TIMES February 2011

Healthcare
surgery, medicines and drugs and yet maintain their ultimate obligation in providing timely, efcient and effective treatments to their customers (patients). The supply chain costs represent today the second largest expenditure category of hospitals operating expenses next to costly manpower. These costs are increasing exponentially due to Growth in usage of medication and very expensive and very clinically sensitive devices and implants Service lines such as interventional cardiology and total joint replacement surgery using high value supplies such as supplants and drug coated stunts. The rise in IT budgets at healthcare institutions Increased cost of drug development, production and distribution Cost of packaging and labeling requirements of Drugs It is as such important to have a close look on supply chain management system of hospitals with an Endeavor to make it efcient, integrated and synchronized.

The subject popularly known as HSCM (Hospital supply chain management system) due to its potential in saving heavy costs and in satisfying patients has gained its prime importance in healthcare industry. Senior nancial executives as such these days need to recalculate the strategic signicance of the supply chain and plan accordingly Inefciencies in supply chain unlike in other domains of industry may result in extreme cases even into death of patients. As such apart from cost reductions, an effective supply chain is very vital to human life and its longevity. Ultimate objective of this subject is to manage materials/equipments and manpower like doctors, nurses and other supporting staff and treat patients and transform them into a healthy person at a reasonable and optimum cost in minimum time so as to satisfy their expectations through quality treatment. Innumerable ows between suppliers and customers, both upstream and downstream, have to be considered to strike a balance.

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HEALTHCARE SUPPLY CHAIN

Supply Chain of Hospitals

Supply Chain (also can be characterized as value Chain) of hospitals integrates suppliers, transport and warehouses and hospital services (including outpatient, emergency, in-patient, laboratory, radiology, stores and purchase, food, laundry and medicines /equipments) so as to serve the patients by optimum utilization of resources. The resources in terms of materials/medicines used in the hospital can be classied majorly based on their applications such as diagnostic, Surgical, Therapeutic, Bedside, Service, Engineering, Housekeeping and ICT. To substantially reduce supply-related costs, a hospital must develop a fully integrated enterprise wide supply chain in which all processes as mentioned above are coordinated and supported by state-ofthe-art technology. A pertinent question which should be asked to hospitals is whether your organization delivers the right product to the right place at the right time and for the right price? If not then situation demands for a thorough check up of your processes and give your hospitals a treatment of Supply Chain Management.

Benefit scope
Basically the process improvement opportunities exist in ve key areas: (1) contingency plans (2) supply chain integrity; (3) Demand pull model (4) Cutting down on too many intermediate partners (5) value visibility. Contingency plans: As the supply chain involves factories producing medicines and diagnostic equipments, temperature controlled warehouses and distribution facilities to keep the material ow in order, what happens if a factory producing life saving medicine gets destroyed or the distribution facilities disruptions hamper the product ow endangering human life? The most effective action is to develop systematic contingency plans, including factors like alternative production sites, manufacturing exibility, factory-direct shipping capabilities, offsite backup distribution center capacity, and critical safety stocks. Supply chain integrity: Quality assurance, such as lot integrity and tracking, is a
LOGISTICS TIMES February 2011

crucial healthcare supply chain function. It ensures that patients receive safe therapies, and that problems are contained and minimized. New technologies, such as radio frequency identication (RFID), offer the prospect of ensuring supply chain integrity. Through automatic identication, traceability and visibility tools, healthcare companies are given the opportunity to make the Healthcare supply chain more efcient and accurate, and thus safer by: Reducing medication errors Making counterfeiting more difcult Enabling efcient and effective traceability Decreasing the production and supply chain cost Demand Pull Model: Healthcare supply chains need to move toward an integrated demand-pull model, so that manufacturers have much earlier visibility into actual consumption. In many other industries, this integrated supply chain system has enabled the participants to align production and distribution much more closely with actual demand. All the channel participants can see and understand what they need to do individually and together in order to successfully lower costs and increase service levels. Healthcare supply chains would free up tremendous amounts of valuable resources by adopting this channel model; important elements, such as ICT and process control systems to provide real-time information at point of patient infusion/injection, are now being put in place. Cut down too many intermediate partners: The prospect of disintermediation, moving product directly from manufacturers to providers, is growing stronger in healthcare supply chains. This process offers important economic benets. But it is only appropriate in certain situations, and it requires that manufacturers and providers develop new expertise and trust. To give a successful example from other segment of industry, Wal-Mart and Proctor and Gamble built a strong and sustainable relationship between them and the rewards were in terms of win-win situation for both of them to become world leaders in their

respective areas. Value Creation by individual partners: At present health care supply chains are fragmented and the current pricing structures and channel policies reinforce the inefciency of this fragmented sector. Distributors negotiate volume discounts from manufacturers, and offer discounts to providers. What is important is to have trust in each partner and work towards common goal of value creation, which is the precondition for major improvements in supply chain efciency. In well-functioning supply chains, each participant has an important role in creating unique, visible value as product ows from source to consumption. Instead of competing within the value chain, one supply chain of the hospital should compete with another value chain of the hospitals for sustainability, survival and competitive advantage. Supply Chain Management in other industries has got its due recognition and this subject now is considered to be a board level topic. Now conditions are right for another round of major healthcare supply chain improvements due to pressure on management to reduce costs and increase efciency and have a customer responsive approach. This has happened especially after hospital chains of multinationals have arrived in India. Healthcare budgets are very tight, supply chains have critical vulnerabilities, and providers have signicant opportunities for much-needed process improvements. The supply chain as such should be part of the enterprise strategic plan, incorporated across all components and service lines of hospitals. A hospitals or health systems strategic plan should include supply chain management as a key strategy for maintaining scal goals, improving quality and satisfaction levels, and addressing industry trends and developments. There is a tremendous scope of applying IT, telecommunication techniques and Automation in hospitals. The mantra is to concentrate on improving efciency, quality, responsiveness to patients and apply innovative methods of supply chain coupled with technology to achieve the end goals.

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46

Eureka, Eureka!
the one and only Soman Nambiar. A real veteran. How can I forget the bearded philosophers booming voice in his new Gurgaon ofce a few months ago? Though I knew that he had put in his papers and on the verge of leaving Ceva Logistics as Director (Freight Management) after a long and illustrious innings, not even once he revealed his exit plans. Perhaps he was unaware of my knowledge. We had spent a little over an hours time while his new ofce was still under furnishing operations. He never demanded a formal questionnaire in advance before granting an audience. I love you, Soman for this dil se approach! No hesitation in walking down his memory lane: full of beautiful anecdotes. Lot of lively characters who are a name to reckon with in the Indian business horizon with him he had hobnobbed. Incidentally, that was our photographer Anil Barals maiden personality-oriented shoot after he came on board. He almost shot 200 odd frames and in the bargain made designer Kausar Syeds life

On a bone-numbing January Sunday morning when mercury dipped to 4.6 degrees Celsius, I jumped out of the quilt all of a sudden and began to shriek: There it is. There it is. Did you see that? Daughter and spouse were shocked and retorted: What? My quick response was: That truck! Have you gone mad? Yes, youve guessed it right. That was my wife. She could not understand what prompted me to eject myself out of the warm comfort of double-layered quilt in these maddeningly wintry climate. Bollywoods heart throb Ranbir Kapoor was dancing on the television screen and Bipasha Basu somewhere in the frame for the Shes a small town girl song in Bachna Ae Hasseno ick. Well picturised, you will agree with me. But the song was no
LOGISTICS TIMES February 2011

My P & Q
Ramesh Kumar

great stuff. Then what? In the middle of the song, I noticed a Ceva truck moving in the background. That caused the excitement. Honestly, I have never seen a Ceva Logistics truck in Delhi. Maybe in Bombay, perhaps. No idea. The presence of Ceva truck in an European setting is nothing unusual. Was it a deliberate product placement like the First Flight vehicle in Priyadarshans De Dana Dan with Akshay Kumar and Suniel Shetty in it? We, for sure, know that R K Saboo paid to get brand visibility for his company. About the less than 5 second clipping

of passing Ceva vehicle in Bachna Ae Hasseno, I have no clues. Watch out for Ceva in that song when it is aired next time.

Untraceable Soman
Talking about Ceva Logistics, brought back memories of

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very difcult in selecting a few frames for the prole section in July 2010 issue. Soon, I heard he has moved out of Ceva Logistics. Since then, I have been trying to track him down in vain. Except that he is somewhere in Bangalore, no one has his exact contact coordinates. In fact, I had demanded Samar Nath, Ceva Logistics bossman a few weeks ago. He also had no clue. Perhaps I have to seek the help of Sarat Chopra. Whos Sarat, you wonder? Good. Read the next item

Tamperproof GPS
One thing I noticed from my recent interaction with drivers of logistics organisation vehicles is that they care too hoots about Global Positioning System or GPS tted in their vehicle for tracking. Even organisations are not too keen on tracking on a constant basis. What they attempt is to check at xed hours maybe 11 in the morning and 4 in the afternoon or whatever time suits them to satisfy their clientele who are keen to know the movement of their inbound and outbound stuff in this age of just in time particularly the dynamic automotive segment. Drivers

mischievously conrm that they possess bagful of tricks to hoodwink GPS. Honestly they dont their movement be tracked on a regular basis. Poor souls, they forget that such tracking will be in their own interest as they drive through unfriendly terrains such as Chattisgarh, Chambal etc. So I quietly knocked on the doors of Sarat Chopra, Managing Director of itrackIndia to understand the utility or futility of GPS is they were to be tampered. Such tamperings do happen, but it is not difcult to prevent such happenings, he said matter of factly. No, there is no need for any extra technological snooper. He offered a simple and basic solution. The bosses be a little more strict. For instance, most GPS equipments are outsourced by logistics companies on a regular fee basis for services provided. Everytime a GPS is tampered, this third party is called in to rectify the same. During the warranty period, such services are no doubt offered gratis. Post that freebie period, GPS service providers demand fee, which eet owners are reluctant. Everytime a GPS is tampered with and we are called in to rectify the same, we denitely charge. Now eet owners have begun penalising the drivers by passing on this repair charges to them, explains he. Citing a municipality eet operation of waste disposal in a north Indian state for which he provided tracking facility, Chopra proudly announces that tampering has petered out when the municipality commissioner

began penalising the eet owners thus affecting their bottomline. Where there is a will, there is a way, no?

Hissar Man
Honestly, I never intended to visit Jamalpur, the new warehousing hub in the NCR. It was not on my radar as I stepped out to meet

have no other option but to come to Bangalore to get repaired at my place. It was a challenge for eet owners as well as Maruti. For quite sometime, Maruti has been asking me to create a facility in northern India to attend to this critical need. Luckily I managed to get a piece of land in Pataudi Road

Ashok Hissaria, promoter of Tippers & Trailers India in his new and upcoming facility on Gurgaon-Pataudi Road. Two out of ve automotive carriers that you bump into on the National Highway 8 are his babies trundled out of his Bangalore facility. Yes, he is Bangalore-based. But under special request from Maruti Suzuki he has decided to set up a workshop in NCR to service the eet the 13,000 strong auto carriers that hang around Marutis Gurgaon and Manesar plant. When these vehicles get damaged, they

hardly a few kilometres away from Maruti and now I am busy getting the infrastructure in place, explains he. The soft spoken and salt-and-pepper haired man from Hissar feels proud that he is able to do something for Haryana his home state. By April, he is condent that this facility would be up and running. Next time, you drive down to Jamalpur and notice a long line of 22 metre car carriers, you know now for whom they are waiting for. Good luck, Ashok!

Details soon
Whats Lt. Gen D V (Retd), the man managed 500,000 valued at Rs.50,000 for the Indian Army, these days? Kalra who items crore upto

Logistics Times
LOGISTICS TIMES February 2011

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PROFILE

rson e pe w th Kno ired business

Sanjiv Kathuria Country Director-Sales & Marketing TNT India

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Business Manager to the core

ts not for nothing that destiny is perceived as an omnipotent factor. Unlike humans, time limitations and schedule pattern rules do not dictate it but rather it is the other way round case. Looking for a proof, then here is one. 6 A.M. is hardly a time band in the cycle of 24 hours, when you expect to be called for an interview. But this is precisely what happened with Sanjiv Kathuria, now Country Director sales and marketing of TNT India about

eight years ago. 45 year old Kathuria had by then accumulated quite a sizeable experience in business development cutting across various domains like IT, hospitality and telecom. He also had a brief brush with entrepreneurship as he was running an outt specializing in business development training and marketing communication alongwith his better half in Bangalore. When that 6 A.M. call happened courtesy a very persuasive headhunting agency, the only reason he

agreed to consider it was because it was an MNC, it was a national position and it was based out of Bangalore- his adopted home town. I was quite surprised when they asked me to come to ITC Maratha, Mumbai so early in the morning. However, it so happened that the senior ofcial who was supposed to conduct this interview was positioned in the Middle-East and he had a 9 AM ight to catch. But the way we conversed during the course of the interview, it was clear

LOGISTICS TIMES February 2011

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they had already made up their mind, says Kathuria while candidly admitting he didnt have much clues about TNT operations in India at that time. In terms of brand reckoning, the cartoon network TNT had a better recall value then, he laughingly points out. The early morning call notwithstanding, surprises seem to have played a critical role in the life of this suave business development manager. For instance, emphasis on higher studies was hardly in the DNA of his family. But Kathuria ultimately passed out from IIM, Bangalore. His family had actually migrated from Pakistan after partition and had settled in Sadar Bazar, Delhi. My grandfather was a textile trader who moved to Ahmedabad in late 60s. We were a typical business family of old Delhi tradition and formal education was hardly an emphasis point. My elder sister, in fact, was the rst post graduate in the family. Barring my mother, nobody else in the family had inclination for higher studies. Padh likh kar bhi to business hi karna hai he breaks into Hindi while recalling his formative years. After his grandfathers sudden death around 1970, the onus of handling the textile trading business fell on Sanjivs father and the entire family moved to Ahmedabad. The fortunate thing was we were living very close to the IIM campus in Ahmedabad and somehow or the other it etched in my subconscious that I have to reach here. My mother was again the driving force here, he adds. IIM happened in 1989 but by then Kathuria had already gained some hands on experience. After attaining a Bcom degree he had joined the sales department of Modi Xerox in Ahmedabad but the egging desire to reach to the IIM was still persisting in him. He was then transferred to Rajkot to develop the Saurashtra market in 1988 Rajkot was a sleepy town at that point in time and I had ample opportunity to study for IIM after the days work. And after three years of stint with Modi Xerox, I landed up in IIM, Bangalore in 1989, he reminisces. Over the next one decade, Kathuria had professional brush with companies like HCL-HP, Sterling Resort

and BPL Telecom before he came on the board of TNT. And in the process, his experience basket subtly added not only the hard core constituent of business development but also brand building and general management. At TNT today, Kathuria leads a team of over 350 people (mostly sales and marketing) guiding them to break new grounds in the fast growing logistics business which is increasingly getting competitive. But obviously his leadership skills are rooted in his experience, not often only pleasant ones as he emphasizes. How would you explain your professional DNA today? I lobby the question to him point blank. My professional DNA is very clear: I am business manager to the core. While consistently enhancing the sales volumes is my priority but at the same time, the key objective is to make some prot for the company at the end of the day, pat comes the reply. Prod him further to showcase the basic building blocks of his core professional philosophy and his explanations come in graphic details. One valuable lesson I have learnt in my life is that whatever is the nature of the enterprise, a consistent cash ow stream is the most imperative component. If the company is ignoring it then it is inviting all sorts of troubles, he stresses. To substantiate his theory, he cites an example from his own professional life. Sterling group, where Kathuria had worked in 1990s, was the rst entity in the country to launch Holiday Time Shares. But the extremely fast growth trajectory of the business got stunted because cash ow was not in the right equilibrium vis--vis the kind of expenditure the company was incurring. It had started as an energetic and vibrant company propagating a concept which was almost novel in the country at that point in time. But just because a clear and consistent cash ow stream was not ensured, things did not fructify on the envisioned lines. For me, the biggest takeaway was: you can cope with a slight uctuating scenario in prots and losses, but not cash ow. This is a tap which should not never be allowed to get dry if the project has to succeed irrespective of

the nancial muscles of the promoters, here ows the word of wisdom. Sanjiv Kathuria admits that TNT, where he has served for eight years now, has been a different experience altogether which has enhanced and sharpened his own professional skills. TNT experience has certainly taught me a lot of new things which are so important in a market situation which has turned dynamic. Being a topnotch MNC, its emphasis on larger exposure and training regime is exemplary. The technological processes are state-of-the-art and you get hooked on to the modalities wherein everyday you know who is doing what even without you asking them or they telling you. Meanwhile as I reach near to the end of the conversation which was conducted at ITC Maurya in Delhi recently, I try to bowl a googly asking him to indulge in self-judgement something which often creates a sense of unease in the person who has been quizzed. How do you judge yourself as a team leader or as a boss?, However, there was no let up in the cool and calm composure and the response ew as effortlessly as his other comments. My mantra of team management is to lead from the front and talking logic to the members of the team when I have to convey a decision. I do tend to explain to them why a decision has been made and here my strategy is to have a buy-in from the team to ensure efcient implementation, he says adding that he is no longer as hands on a person on a day to day basis now as he used to be, thanks to the support of an efcient team. On the lighter side, Kathuria who is father of two school going sons, claims to specialize in cooking certain varieties of cuisines (Biryani, pasta, etc.) which he often prepares on weekends. Cooking is a relaxing habit for me, he underlines. But between you and your spouse, who can claim to have better culinary expertise? is my question. Without any doubt, its me, he asserts with a broad smile on his face. Probably, the desire to excel nds some expression in the kitchen of Kathuria household as well. Ritwik Sinha
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EVENTS TS

DIESLs SHRAM DAAN

Drive India Enterprise Solutions Ltd. (DIESL), a Tata Enterprise (a joint venture between Tata Industries and Tata International) initiated Shram Daan to construct a mini dam in the village of Jarandi in Thane district. This construction was undertaken by over 100 employees from DIESL on 22nd January and is the part of the village development programme initiated last year by the company. The mini dam measures 65 feet in length and ve feet in height with a total capacity of 20 lakh litres of water, which will benet the human and livestock population of the village for the entire year. The construction of the dam is part of the rain-water harvesting project under the village development programme. A medium-sized village, Jarandi, has a population of 600 people mainly employed with livestock and agro-based activities. There is a signicant population (37 per cent) of landless labourers, with over 73 per cent below the poverty line. The water resources are limited and are unhealthy for consumption. DIESL will be closely monitoring this extensive and comprehensive three-year plan with an internal audit team with a view to duplicating the model in other villages in the country.

Worlds largest heavy lift vessel docks in Mumbai

With a lifting capacity of a total of 2,000 tonnes and speed of 20 knots, the worlds largest heavy lift vessel, MV (Motor Vessel) Svenja visited Mumbai on 15th January on its maiden voyage. The innovative vessel type was built in just six months by German-based Sietas shipyard commissioned by SAL Schiffahrtskontor Altes Land. SAL a joint venture between two owner families and the Japanese K Line Group, ranks among the leading international heavy lift shipping companies which operates a eet of 15 heavy lift ships and is been represented by Sai Maritime in India.
LOGISTICS TIMES February 2011

RNI No. DELENG-17848/2010-TC