Global Challenges in Smart Logistics - innovation driving supply chain control
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1 Global Challenges in Smart Logistics - innovation driving supply chain control Bhairavi Jani NOST Network
2 Introduction SCA Group SCA Group was established in 1896 under the name Kanji Mahadev & Co. Later in 1927, the Company was registered as a customs house broker. More than a hundred years later, SCA is a one stop shop for all services relating to Logistics and Supply Chain Management. SCA Group of Companies undertake activities in port, shipping, customs clearance, warehousing, service contracting, freight forwarding, logistics infrastructure building and management, air cargo, supply chain consultancy and IT. The group and its Chairman have also co-founded companies such Blue Dart Express, south Asia's largest express company, Blue Dart Aviation, India s first cargo airline, Swift, India s first NVOCC. The group has also acquired stake in cargo handling companies such as CSC and has ventured into airport cargo terminals and cold chain. The SCA Group is family owned but several of the group companies have international JV partners and it has also taken companies to public listing. 2
3 Introduction Bhairavi Jani Bhairavi is a fourth generation entrepreneur and Executive Director at SCA Group of Companies founded by her great-grandfather. She has a Bachelor of Science in Business with Magna Cum Laude from Miami University, Ohio, USA. Post her graduation, she worked with KPMG Consulting in Washington D.C. Bhairavi returned to India in She began her foray into business by setting up a fourth party logistics company in India called i3pl. She successfully scaled up the company and exited from it. In 2005 after completing the My Globe Executive Education Programme at INSEAD in France Bhairavi moved into the role of the Director for all the companies under the SCA Group. Bhairavi has been listed as the 30 most Powerful Women in India by the India Today publication in Business Today Magazine featured her as the Supply Chain Maven. She has been profiled as Stree Shakti (Woman Power) person by CNBC Awaaz and featured as a Young Turk by CNBC TV 18. She has been listed as one of the 10 women exemplars by the Hindustan Times, Mumbai. Bhairavi is the recipient of the prestigious CII President s Award for her contribution to CII Young Indians. She is the Past National Chairman of Young Indians, CII, a Fellow, India Leadership Initiative of the Aspen Global Leadership Network, Founding Member, Council of Supply Chain Management Professionals USA, India Roundtable, Member, BMW Quandt World Young Leaders Forum, Charter Member The Indus Entrepreneurs (TiE), Member of Beta Gamma Sigma, the Business Honor society, USA. Member of the Asoka Support Network (ASN). 3
4 India Logistics Share of GDP GDP at Factor Cost INR Trillions ('99-00) Logistics is estimated to cost India almost 13% of its GDP Community, Social & Personal Services Financing, Insurance, Real Estate & Business Services Transport, Storage & Communication Trade, Hotels & Restaurant Construction Japan Europe US China 9% 11% 10% 17% Electricity, Gas & Water Supply Manufacturing Mining & Quarrying Agriculture, Forestry & Fishing India logistics cost as % of GDP 13% Source: Cygnus Industry Report Note: The above estimates include inventory carrying costs 4
5 India - Logistics Infrastructure Road: Total Length 331,5231 Kms National Highways 58,112 Kms 1.7 % of the road network carries 40 % of all road traffic 25 % of highway network suffers from congestion Rail: Route Length 63,140 Kms Railways carry 30 % of the total freight Air: Total Number of airports: 124, International: 12 Sea/ Waterways: Major Ports: 12, Minor Ports: 184 5
6 India - Logistics Opportunity Abolition of trade quota Impact on the industries dominated by global trade (e.g. apparel) Capacity expansion Integration Consolidation Greater-than-ever need for a dynamic, reliable and efficient supply chain! The changing global business landscape has made logistics a critical success factor for India s competence in global markets Evolving base for Contract manufacturing De-risking business Domestic market While China still remains a clear leader in contract logistics, Companies are keen to de-risk their business by spreading their manufacturing base to equally cost effective India. Apart from manufacturing derisking, the ever-expanding domestic market is also a big attraction for companies to set-up their base in India Demand for world class logistics services With increasing integration with the world economy, India can no longer afford sub-world class logistics standards 6
7 India Logistics Opportunity Businesses are looking towards rural markets with greater interest while the rapidly evolving domestic landscape is creating a strong need for efficient and reliable logistics services 5000 towns 6,00,000 villages Companies are increasingly finding urban markets saturated and hard to penetrate Rural market offers a virgin territory for the marketers. However, the challenge is to distribute with cost efficiency. Need for a deeper, cost effective supply chain. Many businesses do not have the requisite logistics capabilities in-house to manage the changing business landscape. 7
8 India Consumer Logistics 8 Multiple implies growth factor between and Source: Expenditure Spectrum of India, , Indicus Analytics The overall household budget would be about 2 times higher than now in real terms. The share of food and related products would fall from 40% to 34% (though in absolute amounts it would be about 1.8 times higher). Transport, education, health and recreation would all be among the most rapidly growing items of consumer expenditures. Per capita income growth 8% pa households will earn about double that they do now
9 India Consumer Logistics Amway Piece packing of home deliveries to 300 plus locations and thousands of individual network members Cash collection Returns and replacement Phillips Large SKUs, per piece packing Hand handling, fragile In Transit sales Transportation damage control 9
10 India Multimodal Logistics 10
11 India Multimodal Logistics 29 states, 6 union territories 14 official languages, 3500 plus dialects Fragmented tax regime Evolving Multimodal laws 700 million consumers 980 million cell phone users 151 million internet users 5000 plus towns plus villages And yet, products reach smallest of the villages, and logistics companies are using robust hybrid IT methods and dynamic processes to deliver and track shipments 11
12 India Cold Chain Logistics 12
13 India - Cold Chain Logistics 13
14 India SCA Institute of Logistics and Supply Chain What India needs is a focused approach towards eliminating its logistics roadblocks, one step at a time. It will take investment in looking at how globally accepted best practices can be applied to Indian environment, how can Indian conditions allow for creation of home-grown solutions that can also have applicability in other emerging economies. This requires a platform where industry, academia, government, and international organizations can collaborate and co-create next practices in Indian logistics. Creating the practices is the first step but their application and adaptation by the various stakeholders can only happen through human capacity building for a variety of roles and players. Most importantly Indian logistics sector is driven by SMEs and their role and skill building is essential. Therefore a center that can undertake Research and Development, Experimental Development, Human Capital Building and SME Knowledge Dissemination is the need of the hour in India. 14
15 India SCA Institute of Logistics and Supply Chain Research and Development How does India optimize its natural advantage in geography, with 7600 km of coastline, in-land water ways, and one of the largest road and rail networks in the world, India can be an innovation lab in multimodal logistics? How does India develop technology that can assist multitude of small logistics players operate and cooperate using shared IT platforms? How does India reduce its logistics costs, one of the highest in the world? Experimental Development How can India further develop and build on its rural logistics model and open up new markets for products and also allow Indian rural products to reach global markets? How can India use non traditional and traditional supply chains and distribution networks to allow for seamless and cost effective last mile delivery to its plus villages? How can India enhance its cold chain infrastructure using innovative technology and new methods of transportation and storage? 15
16 India SCA Institute of Logistics and Supply Chain Human Capital Building How can India use its large young population to create a global capacity for services in the logistics and supply chain sector? How can India institutionalize global standards through training and development? How can India create aspirational value for logistics and supply chain jobs? SME Knowledge Dissemination How can 1.8 million truckers of India benefit from global best practices? How can we train them to use new methods? How can thousands of small C and F agents that cater to 9000 million sq. ft. of warehouse space avail knowledge of best warehousing practices? How can plus forwarders, CHAs and shipping agents get trained in new customs and global regulations in an efficient and time bound manner? 16
17 How can YOU Play a Role? We are keen to partner with: Academia Industry players and Associations Skills and Training Organizations Innovation Labs Incubators and Accelerators Government Agencies Research Institutes Technology Companies And More.. All are welcome.. 17
18 In case of further questions Please contact our NOST offices abroad directly, or through the central office: " internet: " telephone: " ianetwerk@agentschapnl.nl or contact this speaker directly: " bhairavi@scagroup.in 18
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