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Offers A Rich
logistics
Variety
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ContentsContents
Logistics- Global scenario
Advantage India
State of Logistics in India
Opportunities In India
Manufacturing
Agriculture
Service Health care
Infrastructure building
Conclusions
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Logistics: Global ScenarioLogistics: Global Scenario
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Manufacturing : Past and FutureManufacturing : Past and Future
Technology has been at the root
of the Industry revolution over
the last century.Global Markets and e-Commerce
Global Reach/Global Impact
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Global Manufacturing Network
Supplier Distributor
Supplier Retailer
Manufacturer
ServiceProvider
Information Network
Enterprise System or
Web-site
Logistics Network
Logistics Hub
Financial Network
Banks
Supply Network
Service Network
Demand Network
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Convergence to Global Manufacturing NetworksConvergence to Global Manufacturing Networks
Assembly
Automation
Factory
Floor
Automation
Airport,
Seaport,
DistributionCentre
Automation,ASRS
CAD/CAM/CAE
LAN, ERP
Paper-based, Human Interface
Collaborative SCP
Marketplace Embedded SC
Machine
Controllers
Cell
ControllersFactory
Controllers
WMS,
TMSB2B
Controllers
Internet, E-mail, Electronic Marketplaces,
Purchasing, Marketing Department
CRM, SRM
Software-based Relationship Management
Agents
GMN
Relationship Automation
Information Automation
Control&Supervision
Automation
MaterialFlow
Automation
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The Global BusinessThe Global Business
ScenarioScenario
Global Customer
Global Manufacturing: No Product produced in onecountry or by one company
Outsourcing to LCCs gained pace
Vertical Integration to Network of Companies
Material, Information and Funds need to movedacross continents
Competition is defined by efficiency,synchronization, and competencies in the network
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The Three CirclesShares of World GDP, 2004Shares of World GDP, 2004
North America
31.2%
(PPP 26.5%)
Western Europe
28.7%
(PPP 21.9%)
Asia Pacific
28.9%
(PPP 34.7%)
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Global Value ChainsGlobal Value Chains
Information Flows
Material Flows
Distribution(US, EU, Asia)
Manufacturing(China)
Raw Materials(Australia)
R&D (US)
IT (India)-Finance (US, EU)
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Advantage IndiaAdvantage India
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India the 4India the 4thth largest economy in the worldlargest economy in the worldPPP adjusted GDP of US$3trillionPPP adjusted GDP of US$3trillion
9.8
5.1
3.22.9
2.1
1.4 1.4 1.4
0
2
4
6
8
10
12
United
States
China
Japan
India
Germany
Italy
United
Kingdom
France
(US$ tn)
Source: World Bank
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Advantage IndiaAdvantage India
One quarter of the worlds youth live in India
54% of the Indian population is less than 25 yrs of
age
2nd Largest English speaking workforce
Focus on Higher Education, Supportive government
policies
Second largest pool of technically qualified
knowledge workers
IPR laws in place
Developing Industry base
MNC
R&Dc
enters
in
India
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IT and R &D are India's Star industriesIT and R &D are India's Star industries
There are more IT engineers in Bangalore (150,000) than
in Silicon Valley (120,000). McKinsey, predicts that IT services and back-office work
in India, will swell fivefold, to a $57 billion annualemploying 4 million.
General Electric, Microsoft, IBM, Cisco, Intel, GeneralMotors, Astra Zeneca, Motorola , Texas Instruments haveR&D centres
Biotechnology is a new hot spot.
Reliance Life Sciences is recognised by the USNational Institutes of Health for stem cell research.
The best-known Indian pharma R&D companies
Ranbaxy, Dr Reddys Labs, Sun Pharma et al. Revolution spread from Computer software to design-
intensive manufacturing to R&D
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TheLogisticsWay The State of Indian LogisticsThe State of Indian Logistics
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IndiaIndia -- Economic Sectors SnapshotEconomic Sectors Snapshot
GDP US $ 692 billion [PPP 3.1 Trillion] 10th largest economy and 4th in PPP terms
Contribution toGDP
Work ForceEmployment
Agriculture 21% 60%
Manufacturing 28% 17%
Service 51% 23%
Logistics costs are 10-20% of GDP
In US it has come down from 15% - 9.8% Very high in developing countries (20% in China)
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CrossCross--Country Logistics Cost ComparisonCountry Logistics Cost Comparison
80%11.37%Japan
30%-40%10%Europe
57%9.9%US
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Elements of Logistics costElements of Logistics cost
Transportation 35%
Inventories 25%
Losses 14%
Packaging 11%
Handling and Warehousing 9%
Customers' shopping 6%
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Accenture: Supply Chains in Asia: Challenges and Opportunities
Logistics In Asia Pacific
Excellent Infrastructure
Sophisticated capabilities and
technology
Easier to attract quality labor
Supply chain partners
Processes and infrastructure thatsupport collaboration
Traditional channelsModerate Infrastructure
Medium IT penetration
With no integration
Poor Facilities and InfrastructureLow IT penetration
Industry partners limited
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Logistics Infrastructure in IndiaLogistics Infrastructure in India
Logistics involves global movement of materials,
information and funds from country to country Requires excellent state of the art country infrastructure
airports, sea ports, Internet and other related facilities
Indian Infrastructure is poor as compared to developedand developing countries and is rated 54th among the 59countries Road : 56/59, Rail: 25/59, Seaport: 51/59, Airport: 40/59
The underlying institutional problems Fragmentation and overlapping of responsibilities among various
government agencies
Complexity of international trade documentation process and lackof IT infrastructure
Complex tax laws
Lack of professionally competent logisticians
Industry readiness: weak asset or system management skills
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RoadwaysRoadways National Highway Development Project (NHDP), US $13
billion, 1998-2007 .
Four/six laning of the highway connecting Bombay,
Delhi, Calcutta and Madras
North-South and East-West corridors (NS-EW),
Kashmir to Kanyakumari and Silchar to Porbandar.
The end to end transport process to be optimized by
controlling loading densities through packaging and
palletizing standards, and loading and unloadingfacilities automation.
Slow speeds, traffic congestion, high wear and tear of
vehicles are some of the problems
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AirAir The air cargo consists of express mail, computers, chips,
electronics and optical equipment, precision instruments
and perishable foodstuffs. The six major airports carry 88% of the total air cargo
Privatization the major airports, airlines is a popular
headline
Delhi
30%
Madras
11%
Bangalore
16%
Calcutta
12%
Trivandrum
1%
Bombay
30%
Delhi
32%
Calcutt a
4%Bangalore
7%
Trivandrum
4%
Madras17%
Bombay
36%
International air cargo traffic Domestic air cargo traffic
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Indian RailwaysIndian Railways During 2000-01, the IR carried
473.5 million tones of freight Rs23,305 crores ( 69%)
89% of its freight is commodities like coal, fertilizers,cement, petroleum products, food grain, finished steel, iron oreand raw material to steel plants.
4,833 million passengers, Rs 10,515 crores (31%)
High Density Network (HDN) connecting Bombay,Delhi, Calcutta and Madras Carries 65% of the total rail freight traffic and 55% of passenger traffic.
Concur is the Flag ship route
Freight is moving away from IR although cheaper
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SeaportsSeaports
Vast coastline of 7,517 kms handles 95% of foreign trade
12 major ports and 184 other (minor and intermediate) ports
Traffic in major ports : 2002-03 - 313 million tonnes
Private sector participation is talke about
7.20Calcutta
8.48Ennore
13.00Cochin
13.30Tuticorin
21.43New Mangalore
23.65Mormugao
23.93Paradip
26.53Bombay
26.83JNPT*
28.55Haldia
33.70Madras
40.63Kandla
46.00Visakhapatnam
Traffic handled (million
tonnes) 2002-03Major Port
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Third Party logistics players in Indiain India
Market is highly fragmented with large number of smallplayers
Rail is state run while truckers are often family-run
Complex business environment, eg. tax rates differbetween provinces, cultural differences
Poor warehousing and transportation infrastructure
Foreign logistics competitors are Exel, Danzas, BaxGlobal, TNT, Panalpina main revenue from freightforwarding
Logistics market is expected to grow by more than20% over the next 3 years as against the present rateof 12-15%
Source : Scope, Indian Logistics Industry, January 2002
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Opportunities In IndiaOpportunities In India
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Opportunities In IndiaOpportunities In India
Leverage the IT & R &D advantageLeverage the IT & R &D advantage
It is essential for India to increase its proportionof Global GDP through growth in all the threesectors of the economy
Planned or wild, growth is essential andimportant. This could be through attracting
MNCs to India or through Indian companiesbecoming MNCs and raising funds through
NASDAQ or large number of small companiesraising capital from international venturesources
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IndiaIndias Share of Industry is Very Lows Share of Industry is Very Low
Vision 2020
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Global Competitiveness inGlobal Competitiveness in
Manufacturing is a National ImperativeManufacturing is a National Imperative
75% of India s working population (600m)has education middle school or below
Only Labor intensive manufacturing can generateemployment in adequate numbers
Experience of Europe, America, Japan, theTiger economies, and now China shows thatWealth creation is possible only through
International trade oriented manufacturing
In China manufacturing sector, constitutesnearly 40% of the GDP.
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Foreign Direct Investment (FDI) in IndiaForeign Direct Investment (FDI) in India
FDI is welcome in all the sectors, except for
defence, railways and atomic energy
FDI inflows : US$ 3.73 billion in 2002-03 and to
US$ 3.57 billion in 2003-2004
Amount of FDI Inflows into India (1997-2004)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
Year (April-March)
BillionUS$
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Indian component manufacturers will move up the valuechain as contract manufacturers Frost & Sullivan has estimated that the revenue of the logistics
industry from the manufacturing sector alone was $13.46 billion in2003, and the market is likely to grow at a rate of6.2% during thenext five years
Strategic location of industries and B2B connectivity tomarketplaces
The increasing online sales will force e-companies to forgestrategic alliance with logistics service providers India can expect a shift in the retail logistics, B2B procurement
practices and the way the distributions are handled Adoption of new technologies such as GPS and RFID will
take place rapidly
Future Trends in Manufacturing IndustryFuture Trends in Manufacturing Industry
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Website
Assembler
Estimated
Time of
Delivery
Order
Processing
System
Customer
ConfiguredOrder
Suppliers
Logistics Service Providers
Warehouse
Global Transportation & Logistics
Industry Supply ChainIndustry Supply Chain
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Leverage IT In Logistics software DevelopmentLeverage IT In Logistics software Development
Indian companies can exploit this strength to developspecific capabilities in IT-enabled Logistics
development and management of logistics planning andcoordination systems.
develop in to 4PL s for global manufacturing and serviceindustries with logistics domain knowledge.
develop automated trade systems such as Trade Net andDigital Trade Transportation Network for tradedocumentation and customs permit applications.
Develop Real-time control & Event Management usingRadio Frequency Identification Tags (RFID) and Web-Services
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KBLP Business ModelKBLP Business Model
Supplier 2 & 3 PLsContract
Manufacturer
Execution
KBLP
Planning, Coordination and Overall Responsibility
CustomerOrders
Operational
Status
Plans
Material Flow
Payment
Service
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IndianIndianRetail IndustryRetail Industry
Restriction on FDI
Accounts for
8% employment and 13% of GDP
Consumer spending has grown at 11.5% per year
India ranks 5th amongst 30 emerging retail markets in DCs
Top cities for retail growth : Bombay, Delhi, Banglore
andPune, smaller cities : Nagpur, Indore, Jaipur, Chandigarh,
F&B, groceries, consumer durables and home products are
promising sector
The organized apparel segment is expected to grow at 9.5%
per annum in the next three years
Consumer Spending Habits
Food &
Beverage
48%
Others
23%
Transport &
Communication
13%
Rent, Fuel &
Power11%
Clothing &
Footwear5%
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e-Choupal
EE--ChoupalsChoupals Farmers- increased income, lessmiddlemen Farmers exposed to
ITC processing facilities Specifications for international
markets
International quality certificationprocesses
Shipment requirements for exports,
The documentation and otherrequirements at the farm level
Use of moisture meters and portableelectronic weighing machines
ITC trained farmers (VendorDevelopment) in specificharvesting, processing, grading, andquality standards and providedguidance on export protocols
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TheThe AgriAgri SupplySupply
ChainChain Agriculture provides 30%
of GDP and 60% of employment
The chain is long and slow
A supply chain study for rice would involve
farmers, seed producers, fertilizer factories,
financial institutions, millers, government,
warehouses, fair price shops, retail shops,
railways, truck transport companies, etc.
Orders of magnitude gains are possible if youapply the Industry supply chain ideas here
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The Agri-Supply Chain -Fertilizers
Location of Facilities
Inventories
Multi-modal Transport
Country Warehouse
Regional WarehouseLocal Warehouse
Factory
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Indian Food Service IndustryIndian Food Service Industry
McDonaldsMcDonalds-- IndiaIndia
The Indian foodservice industry grew by 4.4% in2004 to reach a value of $4.8 billion.
Mcdonalds is one of the successful MNCs in thisarea Indianised on several fronts
products: Mac Maharaja
purchases more than 96% of its supplies from Indiansuppliers.
Restaurants are constructed using local architects
contractors, labor and with maximum local content inmaterials.
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Service Chains Provide
Immense Opportunities
Arise in different contexts Food processing
Health Care
Construction
Finance
Defense
Distribution and retail
Manufacturing Returns handling
Spare parts and MRO
Product Life Cycle Management Closed loop supply chains
Reverse Logistics Transportation
Containers
Window of Opportunity
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Logistics for Large Infrastructure and
Engineering Projects
India is focusing on infrastructure
a wave of projects such as the construction of
airports, seaports, industrial parks and national
highways.
These can be completed in time and budget
through proper logistics management and
coordination of various activities.
Business strategy to develop infrastructureand Industry simultaneously
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SupplyChainEffortsCutLeadTime70%Ownerenterslong-leadsupplychain,holdsinventory
MappingHelpsUncover
SCInefficiencies
Mappingacrossorganizational
boundariesforpipesupports,
contractordiscovers96%
ofelapsed
timeis waittime, only4%isvalue
addtime
IntelCutsFa
bConstructi
onfrom36t
o18months
Conservativeapp
roachindicates$
30MMinventory
savings
Construction SCM HeadlinesConstruction SCM Headlines
In the case studies w e observedIn the case studies w e observed
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Health Care LogisticsHealth Care Logistics
Healthcare services involve coordinationbetween multiple parties of doctors,hospitals, pharmacists, medicalequipment manufacturers, etc.
These interactions and processes arelogistics-based.
For example, In clinical trials, drugs and
patient samples are exchanged betweenmultiple patients and research institutes.
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Coordinate Disease ManagementCoordinate Disease Management
AIDS Management
Patients
Hospitals
Pharmaceutical
Companies
Research
Institutes
Government
Agencies
Voluntary
Organizations
World Health
OrganizationPhilanthropists
like Microsoft
Networking and Coordination ofdifferent players
Multi-lingual Call Centers
Counseling
Information
Diagnosis and Monitoring ofPatients
RFID tags, Internet
IT support
Clinical Trials
Where
aret
he
Logisti
csPla
yers?
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ProjectProject -- Health CareHealth Care
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Some RecommendationsSome Recommendations Balanced Investment between IT and Physical
Infrastructure
Development of selected Vertical Industry Clusters Agriculture/Food Cluster
Manufacturing Clusters such as Automotive and Pharmaceuticals.
Fast Moving Consumer Goods Cluster.
Development of selected Logistics Sectors Global
Interstate
Retail
Think Radical: 80% of the products are made for 20% ofpeople
Produce goods for the 80% of population: requires some timespackaging solutions, some times new product development, etc.
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Center ForCenter ForCenter For
GlobalGlobalGlobal
Logistics &Logistics &Logistics &
ManufacturingManufacturingManufacturing
StrategiesStrategiesStrategies
ThankyouThankyou
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