Action Learning Program 2011

Corporate Mentor

Mr. Muthanna MuckatiraFaculty Mentor

Dr. Dhrupad MathurProf. Srimantika NathroyProf. Rajiv Aserkar

S P JAIN CENTER OF MANAGEMENT

Feasibility Study of Warehouse Management Solution for 3PL players in the Indian Market

S P Jain Center of Management 2(c) 2011

Warehousing in Indian Context

3PL Services in India

3PL Players

Force Field Analysis

Automobile Sector

Auto Component Industry

Case Studies

Value Proposition

Success Factors of Warehousing

Our Framework

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1990sCost Centric, Limited Benefits, Company Owned & Operated 2010

Customer Centric, Value Driver, Broader view -Supply Chain Management

Source : The Warehouse Handbook 2011

(c) 2011 S P Jain Center of Management 4

2007-10 – Growth of 10-12% per annum

• Agriculture - 5-6%

• Industrial - 11-13 % rate

• Factors

• Changed Tax Rules (CST Phased Out)

• Growth in Demand - Pharmaceuticals, Automobiles &FMCG

• Organized Retail sector has contributed to this growth.

• For 2012, India's global trade share is forecasted to reach 1.6% which currently is below 1%

• Technological improvement

• Better Transportation and Connectivity

Source : CRISIL Research Report(c) 2011 S P Jain Center of Management 5

Source : KPMG CII Report(c) 2011 S P Jain Center of Management 6

Scalable

Mechanization Compatible

Accurate

Responsive

Transportation Friendly

Source : Miebach Research(c) 2011 S P Jain Center of Management 7

(c) 2011 S P Jain Center of Management 8

Goods received fromSupplier (factory or

port)

Placing Goods appropriately

- Put Away

Value Addition-Labeling, Kitting,

Packaging

Storing

Order ProcessingPicking the

appropriate goods- Pick Up

Appropriate Shipping

(c) 2011 S P Jain Center of Management 9

Value Chain of Warehouse Management

“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.“ – Council of supply management professionals

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3PL Services can bring down the logistics cost 4.3 %

Current 3PL market in India is Undeveloped and fragmented

3PL Market in India poised to grow by 20 %

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7081

4414

951

522

306

242

238

218

190

ET Logistics

Container Corporation of India Ltd.

Gateway Distriparks Ltd.

Blue Dart Express Ltd.

Allcargo Logistics Ltd.

Aqua Logistics Ltd.

Gati Ltd.

Aegis Logistics Ltd.

Transport Corporation of India Ltd.

Market Cap (Rs. Cr)

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1152.73

900

702

453

179.96

Blue Dart

Gati

AllCargo logistics

Arshiya logistics

Gateway Distriparks

FY2010-11 revenues in Crores Rs.

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68.1

60.139

20.83

14.086

TCI SS

Gateway Distriparks

Arshiya

Gati

FY2010-11 Warehousing revenues in Cr. Rs.

FY2010-11 Warehousing revenues in Cr. Rs.

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3% of Country’s GDP

Grew 13% in 4-5 years

• Innovation in Manufacturing

• Improved Warehousing techniques

• Government initiatives

3.5% of company turnover on Logistics

2/3rd on Transportation

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Highly complex and sophisticated industry

“Just in time” delivery

2009-2010 USD 22 Billion

2010-2011 USD 26 Billion

USD 5 Billion Auto Component exports

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Largest passenger car market

Biggest Challenge – Handling Automotive Components

• Inefficient use of Warehouse space

• Outside yards being used for storage

• Use of old system for tracking and transactions

• Long Order fulfillment time

• Erroneous dispatches

• Low inventory accuracy

• Manual processes

Result - Huge Costs & Less Customer Satisfaction

S P Jain Center of Management 21(c) 2011

Challenges Steps taken to Solve them Value to the company

Erroneous Dispatch orders MARC WMS solution Minimize inventory travel time

Long Order fulfillment timeRearrangement of Warehouse Layout

decreased cost

low Inventory Accuracy Process Re-engineering increased customer satisfaction

Manual Processing Streamline inbound process improved inventory accuracy

Old system of Tracking and transactions

standardizing variou processes within the company as well as vendors.

streamlined the inbound processes, cross docking

Use of Outside yards and inefficient use of the wareshoue space

Rush order cluster picking automated warehouse processes

Increased Cost Cycle count less manual work

Less Customer satisfaction inventory rearrangement.

S P Jain Center of Management 22(c) 2011

Challenges steps taken to Solve them Value to the company

Need of effective Supply chain process Home grown IT Solution Customizable

Integrated IT solution implementation - Home Grown

TVSLSL with help from Ramco systems built ERP solution customized for their operations

More customer satisfactions

Automation of the operations

GPS Technology for inventory tracking Scalable technology

Customizable IT Solution for diverse and changing needs of custoemrs

S P Jain Center of Management 23(c) 2011

Challenges Steps taken to Solve them Value to the company

Operations from 2 different Warehouse locations

Phased approach to analyze, design, build and test the solution

Integration of WMS with ERP solution

Duplication of infra and manpower

Improved order fulfillment

Increased Cost 10% Customer Satisfaction

Standardization of Reporting structure

20% Cost reduction

S P Jain Center of Management 24(c) 2011

International Suppliers

Indian Ports

Dealers in India

Manufacturing Plant/Warehouse

Goods inspected and Duty charged for

imported

Components are stored for After Sales and further distribution- Post Duty

payment

Components and Spare parts are sent to dealers in India

only for after sales

(c) 2011 S P Jain Center of Management 27

International Suppliers

FTWZ

Dealers in India

Manufacturing Plant/Warehouse

Goods inspected, stored and duty not yet paid

Components are stored for After Sales and further distribution- Post Duty

payment

Components and Spare parts are sent to dealers in India

only for after sales

International Dealers

Components re-exported to other countries – Income Tax

Rebate

(c) 2011 S P Jain Center of Management 29

Warehouses

Local Warehouses

• Towns and Cities

RegionalWarehouses

• Distribution Centers for a Region Central and

Large

• 3PL Warehouses

• Value Added Services

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Conventional

• Excel Spreadsheets, Bin Cards

Simple

• Stand Alone applications

• Local IT Solution Providers

Complex Operations

• Extended ERP Solutions

Need of the hour

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Quality Workforce

Technology Adaptability

Operating Efficiency

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Land and Location

Operational Volume

Service Level

Accuracy and Reliability

ProductivityBusiness

Intelligence

Specific Requirements

Pay Period

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Capability – Fitment Model Capability: Warehouse Operations Scale Location Financial Muscle Leadership Quotient Products

Fitment EPS Solution “As-Is” Fit Level of Solution Tailoring Process Consultation Standardization Services

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High Capability Low Fitment

• Translation

• Standardization

• Software Structure

High Capability High Fitment

• Implementation

• Optimization

• Next Level

Low Capability Low Fitment

• Enlightenment

• Consultation

• Customization

• Conversion

Low Capability High Fitment

• Transformation

• Practices

• Processes

• Partnership

Capability on Y Axis Fitment on X Axis

S P Jain Center of Management 36(c) 2011

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TEAM

Abhay Raj MittalAditya Soni

Harish GuntukuRavindra Varigonda

(c) 2011

S P Jain Center of Management 38(c) 2011