STAKEHOLDERS IN LOGISTICS SECTOR

Companies, who need storage Material Handling Equipment manufacturer Rack & Storage Solution companies

Land Owners

Pre Fabricated Building Industry

IT sector , ERP based solutions.

Investors

Infrastructure Providers

Supply Chain Consultants

3rd party Logistics Service Providers

Transporters

Academia in future

Can be present at any level of Supply Chain

WAREHOUSING

Raw Materials or Finished Goods Poor Design reduces efficiency by almost 20%.

DISTRIBUTION

INTERNATIONAL LOGISTICS

Strengths 1. Consumer goods on rise. 2. Burgeoning middle class. 3. Higher GDP growth. 4. Manpower Availability. 5. Land availability. 6. Rising Industrial Production.

Weaknesses 1. Lack of IT usage in Logistics. 2. Unprofessional warehouse management. 3. Low quality existing infrastructure. 4. Lack of suitable skilled labour.

SWOT INDIA
Opportunities 1. Market at Nacsent stage. 2. Continuously growing SKUs in FMCG sector. 3. Free Trade Warehousing Zones coming up. 4. Delhi Mumbai Industrial Corridor in progress. 5. Increasing trade and retail demand. 6. Air Cargo Complexes being set up. 7. Outsourcing to specialists. 8. Phasing out of CST.
Threats 1. Lack of awareness among people regarding warehouses. 2. Industry unwilling to spend on warehouses. 3. Labored GST implementation. 4. Geographical size and diversity. 5. Security concerns. 6. Rising Inflation

Logistics Service Providers( LSPs), strong in certain regions and not pan India. Ideal Single Window Service still not achieved by any player. Companies need to outsource pan country services to different players. Service Provider and actual Logistics carrier different people in many cases. E.g. Transportation for Milk Runs. LSP can t take up space until a long term contract from consumer. Solution lies in Plug and Play & Pay per Use business models. Service level of LSPs is the Key Deciding factor in awarding the contracts in future and not the rentals and no. of warehouses.

 Returns expected are good, but will take time .  growth bound to happen in phases and distributed over regions.  Land prices may soar sooner or later.  Hotspots : Mumbai , Delhi NCR , Kolkata, Nagpur.  For lower volumes : Ahmedabad, Ludhiana, Bangalore, Hyderabad.

Manpower training is required. HR issues and less career growth in this field as of now. Warehousing is being viewed as just STORAGE function. Its treated like a secondary activity and people want to spend less on it. Ignorance about cost benefits. Clearance and Forwarding agent sort of model. Warehouses acting as just depots. Automation, vertical space utilisation and warehouse management systems unheard of.

Para Subparameter meter Infra Road Power Rail Airport Seaport GOVT Reforms Proactiveness LAND Proxi mity

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The Warehousing Act 2007  Current spend : INR 4.5 trillion on Logistics related Infra, 13% of GDP. Inventory Carrying, warehousing and order processing = 57% of this amount. Only 31% Indian companies outsource logistics, globally 75% of companies. INR 14 trillion to be spent on road connectivity, improving existing ports & creating new ports from 2005-6 to 2011-12.  Warehousing (developmental & Regulation) Act was formed in 2007 to ensure that warehousing is being viewed as a critical component to achieve Operational Effectiveness across different sectors.  Had to be enacted in 2010.

The act enables banks & financial institutions to step into commodities and warehousing sector. Some of the key benefits are :  Higher %age participation from private sector including development of modern warehousing infrastructure.  Boosts agricultural sector as now we can store the produce.  Greater transparency, low costs in rural areas, efficient supply chains, better price risk management, rewards for better quality and management.  Attracting large private investments.  Electronic Title Transfer.  Regulation of business by registering of warehouses issuing negotiable warehouse receipts.

An FTWZ is like an SEZ , but with special focus on trade related infrastructure.  FTWZs will be set up only near seaports, airports or dry ports (rail/road hubs).  FTWZ is a special case of SEZ only.

Can be set up by a PSU/ PLC (Private Limited Company) or a JV in technical collaboration with experienced Infra Developers.

Approval required from BoA of DoC ( Department of Commerce)

Permission letter issuance for Development, Operation & Maintenance.

Developer can SALE/ LEASE/ RENT OUT warehouses/workshops/office spaces and other facilities to TRADERS/EXPORTERS.

100% FDI allowed for development of FTWZ.  Minimum Area to be developed : 0.5 million square metres.  Minimum outlay for projects : INR 100 crore.  Supplier of material into the FTWZ will be treated as physical exports for the Domestic Tariff Area (DTA) suppliers. FTWZ envisage duty free import of all goods for warehousing.  Custom duty regulations same as SEZs.  Packing and repacking without processig can take place inside a FTWZ.  As per Section 80 IA of I-Tax Act : 1. FTWZ is exempted from Service Tax. 2. Free forex currency transactions i.e. No amount of money need not be paid as commision for forex conversion 3. Benefits as applicable to SEZs.

 Companies will move from tax efficient distribution networks to Optimised Distribution Networks.  Hub and Spoke model will become widely prevalent like in USA.  Large Scale Consolidation of Logistics Sector and thus Pan India presence ensurable. Modernization of Warehouses possible.  Big companies planning to close their regional warehouses owing to GST.  Instead they are building bigger and more sophisticated warehouses and logistics parks.

Market feasibility or need gap analysis is done keeping in mind the real Estate Perspective to identify the pre catchment areas or the markets. The pre identification criteria are : Connectivity and linkages with multiple markets.  City profile and growth/ development trends.  Air/Sea Port Infrastructure.  Logistics infrastructure.  Industry Profile.  Retail profile Present and Upcoming.  Real Estate Scenario & Land Availability/costs.  Freight and cargo routes.  Demand Type, Value, Volume.

Warehouse setup is a very crucial and strategic decision to make as it is an irreversible process. A slight mistake will land up in full loss. So, all the pros and cons of the LOCATION where you want to setup have to be viewed very carefully. Site selection process is a big project in itself and has to be well researched and minutely planned. Parameters involved in this decision making :1. Serviceability to a specific market. 2. Cost benefit analysis of market or tenant it serves. 3. Value for Money Proposition has to be achieved both for tenant and for service provider.

Temperature & Humidity Control

Very Narrow Aisle Storage Demarcated aisles and Bays

Lighting

Office space

Dust Free Environment Cross Docking facility Tri-Mix Flooring

Parking

Health, Safety , Pest control

Heavy Duty Racking

High rech stackers

Mezzanines

Security

IT and RFID

Automatic Dock Levellers

Commutability of location, proximity to highways

Bottom Up Method (used in Chemical and Oil Storage)

Location Specific Strategy. Small Warehouse Projects. Sourcing and distribution focused. Commodity based goods movement.

Top Down Approach

Research based approach. Consumption based destination/hub concepts.

Search for land sites with help from Brokers.

Search basis : Land Size, Frontage, Topography, Commercials.

Evaluation and shortlisting on basis of Mapping

Priortisation among the deals available is done.

 Used by companies manufacturing Consumer Goods.  Macro Research and Profiling of each city on logistics demand drivers is done.  Volume of socio economic development, format and land size is investigated.

Demand Supply Equation Industry Density

Competitive Analysis.

Tenant Demand Estimates

Retail Clusters

FSI

Land Use patterns

Zoning

Logistics Infrastructure Growth

Proximity to existing Warehouses Industrial Areas

Connectivity to Logistics Infrastructure

Cargo Transfer Points Octroi Check Points

Retail Areas

Plot Size and Shape

Space for heavy vehicle movement

Modular Design & Flexibility

Color Schemes, Lighting and ventilation

Automation & Labor tradeoff

Should minimize costs

Ensure higher FSI

Product Type and Variety

Suitable conditions corresponding to product.

Overall Smooth and trouble free movement of vehicles and materials

Packing Data

Volume throughput

SKUs data
Warehouse Management Process

Client Supply chain knowledge transfer.

High Order Fulfillment Rate

Low Turnaround time & Discrepencies

Low Incorrect Fulfillment

Negligible Inventory Damage

Receive

PUTAWAY

STORE

PICK

Dispatch

VALUE ADDons : 1. 2. 3. 4. 5. 6. Repackaging. Knitting. Cross Docking. Warehouse receipts. Quality and Dispatch checks. Repair & Damage control.

All these are feasible because reverse logistics are almost 7 times costlier, so companies try to avoid such procedures and take the necessary steps before the actual delivery of the product they are supplying.

Abbreviation 3PLs FTWZ FSI

Full Form Third Party Logistics Free Trade Warehousing Zone Floor Space Index

Other Details

Ratio between the built up area allowed and plot area available. Higher the FSI better the space utilisation.

2- Bin system Smart Bin System Kitting

Process in which individually separate but related items are grouped, packaged, and supplied together as one unit. 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 E.g. In ordering a PC online, a customer may select memory, drives, peripherals, and S/W from several alternatives. The supplier then creates a customized kit that is assembled and shipped as one unit. 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.

Cross Docking

Key Companies in Logistic related businesses : 1. DIESL(Warehousing) A TATA group enterprise ; www.diesl.in 2. SSI SCHAEFER (Material handling Equipmentsupplier) www.ssi-schaefer-asia.com 3.