PowerPoint Presentation: Introduction about the Logistics and Supply Chain Sector INTRODUCTION: INTRODUCTION What is Logistics? Management of flow of goods and services Integration of information, transportation, inventory etc Reduces operational cost, improve delivery performance and enhance customer satisfaction The importance of logistics is growing and now the logistics industry has become highly recognized in the global scenario Evolution of Logistics Industry: Evolution of Logistics Industry Logistics Outlook: Logistics Outlook Indian Economy is growing at over 8% and Logistics industry is booming India is poised for a major growth in the coming years and Indian Freight Forwarding is poised to become the next exciting growth sector. According to World Bank LPI (Logistics Performance Index) survey conducted among 155 countries India ranked 47th and continues to be the top performer in South Asia. The survey also concluded that excluding high-income countries, India is also among the 10 most significant over performers. Indian Scenario of Logistics Industry: Indian Scenario of Logistics Industry Logistics Industry size $ 200 billion by 2020 The Indian logistics market recorded revenues of about $ 82.10 billion in 2010, witnessing a growth of about 9.2 percent over the previous year. Annual logistics cost is estimated to be 14% of GDP Out of the total cost 99% is accounted by the unorganized sector Is growing at a very fast pace of 12% per annum The market is estimated to be around USD 100 billion Has generated employment for 43 million people in the industry Indian Logistics Industry: Indian Logistics Industry Challenges: Inefficient Supply Chain Infrastructure Low Technology Penetration Food Safety Unorganized sector Bureaucracy Lack of scalability Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 8 Challenges PowerPoint Presentation: Disjointed Food Supply Chain Village Commission Agent Sub Farmer District Commission Agent Wholesaler Retailer Consumer • Low yield / non-standard quality Farmer • No control on quantity / quality of raw material • Price de-linked from market Processor • Unscientific and unhygienic handling Village • Lack of infrastructure leading to loss of quality Commission Distributor • Poor market access Agent • Loss in trade passed onto farmer • Lack of infrastructure leading Mandi / Local • No infrastructure for handling/grading Retailer agents • Price quality correlation not assured • High prices Transportation • Unscientific method leading to loss of quality /damages Consumer • Limited choice • Inadequate infrastructure Wholesale • Rampant wastage Non value adding players • Opportunistic profiteering Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 9 PowerPoint Presentation: Poor Supply chain Infrastructure • Poor infrastructure facilities for Storage Transportation Processing Packaging Distribution • About 3,500 cold storages/warehouses Only 13m tons of storage capacity for production or 140 mn tons of Fruits/Vegetables Sanjeev Asthana Agro Enterprise Without Borders, Singapore, 2009 10 PowerPoint Presentation: Supply Chain - High Costs • Inefficiencies in Distribution Lack of cold chain and warehouse structure Logistics costs in India are among the highest Fragmented retail structure • Supply Led Growth • World: 72% • India: < 1% • More than 5 million retail outlets selling food products • Limited focus on food safety and hygiene • Limited choice to the consumer • Low investment in quality control, product innovation, private labeling and market intelligence Agro Enterprise Without Borders, Singapore, 2009 11 Current Status and Dynamics of the Industry: Current Status and Dynamics of the Industry Issues – Pricing pressures, high cost of operations, low returns on investment, hiring and retaining talent and pressure from the client Role of service providers have become very important to complete supply chain integration Demand for third party logistics providers is increasing Growing at a very fast rate in South-East Asian countries Technology used in Global Logistics Industry: Technology used in Global Logistics Industry Warehouse Management System Material Flow Control System Portal Application Automated Storage and Retrieval Systems Mini Trolley System Lean lift Systems Sorter Systems Light to Pick RFID Global Positioning Systems Current Status and Problems in the Industry: Current Status and Problems in the Industry Is in nascent stage Is considered to be a weak link of Indian Economy Is a high cost, low margin business Economies of scale is absent High tax Lack of trust and awareness among the Indian shippers Poor physical and communication infrastructure Stiff competition from international firms Lack of skilled labor Lack of technology being used Positive Trends Seen In Indian Logistics Industry: Positive Trends Seen In Indian Logistics Industry The industry has got the desired momentum Logistics has become a strategic source of competitive advantage Huge investments are made by foreign investors High investments are made by government to improve the infrastructure Companies are re- engineeering their supply chain to make it more responsive India is becoming the auto hub of the world Technology Used By Indian Logistics Industry: Technology Used By Indian Logistics Industry Online Tracking E-pod E-mail Updates Toll Free Number with 24 x 7 service SMS Updates Enterprise Management System Business Accounting Software Customer Relationship Management Software PowerPoint Presentation: A 3PL provider is a company which supplies /co-ordinates logistics functions across multiple links in the supply chain. The company acts as a ‘third party’ facilitator between seller/manufacturer (the ‘first party’) and buyer/user (the ‘second party’).” Supplier’s Supplier Suppliers Distributers Customers/ End Users Design Market Acquire Convert Distribute Mgmt. Control Manufacturing Unit Supply Chain Model 3PL 3PL 3PL 3PL Definition of 3PL: PowerPoint Presentation: It acts as single interface between the client and multiple logistics service providers. All aspects of the client’s supply chain are managed by the 4PL organisation. The 4PL organization is often separate entity established as a joint venture or long term contract between a primarily client and one or more partners. It is also possible for a major 3PL provider to form a 4PL organisation within existing structure. Client 4PL 3PL 3PL 3PL Key Characteristics: Hybrid organisation formed from a number of different entities Typically established as a JV or long term contract Responsible for management and operation of entire supply chain Continuous flow of information between partners and 4PL organisation Definition of 4PL: PowerPoint Presentation: Developing and Deploying India’s Supply Chain Talent ! THANK YOU!