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CHAPTER 1 INTRODUCTION
Third party logistics is an integral part of the overall transportation and logistics services which are in turn directly correlated with the global economic condition. The global third party logistics market registered an impressive growth up till 2008, but nosedived in the year 2009 responding to global economic recession and plummeted trade volumes. However, the economic revival has reflected a growth in overall logistics as well as third party logistics market. The concept of Third-Party Logistics (3PL) has become a growing reality in India in recent years, allowing large companies to outsource logistical activities that had previously had to be conducted in house. Growing recognition of the role of outsourcing of logistics services coupled with growth in production and trade and global economic revival are the major factors driving growth in the global third party logistics market. India is witnessing an increasing demand for the 3PL business with companies now concentrating on managing their supply chain mechanisms in a better way as well as to deepen their market penetration. The 3PL industry has just begun to grow in the past few years in India. When compared to the developed nations, this segment here has got a lot of potential which is still to be fully achieved. This report will help the 3PL companies to access the requirements of companies who wish to use those 3PL services, so as to achieve higher customer satisfaction and build an integrated platform for growth for both the Service Provider & the Service Seeker.
1.1
Issues in Supply Chain Management Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages
Acharya Institute of Management & Sciences
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required by end customers (Harland, 1996). Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). A customer focused definition is given by Hines (2004): "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughput efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements." There are various issues which will help improve efficiency of the service provided in Supply Chain Management. Some of the problems addressed by SCM are mentioned below: 1.1.1 Distribution Network Configuration: The distribution network involves Numbers, Locations and Network Missions of Suppliers; Production facilities; Distribution centers; warehouses; cross-docks and customers. 1.1.2 Distribution Strategy: The distribution strategy involves obtaining efficient solutions for the issues related to: a. Operating control (e.g., centralized, decentralized or shared) b. Delivery scheme (e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping
Direct shipment is a method of delivering goods from the supplier or the product owner to the customer directly. In most of the cases, the customer orders the goods
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from the product owner. This delivery scheme reduces transportation and storage costs, but requires additional planning and administration.
Direct shipment is a common practice in industries that rely on outsourced manufacturing to a big extent, like high-tech, apparel and footwear as well as durables industries.
Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination.
c. Mode of transportation (e.g., motor carrier, including truckload, LTL, parcel)
Less-than-Truck-Load (LTL) shipping is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down in to units less than 68 kg. Full truckload carriers move freight that is loaded into a semi-trailer. Semi trailers are typically between 26 and 53 feet and thereby require a substantial amount of freight to make such transportation economical.
d. Railroad e. Intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar) f. Ocean freight g. Airfreight h. Replenishment strategy (e.g., pull, push or hybrid), and i. Transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL)
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1.1.3 Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trades-offs are key to developing the most efficient and effective Logistics and SCM strategy. 1.1.4 Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. will help in managing resources efficiently and avoid unnecessary costs. 1.1.5 Inventory Management: Inventory Management includes monitoring Quantity and Locations of inventory, including raw materials, work-in-progress (WIP) and finished goods. 1.1.6 Cash-Flow: Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. Arrangement of suitable payment terms and methodologies for exchanging funds across entities within the supply chain for the services should be swift. The flow is bi-directional. 1.2 Activities/Functions in Supply Chain Management Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.7 1.2.1 Strategic Level Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities Information technology chain operations Where-to-make and make-buy decisions Aligning overall organizational strategy with supply strategy It is for long term and needs resource commitment
1.2.2 Tactical level Sourcing contracts and other purchasing decisions Production decisions, including contracting, scheduling, and planning process definition Inventory decisions, including quantity, location, and quality of inventory Transportation strategy, including frequency, routes, and contracting Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise Milestone payments Focus on customer demand and Habits
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1.2.3 Operational level Daily production and distribution planning, including all nodes in the supply chain Production scheduling for each manufacturing facility in the supply chain (minute by minute) Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers Inbound operations, including transportation from suppliers and receiving inventory Production operations, including the consumption of materials and flow of finished goods Outbound operations, including all fulfillment activities, warehousing and transportation to customers Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company
1.3
Importance of Supply Chain Management
Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. According to Peter Drucker's new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies.
During the past decades, globalization, outsourcing and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid
collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, it is not clear what kind of performance impacts different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players.
From a systems perspective, a complex network structure can be decomposed into individual component firms. Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players.
In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing "Just-In-Time" and "Lean Manufacturing" practices. Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network.
A relation between companies has been greatly synchronized by the 3PL companies to remove unwanted gaps in services. 1.4 Categories of Logistic Service Providers
First-party logistics provider (1PL) Second-party logistics provider (2PL) Third-party logistics provider (3PL) Fourth-party logistics provider (4PL)
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1.4.1 First-Party Logistics provider (1PL)
A First-party logistics provider (abbreviated 1PL) is a firm or an individual that needs to have cargo, freight, goods, produce or merchandise transported from a point A to a point B. The term first-party logistics provider stands both for the cargo sender and for the cargo receiver. A 1PL can be anything from a manufacturer, to a trader, buying office, importer/exporter, wholesaler, retailer, and a distributor in the international commerce field. It can also be institutions such as government department, NGO, associations, military, and post. An individual or a family removing from one place to another also needs to have its personal effects transported from their place of origin to their new place, and is as such considered as a first-party logistics provider. 1.4.1.1 Types of transportation Typically the first-party logistics providers subcontract their transportation's needs to 2PLs and 3PLs, which are companies, specialized in transportation. This helps the 1PL to benefit from cheaper transportation prices thanks to the specialization of the 2PLs and 3PLs, and the subsequent economies of scale. The transportation needed by the 1PL can be anything from transportation by ship, barge, aircraft, train, van or truck. In the "PL" terminology, it is important to differentiate the 1PL from the: 2PL, which are actual carriers, 3PL, which are one stop shops for the 1PL, such as freight forwarders or courier companies, 4PL, which are consulting firms such as CPCS, SCMO, BMT, Deloitte, and Accenture.
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1.4.2 Second-Party Logistics Provider (2PL) A Second-party logistics provider (abbreviated 2PL) is an asset-based carrier, which actually owns the means of transportation. 1.4.2.1 Types of 2PL Second-party logistics providers are: Shipping lines, which own, lease, or charter their ships, Airlines, which own, lease, or charter their planes, Truck companies, which own, or lease their trucks, Barge companies, which own, lease, or charter their barge, Rail companies, which own their trains, Warehouse owners.
1.4.2.2 Transportation Industry In the transportation industry, the second-party logistics providers are segmented between different categories of transportation: Sea freight, which regroups shipping lines and barge companies, Air freight, which regroups the airlines, as well as the cargo helicopter companies, Trucking, which regroups the truck companies and the van companies, Railways, which regroups the rail companies, Warehousing and logistics.
1.4.3 Third-Party Logistics Provider (3PL) To put forward some standard definitions, we would adopt the definition of 3PL found in the Council of Supply Chain Management Professionals glossary, which reads as follows:
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Definition: "A firm that provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking,
th
inventory
management, packaging, and freight forwarding." (Source: Wikipedia.org, May 5 , 2011) 1.4.3.1 Types of 3PL Freight forwarders Courier companies Other companies integrating & offering subcontracted logistics and transportation services
1.4.3.2 Categories of 3PL providers:
Standard 3PL provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity. Service developer: this type of 3PL provider will offer their customers advanced valueadded services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks. Customer adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the companys logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small. Customer developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.
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Overlapping 3PL can also be 2PL at the same time in the following cases: When a shipping line owns a freight forwarder, When an airline owns a general sales agent (GSA), When a freight forwarder owns trucks or a warehouse, When a courier company owns planes.
1.4.4 Fourth Party Logistics Provider (4PL)
A Fourth-party logistics provider (abbreviated 4PL), lead logistics provider is a consulting firm specialized in logistics, transportation, and supply chain management. Typical fourthparty logistics providers are CPCS, SCMO, BMT, Deloitte, Capgemini, 3t Europe and Accenture. As the 4PL industry is still in its infancy and currently being created throughout the world (Blue Ocean Strategy), its definition and function still leads to a lot of confusion, even for professionals of the transportation industry. Definition: A fourth-party logistics provider is an independent, singularly accountable, nonasset based integrator of a client's supply and demand chains. (Source: Wikipedia.org, May 5th, 2011)
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CHAPTER 2 RESEARCH METHODOLOGY
The system of collecting data for research projects is known as research methodology. The data may be collected for either theoretical or practical research for example management research may be strategically conceptualized along with operational planning methods and change management. According to Clover and Basley, It is the process of systematically obtaining accurate answers to significant pertinent questions by the use of scientific method gathering and interpreting information. 2.1 STATEMENT OF THE PROBLEM: Evaluation of the Quality of Services is very important for Third Party Logistics service providers in this competitive Oligopolistic market structure. Keeping the customer satisfied is crucial to retain them for long run association and mutual benefit. Therefore, periodical assessment of customer satisfaction is a must for 3PL companies. This is also critical in reducing the switching costs for the service seeker. The proposed study aims at identifying the factors that enhance the customer satisfaction and studying the future prospects for the 3PL companies. 2.2 OBJECTIVES OF RESEARCH The objectives of this research are: 1) To understand what category of industries use 3PL services 2) To understand how these companies do select the 3PL service providers 3) To analyze the 3PL service requirements by service seekers 4) To analyze customer preferences in using 3PL services 5) To explore opportunities for development of services in the future
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2.3 SCOPE OF THE STUDY The study covers the customers of Third Party Logistics companies. This study is restricted to Bangalore city. The theoretical basis for this study is drawn from Supply Chain Management. One important criteria for the respondents is to have a 3PL partner assisting them with their logistics which include all the major aspects like imports, exports, customs clearance, local distribution activities, warehousing and transportation facilities. 2.4 BENEFITS OF THE STUDY: The findings of this study will help in understanding which industrial sector use these 3PL services, and which segments can be targeted for the future marketing of services. The findings of the study will help in understanding how the service seekers select their 3PL partners; this will help in enhancing the marketing practices which are undertaken by the 3PL companies. The findings of the study will also help in understanding the service requirements by the 3PL service seekers; this will help in 3PL companies to redefine their approach to their customers and evaluate avenues for service development. The findings of the study will help in understanding 3PL companys customer preferences regarding services and also helps in exploring opportunities for development of certain services for the future. 2.5 REVIEW OF LITERATURE: The research study by Soon-hoo So, JaeJon Kim, KiJu Cheong, Geon Cho of Management Research Institute, Chonnam National University, Korea have identified 5 avenues to evaluate quality of services. They are: 1) Tangibles: the physical facilities, appearance of personnel, tools or equipment used to provide service 2) Reliability: the ability to perform the promised service dependably and accurately 3) Responsiveness: the willingness to help customers and provide prompt service, responds immediately to customer request and site problems
4) Assurance: the skill, knowledge and courtesy of service providers and the level of confidence that they convey to customers 5) Empathy: the care and personalized attention the firm provides for its customers.
As the competition in the 3PL market has intensified, service quality has become an important differentiator among service providers. The concept of service quality goes beyond the technical aspects of providing the service. It includes customers perception of what the service should be and how the service is to be conveyed.
Therefore, 3PL service providers should understand how customers perceive and evaluate service quality, because service quality is related to customer satisfaction, which in turn influences the performance of their organizations. Keeping the following points in mind, the questionnaire used for this study is designed.
2.6 RESEARCH DESIGN This research design is of Descriptive Type. Descriptive research design is a scientific method which involves observing and describing the behavior of a subject without influencing it in any way. 2.7 TOOLS OF DATA COLLECTION The two following sources will be used for the data required for this study. Primary data: The collection of data is done through customer satisfaction survey for which the tool is an appropriately designed questionnaire that contains both open ended & closed ended questions (multiple choice & dichotomous questions) and open ended questions for subjective answers. The targeted respondents will be both approached individually and also collection of data through e-mail. Secondary data: This data is collected through articles and research papers published in periodicals & journals, published reports by the reputed organizations and reliable web sources.
2.8 SAMPLING PLAN Sampling Techniques The sampling technique which will be used for this study is stratified sampling. This method is used because the respondents will be targeted from specific industrial segments. Each stratum (here industrial segment) is then sampled as an independent sub-population (companies under different industrial segment), out of which individual elements can be randomly selected. Sampling Unit The sampling units are the representatives from the Administration or department of Logistics from the above mentioned segments. Sampling Size The sample size is 24. This includes companies in Bangalore under various industrial segments as differentiated in the questionnaire. 2.9 PLANNING AND ANALYSIS The data collected from the study was presented through appropriate statistical tools such as graphs, charts and averages and was used to analyze for interpretation and providing relevant suggestions. 2.10 SOFTWARE PACKAGES USED The software tools used for the analysis of the findings and generation of this report is Microsoft Word, Microsoft Excel. 2.11 RESEARCH LIMITATIONS Survey is restricted to the Bangalore region. Sample size restricted to 24 due to time constraints Respondents being from business segments were reluctant to share information due to confidentiality factor involved.
2.12 CHAPTER SCHEME Chapter 1: Introduction It provides an insight and Introduction about the broad area of the topic chosen and also the theoretical background of the study. Chapter 2: Research Methodology It consists of detailed coverage of the manner in which the report is prepared. Research methodology helps to understand the practical steps adopted to reach the data and methods of analysis and interpreting the response. It also includes Need for study, Statement of Problem, Objective, Research Design, Source of Data, Tools of Analysis, Scope and Limitation of Study, Literature review. Chapter 3: Industry Profile The chapter is concerned with the introduction and the background of Third Party Logistics Industry with reference to Indelox Services Pvt. Ltd. as a whole which gives detailed information about the origin, growth, development and its future. Chapter 4: Data Analysis and Interpretation The data collected from the study will be presented and analyzed using appropriate statistical tools for interpretation and providing relevant suggestions. Chapter 5: Summary of findings Based on the findings of the study, detailed analysis and summary of the data with respect to the objectives will be made. Chapter 6: Suggestions & Conclusions Based on the study of the research, all relevant suggestions and conclusions will be made. This will help in identifying areas to improve for the 3PL companies.
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CHAPTER 3 INDUSTRY PROFILE AND COMPANY PROFILE
3.1 Introduction Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements 3.2 Origin of Logistics The term "logistics" originates from the ancient Greek "logos" ratio, word, calculation, reason, speech, oration Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title Logistics who were responsible for financial and supply distribution matters. 3.3 Different mediums of Logistics services in India There are three mediums of logistics services in India. These can be categorized in the following way:
Air freight this is a modern and the safest mode to ensure a fast delivery of goods. A chosen one by many because of the swiftness of the system there are many companies that are now even providing super fats deliveries by airways even on the same day.
Land transport this is a means of logistics support that has withstood the test of time through the extensive network of roads in India. It has been the popularly used method and used especially in the shipments of heavy articles like machinery and vehicles. This is also a chosen method in case of household packers and movers.
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Railways this is also an age old method of shipments and transport. Though most used in case of domestic services this is very effective in the availability of cost effective logistics support in India.
Waterways an essential part of this industry this is also one of the oldest methods. Shipments and transportation of goods is done on an international basis through this way. It is apt in case of shipments of oil, highly sensitive or volatile articles like Uranium.
3.4 Subdivisions of Logistics Management Business Logistics- Procuring, moving and storing of raw materials and transporting, warehousing and distribution of finished goods. Facilitation of relevant manufacturing and marketing. Making finished goods available to the customers in the market. Event Logistics: - The net work of activities, facilities and personnel required organizing, schedule and deploying the resources for an event to take place and to efficiently withdraw after the event. Service Logistics: - The acquisition, scheduling and management of the facilities/assets, personnel and materials to support and sustain a service operation. Military Logistics: - Design and integration of all aspects of support for the operational capability of the military forces and their equipment to ensure readiness, reliability and efficiency. Third-party Logistics (3PL): - Third-party logistics involves the utilization of external organizations to execute logistics activities that have traditionally been performed within an organization itself. According to this definition, third party logistics includes any form of outsourcing of logistics activities previously performed in-house. This helps the organization to concentrate and specialize on their core functioning area. Example: - A company with its own transport facilities decides to employ external warehouse specialist, this would be an example of third party logistics.
Production Logistics: - The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time. Production logistics is getting more and more important with the decreasing batch sizes because companies are trying to customize based on end user requirement.
3.5 Objectives of Logistics Industry The purpose of logistics industry is to enable an effective transportation or timely movement of goods from one place to another with least cost. There are four variables which draw attention to the need of effective logistics Logistical costs- For individual businesses logistics expenditures are 5% to 35% of sales depending on type of business, geographical areas of operation, weight/value ratios of products and materials. This is an expensive operation. Improvement in the efficiency of logistics function yields savings as well as customer satisfaction. Time/service: - Hours may decide customer service, competitiveness and valueadded. Time/service is a factor of competition, customer requirements. Delays are not acceptable. Inventory management: Inventory requires to be maintained to take care of needs between the time of demand and time of supply. Inventory management involved decisions concerning: Buffer stock, Lead time, Replenishment of stocks. Organizations should try to optimize inventory by striving hard to achieve Just in time which reduces inventory as well as locking up of financial capital. Warehouse Management and Control System: - There is some functionality overlap, the differences between Warehouse Management Systems (WMS) and Warehouse Control Systems (WCS) can be significant. To put it simply, the WMS plans a weekly activity forecast, based on such factors as statistics, trends, and so forth, whereas a WCS acts like a floor supervisor, working in real time to get the job done by the most effective means.
3.6 Overview of Indian logistics industry Logistics industry in India is an industry that has not achieved its much deserved attention or recognition. It is an area that is ripe with potential and yet the resources are far from complete utilizations. There is however a huge demand for logistic services in India especially with the growth of the Indian economy along with the entry of new companies in sectors that was otherwise unknown. The Indian logistics structure is witnessing a paradigm shift. The industry is expected to grow at 16% up to 2010. Being driven by rising export and import, government investment on infrastructure and the entry of private players, the industry is undoubtedly on a high growth path. With the market becoming more competitive especially for the manufacturing sector, outsourcing of logistics activities is the preferred option. The Indian logistics industry is currently very disorganized. The major players can be broadly categorized as pure transport providers, transporters providing certain value added services such as warehousing, and completely integrated players providing 3PL services. The major elements of logistics costs for Indian Industries include transportation, warehousing, inventory management and other value added services such as packaging. Factual information about Logistics Industry: Globally, the logistics industry is valued at US$ 3.5 trillion. Estimated at a value of $14 billion US dollars this industry is slated for another 9% to 10% growth in the years to come. The Indian Logistics Industry is presently estimated at US$ 90 billion. (CII) The industry has generated employment for 45 million people in the country in comparison with the IT and ITeS sector which employs approximately 4.3 million People. It is forecast to grow at a Compound Annual Growth Rate (CAGR) of approximately 8% over the next three to five years. (CII)
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Third Party Logistics (3PL) Solutions, is slated to grow at a compound annual growth rate (CAGR) of over 16% from 2007-10.
Strong economic growth and liberalization have led to considerable increase in domestic and international trade volumes over the past five years. Consequently, the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions.
Third Party Logistics Service (3PL Services) provider. Industry has been valued at US$ 125 billion in 2010. (CII)
3.7 Range of Logistics Services
Figure 3.1: Range of Logistics Services
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3.8 Company Profile Indelox Services Pvt. Ltd was incorporated in year 2000 and has since established as a formidable player in distribution, compliance and outsourced services, which requires specific knowledge strengths. The company is led by Mr. Jeevan Guruprasad Rao Sahib and his ably supported and promoted by individuals with working knowledge and experience in functional roles of Manufacturing and trading organizations Indelox has neatly laid structure of committed and enthusiastic team of staff who will always deliver as promised. Promoted by individuals with working knowledge and experience in functional roles of Manufacturing and Trading Organizations, Indelox has a neatly laid structure of committed and enthusiastic team of staff who will deliver always as promised. Headquartered at Bangalore is now well established with branches at Chennai, Hyderabad and New Delhi. Our services are in the area covering the entire Supply Chain Activity including, VMI, Order Management and processing, Specific Customized Services, Special packing Services, Reverse Logistics. The below sections from 3.9 to 3.16 is as described by the companys own words. 3.9 Strategy Indelox is among those companies who are attempting to create a niche place for the services it renders. We will operate through complex matrix of Customers needs to deliver through excellent operation process, which has stood its test. We have deployed through 2006 a strong process at each of the operational level to deliver as promised which has increased the satisfaction levels of Customers and also brought in more customers.
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3.10 Vision We bring products and services closer to customers by being responsive to diverse business needs providing responsible service in international trade and compliance. 3.11 Mission Deliver critical service that will enhance customers business competitiveness. Enhance competence through technology, knowledge acquisition and management. Create ambience and recognize staff for participating and contributing in growing the company and supporting society. Participate with industry and academic institutions to develop and impact vocational skill. Provide prospect to every employee to make the difference for himself and Indelox. 3.12 Core Values We constantly strive to bring our products and services closer to our customers by imbibing our core values in our work environment. 3.13 Integrity We practice and profess ethical standards in all our transactions by complying with all applicable policies, laws and regulations and ensure that the customers also comply to the same. We do not permit any activity or business dealings that are achieved through violation of laws or unethical conduct. 3.14 Responsiveness We are proactive in our action and make ourselves available for our customers, colleagues and business environments needs at all time.
3.15 Responsible We respect and honor our commitment and take personal accountability for all our actions and results as an individual, team and the organization. We have inculcated an interest and passion for continual improvement of all our functions. 3.16 Excellence We constantly strive to achieve and maintain the highest possible standard in our products and services. We always look beyond and find new methods and innovative approach to service the ever changing business environment. We foster creative and inventive initiatives that are critical for customers and self. 3.17 The Organizational Structure The organizational structure of Indelox is the Functional structure. Arranging the business according to what each section does is a functional structure. Functional structure is a design where people are grouped based on common area of expertise and they use the same resources. The business composition at Indelox is divided into five functional areas namely: Third party logistics (3PL) Compliances HR Finance Marketing
CEO
3PL
COMPLIANCES
HR/ADMINISTRATION
FINANCE
MARKETING
Figure 3.2: Organization Structure of Indelox Services Pvt. Ltd.

3.18 Third Party Logistics (3PL) at Indelox 3.18.1 Commercial Warehousing Indelox provides Warehouse space for storage of lightweight, high value cargo fully secured with fire protection. Rental is priced on monthly basis on short or long duration. Today the Indian Industry has access and reach to global markets and has greatly benefited from the services we offer. Indelox also create designed facility upon specific customer demand and need. 3.18.2 Global Logistics Freight Consolidation Indelox moves cargo in and out of India to any destination. There is an agent network in most of the places across continents. These services are being developed as full services. Indelox also has good working relations with many of the global players and arranges for speedy and cost effective solutions. 3.18.3 Commercial Function & Distribution For companies who do not wish to establish support services within the organization Indelox supports and manages through its efficient staff the complete process of Order Management, Execution and Fulfillment. Indelox works in close proximity with field sales groups and ensure that your promises are delivered. 3.18.4 Outsourced Warehouse Management Indelox possesses the complete strength to manage large and small warehouses with skilled resources including mechanical operations and IT. Indelox already manages Manufacturing and Trading warehouses.
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3.18.5 Functioning Of 3PL at Indelox
3PL
WAREHOUSE
DISTRIBUTION
SUPPLY CHAIN MANAGEMENT
IOR/EOR
PRIVATE BONDED WAREHOUSE
PUBLIC BONDED WAREHOUSE
GENERAL WAREHOUSE
Figure 3.3: Functional substructure of 3PL activities at Indelox
Warehousing and distribution-The warehouse activity begins with clearance of goods at customs, complete verification of physical goods and ends with proper storage of goods at depot. Distribution function is activated once clients send a call for the freight; an Ex-bonding document is prepared which undergoes custom clearance process. Once the green light is received from custom department the goods are packed and dispatched to the customer and post clearance documentation is done.
Supply Chain Management- SCM activity at Indelox basically covenant with Purchase Order Generation to Loading of Material to Production/End Users.
IOR- Import on record- Goods from other countries are being imported in our name and stored in warehouse and then dispatched to customers based on the request subsequent to clearance from custom for warranty replacement only at FOC (Free of Cost)
EOR- Export on record- Merchandise in warehouse is supplied to overseas customer by preparation of invoice, packing list and shipping bill and cargo clearance at CHA(custom House Agent) and handling it to freight forwarder and moment of material outside India
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3.18.6 Inbound Activity Flowchart of 3PL Department Import Clearance at Port
Inbound Documentation Activity
Inbound Warehouse Activity
Request from Customer for Outbound Clearance
Stock Conformation & Allocation (System Stock & Physical Stock)
Outbound Documentation Activities Post Clearance Documentation Handling Activities
Outbound Warehouse Activities
Post Dispatch Formalities & Follow-up
Other Related Activities
Figure 3.4: Inbound Activity Flow chart
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3.18.7 Outbound documentation activity of 3PL Department
Register the Customer Request/Take Docket Number
Concessional Duty Clearance
Full Duty Clearance / Self
EOU/SEZ Clearance
Export Clearance
Advance License Clearance
Documents to Custom for Processing and Pass-Out Figure 3.5: Outbound Documentation Activity
Warehousing and Distribution Activity Involves: 1. Receipt of pre-alert and clearance at ports 2. Receipt of shipments at warehouse and 100% physical verification. 3. Storage of goods- according to storage temperature requirements of the product. 4. Documentation and stock updating- manual as well as system stocks. 5. Verification of customers request and relevant documents for Ex-bonding and Preparation of required documents for Ex-bonding. 6. Processing at customs and obtaining customs clearance. 7. Pick and packing. 8. Dispatch and follow-up. 9. Warehousing maintenance- material/ equipment handling and space management. 10. Perpetual inventory. 11. Post clearance and post dispatch documentation. Above processes are applicable to the private/public bonded warehouse and in case of other warehouse the process (6) will be excluded all other process will remain same.
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Import On Record Involves: 1. Import of goods on our name. 2. Receipt of pre-alert and clearance at port. 3. Receipt of shipment at warehouse and 100% physical verification. 4. Storage of goods- according to storage requirements of the products such as temperature etc. 5. Verification of customers request and relevant documents for dispatch and preparation of required documents for dispatch. 6. Pick-pack. 7. Warehouse maintenance- material/equipment handling and space management. 8. Perpetual inventory. 9. Post clearance and post dispatch documentation. Export On Record Involves: 1. Request/ letter from overseas supplier. 2. Obtain GR waiver from bank. 3. Preparation of invoice, packing list and shipping bill. 4. Verification of IOR documents. 5. Cargo clearance at port by CHA. 6. Handing over the cargo to freight forwarder. 7. Movement of material out of India. 8. Obtaining acknowledgement for receipt of material. 9. Post clearance and post dispatch documentation.
3.19 COMPLIANCES 3.19.1 Introduction Compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that corporations or public agencies aspire to in
their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and regulations. Due to the increasing number of regulations and need for operational transparency, organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls. This approach is used to ensure that all necessary governance requirements can be met without the unnecessary duplication of effort and activity from resources. A compliance focus uses risk management-based compliance approaches to implement effective controls across the global trading supply chain. Risk management is a fundamental approach to launch innovative compliance and trade facilitation initiatives. It enables a better understanding of threats and allows for more-targeted enforcement programs. Risk management provides the framework for effective deployment of constrained resources to focus on priority areas. Tactical programs include instituting stratified account management to facilitate trade processes and augment compliance and enforcement. 3.19.2 Compliance & CHA Services at Indelox 3.19.2.1 Customized Import Export Indelox also has a full services sister organization, M/s Anvase Exim Pvt. Ltd. licensed by Department of Revenue, Ministry of Finance, Government of India to render complete Customs Brokerage, Service at 4 major locations in India, Bangalore, Chennai, Hyderabad and New Delhi. Anvase also assist in Customs Duty Drawback and Refund process.
3.19.2.2 Customs Bonded Warehouse (CBW) Management Growth in International trading activity has brought several opportunities to both Global and Indian players to source and stock for sale in India. CBW provides many avenues to increase Sales and Reach. Indelox is managing a total area of 80,000 sqft Warehouse Space of CBW in Bangalore facilitating many opportunities for strategic positioning and spread of market, whether it is for industrial manufacture or direct to consumer.
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3.19.2.3 Regulatory Compliance under Export Promotion Schemes These are options available to customize business models to suit your export market and save on Duties & Taxes. The Indian Government, from time to time announces various schemes that allow concessions when goods are manufactured in India for export, the regulatory body i.e. Ministry of Commerce and Ministry of Finance prescribe regulations and procedure to comply to avail the benefits of schemes announced by the Government. Indelox provides complete assistance at the stage when the application needs to be made, commencement of project to routine operation, extension of period of operation under the scheme and when moving out of the scheme.
Indelox takes care of the following compliances:

Licensing under Export Promotion Schemes Regulatory compliance under STPI, EHTP, EOU Indirect Taxation compliance under EXCISE Refund & Drawback of Customs Duty Finalization of Valuation under Related Party Transaction
3.19.3 Functioning Of Compliance at Indelox
STPI
COMPLIANCES
LICENSING
AUDIT
Figure 3.6: Functioning of Compliance
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This module is comprised of a group of competent personnel, equipped to support customers by providing services in respect of obtaining regulatory clearances or approvals relating to Pre Imports and Pre/Post exports and leverage benefits of various schemes aimed at promotion of export trade. The area of support is broadly classified into: 1. STPI and EOU compliance. 2. Import and export authorization for various schemes. 3. Advisory and consultation to customers. 4. Any specific activity within the ambit of compliance services.
3.19.3.1 Scope of Compliance at Indelox The scope of departmental activities includes the following: 1. Providing consultation and operational support on regulatory issues of STPI and EOU /SEZ customers (including new registration). 2. Provide guidelines and support to manufacture and service providers on various schemes of EXIM, to make their business competitive. 3. Provide updates on changes in the policy and notification to internal and external customers.
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3.19.4 Compliance Department Activity Flow Chart

Request from Customer
Verification of Contract
Update the Contract/Quotation from Customers by Mail
Verification of Document Allot the Docket Number for the Activity
Job Allocation
Preparation Of Application
Verification Of Allocation
Submission of Application to Respective Departments
Reply to Query if Any with Concurrence of Customers
Collection & Verification of Approval/Certificates
Copy for Billing & Records & Close the Docket
Invoice Dispatch, Payment Follow up & collection Figure 3.7: Activity flowchart of Compliance
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3.19.5 ETHICAL PRACTICE & CUSTOMER RELATIONSHIP 3.19.5.1 Safety, Health and Environmental Policy Indelox is committed to minimize risk to human health and the environment in and around the workplace. More specifically, Indelox is dedicated in maintaining the health and safety of employees, customers and neighbors, as well as preserving the integrity of environment. The commitment is supported by management and is the individual as well as collective responsibility of all Indelox employees as a team. Indelox is committed to minimize waste and will continue to invest in innovations that protect our environment. We look forward to integrate environmental issues and concerns into our business decisions and transactions. Indelox adheres to all safety regulations and reports any unsafe conditions of work-related injuries, illness and accidents to the compliance committee. The company is committed to protect the environment. Therefore, each of them shall comply strictly with the letter applicable environmental laws and regulations. Nobody in the company has authority to engage in the activities that does not comply with the environmental policies laws. Failure to report or disregard any company safety rules and regulations may result in disciplinary action including termination of employment. 3.19.5.2 CSR and EVM Indelox strongly believes in reaching out to the society around it. Some of its social responsibility schemes involve the staff who also contributes generously. We provide notebooks to more than 1000 primary and higher primary school children. We are also in the process of adopting a few schools and planning to take responsibility for their overall development from A to Z.
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3.20 Awards and Recognitions: Indelox believes in continuous improvement of its practices and this has been proved by the following achievements: 1. Indelox has been awarded the prestigious ISO 9001: 2008 Certification for provision of Third Party Logistics services such as Warehouse Operations, Distribution Management, Export, Import support and also compliance services for Trade Promotion Schemes. 2. Conferred with the prestigious (Confederation of Indian Industries) CII EXIM Bank award for achieving Business Excellence in the year 2009. 3. Conferred with the prestigious (Confederation of Indian Industries) CII EXIM Bank award for significant achievements on journey towards Business Excellence in the year 2010. 4. Indelox was awarded Commendation Certificate of IMC Ramakrishna Bajaj National Quality Award 2010 by His Excellency Governor of Maharashtra Shri Shankarnarayan. 5. Indelox Received Special Commendation certificate for Best Practice in HR for the year 2010 from Deputy Director General of CII.
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CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
The questionnaire (Annexure 1) was designed keeping the objectives of the research in mind. This survey was carried out by visiting companies (respondents) in Bangalore region. This study is directed to only those companies who are using the 3PL services, hence the low sample size (24 respondents). Likewise, there are very few established 3PL service providers in Bangalore. The universe size of 3PL service providers in Bangalore region is about 20. The range of this survey is restricted to visiting the respondents and identifying the various reasons of their 3PL partner selection, the benefits they have received and how they want the 3PL partners to be associated with them in the coming years. The analysis of this survey of 24 respondents using 3PL services in Bangalore is as below:
Participated Industrial Segments

4% 13% 25% Information and Communication technology Software Development and Research Centre Fine chemicals and reagents 21% 12% Laboratory equipment, consumables Engineering and earthmoving 4% 21% Precision engineering
Figure 4.1: Companies in various industrial segments using 3PL services in Bangalore
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Industrial Segment Information and Communication technology Software Development and Research Centre Fine chemicals and reagents Laboratory equipment, consumables Electrical fixtures and parts Engineering and earthmoving Precision engineering Aerospace parts Toys and Entertainment
Respondents 6 3 1 5 0 5 3 0 1
Percentage (%) 25 12 4 21 0 21 13 0 4
Table 4.1: Statistics of companies in various industrial segments using 3PL services in Bangalore
Analysis: 25% of the respondents (6 of the 24) were the companies from Information and Communication Technology sector. In this study, this segment gave the highest response and thus is a major contributor for this study. 21% (5 of the 24) was contributed each by companies belonging to Laboratory equipments, consumables segment and (5 of the 24) from Engineering & Earthmoving segments. The contribution from Precision Engineering is 13% (3 of the 24), Software development and research centre (3 of the 24) with 12% and the rest 4% comprising of Fine chemicals & reagents (1 of the 24) and Toys & Entertainment segments (1 of the 24). There was no contribution from Aerospace and Electrical fixtures and parts segments. Inference: Bangalore is a city where IT industry has a strong presence, and also the companies relying on IT services. This is also reflected in this study, wherein the majority of the respondents were from Information and Communication Technology and also from Software development & research centers. These companies majorly use the 3PL services because they prefer concentrating on the core activities related to their field and outsource the non-related activities.
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Figure 4.2: Respondents mentioning what qualities they saw in their 3PL partner before selecting them
Services Be prompt in service delivery Reasonable price Should be able to handle large volumes effectively Short order execution times Technologically updated (IT integration capabilities) Being ISO 9001 certified or similar quality certification is a must! Should provide detailed work reports Updated knowledge on compliance regulations Good material handling capabilities Adequate warehouse facilities Goods tracking Efficient Customer Relationship Management Respondents 15 20 12 11 11 8 9 6 15 17 4 8
Table 4.2: Statistics of respondents mentioning what qualities they saw in their 3PL partner before selecting them
Analysis: 20 respondents indicated that they have selected their 3PL partner for the reasonable price of their services. 17 respondents said that they have selected their 3PL partner due to their
adequate warehouse facilities. 15 respondents indicated importance to being prompt in service delivery and having good material handling facilities. 12 respondents indicated that the 3PL partner should have capability to handle large volumes effectively. 11 respondents mentioned that IT integration capabilities and short order execution times are important while the selection was done. They gave lesser importance to the 3PL company being ISO 9001 certified (8 of 24), provision of detailed work reports (9 of 24), goods tracking (4 of 24) and for efficient customer relationship management practices (8 of 24). Inference: While efficiency in service delivery is important, comprising of factors like cost effectiveness, warehouse facilities, material handling facilities, large volume handling capacity, they are not more focused on the quality aspects, reports and customer relationship management practices. This shows that the service seekers (companies) select their 3PL partner with factors which just fulfill their basic requirements (goods handling & transfer). They are not interested in their 3PL service provider in being quality certified, following regulations and having detailed work reports regarding to their tasks. This shows that there is scope for 3PL providers to make aware of their other capabilities & strengths to their customers so as to strengthen relationship. From the companys perspective, they should also look into areas other than just required by them so as to exploit the provided services to the fullest.
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Figure 4.3: Respondents indicating level of future service requirements they would seek from their 3PL services provider Future Service Levels Just the current level of service (no change) Complete services (from your company to end customer) Complete supply chain integration & collaboration (synchronization with my business) Value addition to provided services (for mutual growth in future) Respondent Percentage (%) 3 3 9 9 12 12 38 38
Table 4.3: Statistics of respondents indicating level of future service requirements they would seek from their 3PL services provider
Analysis: As the table shows that 12% (3 of 24) of the respondents prefer no change in the current levels of service and also the same number (3 of 24) opted for complete services. But, 76% (18 of 24) of the companies prefer much more than that. 38% of companies suggest complete
supply chain integration (9 of 24). The rest (9 of 24) indicated value additions to services are needed by these companies for mutual growth. Inference: This is a good prospect for 3PL companies as their customers are willing for a closer integration of their businesses with 3PL companies. This ensures long time relationship between them and the benefits of these are very good for the 3PL partner as its customers will not switch over to other 3PL players, because of high switching costs thus involved.
Benefits from 3PL Services

0 Increased reliability with consistent service Reduced cost of logistics Enhanced flexibility Shortened delivery lead times Increased productivity Helped to focus on my core business Improved visibility across logistics & supply chain Gives access to techniques and expertise Improved warehouse space & capacity utilization Enabled us to offer new services Enabled us to access new markets 2 4 6 8 10 12 14 16
Figure 4.4: Respondents reveal the benefits they received from the 3PL services providers. Benefits Respondents Percent (%) Increased reliability with consistent service 10 42 Reduced cost of logistics 15 63 Enhanced flexibility 13 54 Shortened delivery lead times 7 29 Increased productivity 12 50 Helped to focus on my core business 11 46 Improved visibility across logistics & supply chain 7 29 Gives access to techniques and expertise 9 38 Improved warehouse space & capacity utilization 11 46 Enabled us to offer new services 2 8 Enabled us to access new markets 1 4 Table 4.4: Statistics showing how respondents benefited from the 3PL services
Analysis: From the table it is evident that majority (15 of 24) of the respondents (63%) felt Reduced cost of logistics as the main benefit from outsourcing of their logistics functions. 54% (13 of 24) indicated to have achieved enhanced flexibility. 50% (12 of 24) say they have achieved increased productivity. 46% say they achieved improved warehouse space & capacity utilization and also helped them to focus on their core business (11 of 24). 42% say they have got increased reliability because of consistent service (10 of 24). 29% indicated that they could achieve shortened lead delivery times (7 of 24), also the same number of respondents (15 of 24) indicated to have got Improved visibility across logistics & supply chain. Very few people indicated to have enabled them to offer new services (2 of 24) and also access newer markets (1 of 24). Inference: Many companies have actually exploited the services to achieve their business objectives. But still some of the benefits are yet to be used, so as to completely utilize the services offered.
Satisfaction Levels
Neutral 17% Very Satisfied 37%
Moderately Satisfied 46%
Figure 4.5: Respondents indicating their satisfaction levels of their current 3PL partner
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Satisfaction Very Satisfied Moderately Satisfied Neutral Moderately Dissatisfied Very Dissatisfied
Respondent Percent (%) 9 37 11 46 4 17 0 0 0 0
Table 4.5: Statistics of satisfaction levels of respondents towards their current 3PL partner
Analysis: Table shows that 46% of the respondents (11 of 24) are moderately satisfied with their 3PL partner, 37% are very satisfied (9 of 24) and 17% are neutral towards their 3PL partners services (4 of 24). None has shown any negative response to this question suggesting that Indian 3PL companies are in their right direction to achieve business goals. Inference: The 3PL companies have managed to keep their customers satisfied by services and support to them. This study from 24 respondents has shown no negative response to their 3PL partners.
Promptness in delivery
Very important 46%
Important 54%
Figure 4.6: Respondents reaction when asked how important promptness in delivery is from their 3PL partner
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Promptness in delivery Very important Important Neutral Not Important Not Very Important
Table 4.6: Statistics of respondents reaction when asked how important promptness in delivery is from their 3PL partner
Analysis: It is evident from the above table that 54% (13 of 24) say that promptness in delivery is important and 46% say that it is very important (11 of 24).
Inference: The inclination towards this aspect shows it is a very important factor for a 3PL to satisfy its customers, and could be a vital factor for selection of 3PL partners by companies.
Figure 4.7: Respondents reaction when asked how important safety of goods is from their 3PL partner
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Safety of goods Very important Important Neutral Not Important Not Very Important
Table 4.7: Statistics of respondents reaction when asked how important safety of goods is from their 3PL partner
Analysis: 54% said that safety of goods is very important aspect (13 of 24) when 3PL activities are concerned and 46% (11 of 24) said that it is important. Inference: Safety of goods is primarily an important objective for a 3PL player and it is evident from this study that its customers value the same as an important function.
Figure 4.8: Respondents reaction when asked how important Adhering to compliances is by their 3PL partner
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Adhering to compliances (Regulations set by the Government) Very important Important Neutral Not Important Not Very Important
Table 4.8: Statistics of respondents reaction when asked how important Adhering to compliances is by their 3PL partner
Analysis: 59% (14 of 24) say that adhering to compliances is very important in 3PL activities, 33% say it is an important factor (8 of 24), whereas 8% (2 of 24) are neutral for this particular concern. Inference: Majority of the respondents (92%) have considered the fact that adhering to compliances is important. This is a good sign as business will function smoothly only when companies understand this and are cooperative with their 3PL partner at urgent situations and not compel them to cut corners. Good business practices ensure healthy business. Those undecided should be made aware of this important factor.
Figure 4.9: Respondents reaction when asked how important Appropriate and complete documentation is by their 3PL partner
Appropriate & Complete documentation Respondent Percent (%) Very important 9 38 Important 13 54 Neutral 2 8 Not Important 0 0 Not Very Important 0 0 Table 4.9: Statistics of respondents reaction when asked how important Appropriate and complete documentation is by their 3PL partner
Analysis: 54% of the respondents (13 of 24) say that appropriate and complete documentation is important concern in the 3PL activities, 38% say it is very important (9 of 24), whereas 8% are neutral on this subject (2 of 24). Inference: Appropriate documentation is a very important factor from a business point of view. This is so because of government laws stating that customs related transaction should be documented and kept safely for a period of 7 years from the date of this transaction.
Figure 4.10: Respondents reaction when asked how important Cost of Outsourcing is from their 3PL partner Cost of outsourcing Very important Important Neutral Not Important Not Very Important Respondent Percent (%) 11 46 13 54 0 0 0 0 0 0
Table 4.10: Statistics showing respondents reaction when asked how important Cost of Outsourcing is from their 3PL partner
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Analysis: It is evident from the above table that 54% say that cost of outsourcing is important concern (13 of 24) and 46% say that it is a very important concern (14 of 24).
Inference: The inclination towards this aspect shows it is a very important factor for a 3PL to satisfy its customers, and could be a vital factor for selection of 3PL partners by companies. This observation implies that companies select their 3PL partner for the benefit of reduced costs involved in logistics operations.
The analysis for each question from the designed questionnaire is done above. The research is supported by graphs, tables and descriptions of the findings. The next chapter gives an summary of the important findings conveyed through the research analysis.
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CHAPTER 5 SUMMARY OF FINDINGS

The respondents in this research study are from key decision makers from the visited companies. The companies are from various parts of Bangalore region. All the respondents take care of the logistics process in their company. All of the 24 respondents are male except one, who is a women entrepreneur. The findings from this research are all brought together under objectives as set for this study. Objective 1: To understand what category of industries use 3PL services Findings: The majority (25%) of the companies which use the 3PL services come from Information and Communication Technology sector (6 of 24). The next major users of these services are from Laboratory equipments, consumables segment and Engineering & Earthmoving segments with 21% each (5 of 24).
The companies under these above said segments usually operate in many countries and are regular users of 3PL services, either for their exports from SEZ units (licenses are given to operate for a company in SEZ only if all their sales come through exports).
Other segment like Precision Engineering (whose contribution is 13%) is rather a small industry and is usually restricted by their scale for exports (3 of 24 respondents). Software development and research centre (with 12%) use this service only on situational basis (3 of 24 respondents) to import or export specialized equipments (or ingredients). Fine chemicals & reagents; Toys & Entertainment segments (each contributing 4%) is still a growing segment in India and the development of this segment is anticipated (1 of 24 respondents each).
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The companies in the above said segments majorly use the 3PL services because they prefer concentrating on the core activities related to their field and outsource the nonrelated activities.
Objective 2: To understand how these companies do select the 3PL service providers Findings: The respondents primarily select their 3PL partner for the reasonable price offered for their services (15 of 24 respondents supported this factor).
Enhanced flexibility (choice of 13 of 24 respondents) & increased productivity (12 of 24) are the next important factors considered.
Adequate warehouse facilities are the next important reason for their 3PL partner selection (11 of 24 respondents supported this factor).
Other factors like promptness in service delivery; IT integration capabilities and ability to handle large volumes of goods are preferred next in preference. 46% say they could focus more on their core functions by relying on their 3PL partner.
The respondents are not more focused on the 3PL partner being quality certified, good reporting and customer relationship management practices.
Objective 3: To analyze customer preferences in using 3PL services Findings: 12% (3 of 24) of the respondents prefer no change in the current levels of service and also the same number (3 of 24) opted for complete services. But, 76% (18 of 24) of the companies prefer much more than that. 38% of companies suggest complete supply chain integration (9 of 24). The rest (9 of 24) indicated value additions to services are needed by these companies for mutual growth.
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This is very promising for the 3PL players as their companies are willing to integrate their business with them.
This means mutually benefiting on the longer run by supply chain integration. This ensures quicker transactions due to familiarity in operations, which increases productivity for both companies.
By integration, switching costs involved (in changing 3PL partner) of the companies will increase, thereby providing the best possible services by 3PL companies is important if both needs to prosper in such a highly competitive business environment.
Objective 4: To analyze the 3PL service requirements by service seekers Findings: 63% (15 of 24 respondents) observed reduced cost of logistics as main benefit by using 3PL service provider. The other benefits which were observed are: achieved enhanced flexibility; achieved increased productivity; improved warehouse space & capacity utilization; and also could focus on core business.
The benefits should be able to extend the companies to reach other markets or extend their services. This can be achieved when the companies use the saved resources, (which otherwise would be used up for logistics) and direct them to other core business needs. Thereby helping in business areas development.
The satisfaction levels show a positive trend. Majority (87%) of the companies are satisfied with their 3PL partner, this is an important finding. It shows that the 3PL companies are doing their best in achieving customer confidence.
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Objective 5: To explore opportunities for development of services in the future Findings: The 5 important factors which were chosen as parameters have all got either important or very important remarks. The parameters are: 1. Promptness in delivery 2. Safety of Goods 3. Adhering to compliances (regulations set by the government) 4. Appropriate & complete documentation 5. Cost of outsourcing
All of the above concerns are weighted important aspects for the 3PL activities. Statistics in the study also shows that these said parameters can be used as a tool for measuring a 3PL service providers abilities and tying up with them by companies for their logistics requirements.
These above said findings are as per the primary and secondary data collected during the course of this research. Also, the respondents were asked informally about concerns & noticeable points (concerns) while filling up of the questionnaire. Their responses are also included in the findings.
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CHAPTER 6 SUGGESTIONS AND CONCLUSIONS

This section gives a list of suggestions, which were observed in this research study, for the improvement of 3PL industry in India. These include information derived from the primary data (this study) and also through secondary data. The views given here will help to improve the relationship between the 3PL service provider and its customers. 6.1 Suggestions for 3PL companies: 1. Apart from the important business segments where revenue potential is present (like IT & related segments), 3PL players should also focus in segments like precision engineering, aerospace and entertainment/ education segments. This is a promising segment for future business.
2. Emphasis on the service benefits should be done by 3PL service providers to their customers. Effective marketing of the same should be done so as to attract many companies towards using these specialized services. 3. 3PL companies must propagate the benefits of being quality certified to their customers, apart from the basic services and facilities. This is important since, in India 3PL industry is just growing and having a firm base reflects in the overall confidence/ reliability of this industry. 4. 3PL companies should try to extend its services to its existing customers, (76% of their customers are willing for the same) as per the exact requirements of their companies. This will ensure better integration of businesses and mutual prosperity. 5. Apart from the 5 major concerns of logistics parameters such as: Promptness in delivery; Safety of Goods; Adhering to compliances (regulations set by the government); Appropriate & complete documentation and Cost of outsourcing, many respondents also felt the need to get better support during emergency/critical
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situations. This can be employed by a 3PL partner as a major potential if it has so and do marketing of the same to attract more important customers. 6. The activities in 3PL can be better controlled by using dedicated 3PL softwares (example: 3PL Central, Camelot 3PL Software, etc) which enables better integration within the systems of both the company and 3PL service provider. 7. The usage of IT systems & IT enabled applications help in reducing process lead times and thus can be a powerful tool for achieving customer satisfaction.
6.2 Suggestions for companies using 3PL services: 1. The companies using 3PL services should utilize the complete benefits offered. This could be in terms of decreased cost of logistics, simplified distribution network, etc. which will enable them to focus on their core business activities and thus be competitive amongst their competitors.
2. The companies using the 3PL services must acknowledge the efforts of 3PL companies getting quality certified to be competitive in this heterogeneous market structure. This ensures the overall quality of output and also decreases mishaps. 3. The companies using 3PL services must encourage their 3PL partners to extend services so as to reduce dependence upon many agencies and focus on only the most suitable partner. This will reduce any delays due to miscommunication which might occur during any transaction. 4. Better integration of 3PL partner within the companys businesses will enable the company to reach out to its consumers quicker, without much error in the involved process as it gets familiar for both parties in due course. 5. Companies using 3PL services are satisfied with their current 3PL partner (87% responded positively), though this hasnt much given a chance to realize benefits like
business expansions and to offer newer services. The companies using 3PL services need to exploit the benefits it received though outsourcing of its logistics activities. This can be achieved by proper communications during setting up of contact objectives. The company should plan accordingly to shift its unwanted resources towards more productive works. 6. The companies using 3PL services must help in developing home grown companies. This ensures more business for Indian 3PL companies, and less dependence on foreign 3PL players. This helps in not only giving a direct boost for these 3PL players but also helps in increasing the revenues of government. 7. The companies using 3PL services must ensure healthy development of Indian 3PL companies so as to uplift the growth deprived 3PL sector, as this segment is getting little support from the government (insufficient infrastructural development).
These suggestions are as a result of extensive study through the primary and secondary data. If, these are employed during the current stages of development of this sector, there is a large scope for improvement in India. This will help in being competitive with other developing countries like China and Brazil. More investments can be brought to India, which will directly help in companies being more productive and bring out higher Industrial output.
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6.3 Conclusion
This study has shown that 3PL companies are in the right path of growth. As in comparison with foreign countries, 3PL in India is not developing faster enough. This could be due to inadequate infrastructural support provided by the government. The 3PL industry in India is at this stage because of mergers and acquisitions by global players such as DHL (acquired Blue Dart for Indian operations), FedEx (acquiring AFL & PAFEX), Allcargo Global Logistics is scouting for acquisitions in the fast growing markets of India and East Asia, etc. The 3PL market in India remains at a relatively developmental stage, with multinational companies in all industries being the prime users of these services. Usage of 3PL services in India is mainly dominated by automobile (including auto components) and IT hardware industry. These two industries are more dynamic in terms of usage of 3PL services compared to other industries like, retail, FMCG, apparel, and consumer electronics. The logistics cost among these industries varies between 3-5% of the total sales, which is far less compared to other developed markets in America and Europe. According to Asia Logistics News, Indian 3PL market is poised to grow at 26% CAGR (Compound Annual Growth Rate); this is promising for the 3PL industry and can expect better growth with their customers in the years to come. This study reveals the minute details of how the 3PL service providers are operating currently, and how these are being perceived by the companies using these services. This 3PL segment has a very good future in India. This segment still needs to get that boost from the government. This can be indirectly done by improving the road conditions, building higher capacity shipyards, and other infrastructure facilities, which will reduce the cost for 3PL companies, and thereby provide cheaper tariffs to their customers. Companies using the 3PL services need to depend on homegrown 3PL companies, by which there will be co-development in this emerging sector and maximizes the growth potential for Indian 3PL industry as a whole, which are struggling against their cash rich foreign competitors.
Some strategies which can be implemented by 3PL companies to get attention from service seekers can be by: Use online forums & websites which concentrate on 3PL activities where buyers and sellers of services interact and expert opinions on problems in logistics industry can be discussed. For example at www.3pladvisor.com, 3PL companies can advertise about their offered services and their customers can provide feedbacks and testimonials.
Usage of social network sites like Twitter, Facebook, LinkedIn, etc. This will help bring likeminded people together and help business grow better.
Organizing an event/conference exclusive for the 3PL industry. This again will get companies from both sides together and discuss on current issues, knowledge sharing and getting expert opinions.
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BIBLIOGRAPHY Books: 1. Harland, C.M. 1996. Supply Chain Management (SCM). UK: Blackwell Encyclopedic Dictionary of Operations Management. 2. Hines, T. 2004. Supply Chain Strategies: Customer Driven and Customer Focused. Oxford. Elsevier. Pp 76. 3. Bartholdi, John. J and Kevin R. Gue. 2004. The Best Shape for a Crossdock Transportation Science, Vol. 38, No. 2. Pp. 235-244. 4. McKinlay, A. H. 2004. Transport Packaging. IoPP Bookstore Periodicals and Journals: 1. 3PL industry statistics. Log.India. Feb, 2011. Pp: 15-18 2. Cold storage in transit. Smart Logistics. March, 2011. Pp: 105-107 Published research reports: 1. So , Soon-hoo, JaeJon Kim, KiJu Cheong, Geon Cho. 2006. Evaluating the Service Quality of Third Party Logistics Service Providers Using the Analytic Hierarchy Process. Journal of Information Systems and Technology Management, Vol. 3, No. 3. ISSN online: 1807-1775. pp. 261-270. World Wide Web: 1. SCM: http://en.wikipedia.org/wiki/Supply_chain_management#cite_note-2 (May 5th, 2011 ) 2. Direct Shipment Best Practice of the Federal Aviation Administration (FAA) : http://www.faa.gov/aircraft/air_cert/production_approvals/mfg_best_practice/media/d irectship.pdf (May 5th, 2011 ) 3. CSCMP Supply Chain Management Process Standards: cscmp.org/downloads/public/resources/standards-toc.pdf
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ANNEXURE QUESTIONNAIRE Dear Respondent, This survey is for a research project intended for the Final year, MBA course of Bangalore University. Your efforts are appreciated in helping carry forward this 3PL Industry Analysis Survey. Your responses to this questionnaire will be kept confidential and will be used only for academic research. (Nandakumar Bhat. H)
Please fill out all the details as below. There are 7 distinct sections. Every section in this questionnaire will have an introductory message which will guide you through comfortably.
Third Party Logistics (3PL): A firm [that] provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding. Section 1: Respondent details Your Name: Date: Section 2: Industrial Presence Please mention the industrial segment your company is in: (Tick whichever applies) Information and Communication technology Software Development and Research Centre Fine chemicals and reagents Laboratory equipment, consumables Electrical fixtures and parts
Company Name: Contact No.:
Engineering and earthmoving Precision engineering Aerospace parts Toys and Entertainment If Others, Please mention:
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Section 3: Services of your 3PL partner
What qualities did you see in your 3PL service provider before selecting them? (Tick whichever applies) Be prompt in service delivery Reasonable price Should be able to handle large volumes effectively Short order execution times Technologically updated (IT integration capabilities) Being ISO 9001 certified or similar quality certification is a must! Should provide detailed work reports Updated knowledge on compliance regulations Good material handling capabilities Adequate warehouse facilities Goods tracking Efficient Customer Relationship Management If Others, Please mention:
Section 4: Future Service requirements from your 3PL partner What are future service requirements you would seek from your 3PL services provider? (Tick whichever applies) Just the current level of service (no change) Complete services (from your company to end customer) Complete supply chain integration & collaboration (synchronization with my business) Value addition to provided services (for mutual growth in future)
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Section 5: Benefits of outsourced 3PL Services
How did you benefit from the 3PL services? (Tick whichever applies) Increased reliability with consistent service Reduced cost of logistics Enhanced flexibility Shortened delivery lead times Increased productivity Helped to focus on my core business Improved visibility across logistics & supply chain Gives access to techniques and expertise Improved warehouse space & capacity utilization Enabled us to offer new services Enabled us to access new markets If Others, Please mention:
Section 6: New services under 3PL Please mention any new areas where you would like the 3PL services in your business:
Section 6: Satisfaction Level
How satisfied are you with your current 3PL partner? (Tick one that applies)
Very Satisfied Moderately Satisfied Neutral Moderately Dissatisfied Very Dissatisfied
Section 7: Rate the concerns in outsourced logistics services Rate the importance of the following concerns in relation to outsourced logistics services provision? (Tick one that applies)
A. Promptness in delivery
Very Important
Important
Neutral
Not Important
Not Very Important
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B. Safety of Goods
Very Important
Important
Neutral
Not Important
Not Very Important
C. Adhering to compliances (Regulations set by the Government)
Very Important
Important
Neutral
Not Important
Not Very Important
D. Appropriate & Complete documentation
Very Important
Important
Neutral
Not Important
Not Very Important
E. Cost of outsourcing
Very Important
Important
Neutral
Not Important
Not Very Important
Any other suggestions or comments from you will be appreciated:
Thank you for taking your time out in filling this questionnaire
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CHAPTER 1 INTRODUCTION

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Acharya Institute of Management & Sciences

c. Mode of transportation (e.g., motor carrier, including truckload, LTL, parcel)

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Importance of Supply Chain Management

Acharya Institute of Management & Sciences

1.4.1 First-Party Logistics provider (1PL)

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Acharya Institute of Management & Sciences

1.4.3.2 Categories of 3PL providers:

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1.4.4 Fourth Party Logistics Provider (4PL)

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CHAPTER 2 RESEARCH METHODOLOGY

Acharya Institute of Management & Sciences

Acharya Institute of Management & Sciences

CHAPTER 3 INDUSTRY PROFILE AND COMPANY PROFILE

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Acharya Institute of Management & Sciences

3.7 Range of Logistics Services

Figure 3.1: Range of Logistics Services

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Acharya Institute of Management & Sciences

Figure 3.2: Organization Structure of Indelox Services Pvt. Ltd.

Acharya Institute of Management & Sciences

3.18.5 Functioning Of 3PL at Indelox

SUPPLY CHAIN MANAGEMENT

PRIVATE BONDED WAREHOUSE

PUBLIC BONDED WAREHOUSE

Figure 3.3: Functional substructure of 3PL activities at Indelox

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3.18.6 Inbound Activity Flowchart of 3PL Department Import Clearance at Port

Inbound Documentation Activity

Inbound Warehouse Activity

Request from Customer for Outbound Clearance

Stock Conformation & Allocation (System Stock & Physical Stock)

Outbound Documentation Activities Post Clearance Documentation Handling Activities

Outbound Warehouse Activities

Post Dispatch Formalities & Follow-up

Other Related Activities

Figure 3.4: Inbound Activity Flow chart

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3.18.7 Outbound documentation activity of 3PL Department

Register the Customer Request/Take Docket Number

Concessional Duty Clearance

Full Duty Clearance / Self

Advance License Clearance

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Acharya Institute of Management & Sciences

Indelox takes care of the following compliances:

3.19.3 Functioning Of Compliance at Indelox

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Acharya Institute of Management & Sciences

3.19.4 Compliance Department Activity Flow Chart

Update the Contract/Quotation from Customers by Mail

Verification of Document Allot the Docket Number for the Activity

Submission of Application to Respective Departments

Reply to Query if Any with Concurrence of Customers

Collection & Verification of Approval/Certificates

Copy for Billing & Records & Close the Docket

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Acharya Institute of Management & Sciences