India 2nd fastest growing economy booming with growth rate of 9.4%, number of Indian sectors are uprising i.e. retailing(growth rate@ 18%-20%), automobile (growth rate 18%), FMCG (10%) & manufacturing sector (nearly 11.3%) and market become more customer driven. Now every customer expect better quality at cheapest price on time.
Do companies will satisfy customer demands ON TIME EVERY TIME……………….
'On Time Every Time' a big challenge for Indian logistic companies today. According to one report India spend 13% of its GDP on logistics which is more than worlds’ average expenditure on logistics. Today we are facing this problem because of inadequate national highways, poor infrastructure, preconceived mindset, taxation, lack of high technology & regulatory loopholes.
According to Li & Fung asia’s best supply chain company statement:
Rs 5 (price of product)= Rs 2 (manufacturing cost)+ Re 1 (marketing expense)+Rs 2 (supply chain or transportation cost).
This distribution of cost structure shows that nearly 40% - 45% of product cost is incurred in transportation which is much higher than expectation but its beared by customers only.
As per Li & Fung statistics all manufacturing units are using number of operations techniques i.e. TQM, Benchmarking, Kanban, Six sigma etc to reduce its manufacturing cost. The scope of cost reduction is left with Supply chain.
Role of Indian Government in logistics:
Indian government is dealing this issue very seriously. In road sector alone government will see investments of about Rs 1,52,000 crore between 2006 and 2012. Airports, which together handled a cargo of 1.4 million tonnes last fiscal, as against 0.65 million in 1995-96, will also see significant expansion and development.
Major projects in respective field are:
freight corridor project (railways)
Golden Quadrilateral Project (roadways)
Opportunities for logistics companies:
There is biggest opportunity for logistics companies and in response according to Edelweiss estimates that the six major players in this sector — Concor, Gateway Distriparks Ltd (GDL), Allcargo, SICAL, Transport Corporation of India and Gati — will spend Rs 3,400 crore over the next three years to cash in on the growth opportunities. These companies together invested about Rs 500 crore in the last fiscal.
For optimization of service, logistics companies will have to work upon following:
Reduce transport costs
Improve customer service
Improve utilization of people
Reduce inventory holding costs
Lead time
Technology i.e. RFID, Tracking systems, supply chain softwares & EDI (ectronic data exchange) for proper coordination.
Lets see upto what extend these logistics companies will be able to satisfy customers ON TIME EVERY TIME.
References: Business Line 15 jan, 2007
Business Line 12 apr,2007
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3 comments:
"On Time Every Time", It is good to hear.
But this concept is adapted very late in Logistics Industry.
If I am correct the Parental Concept was JIT.
JIT-Just in Time.
This concept was first adapted by Japan in 1960-1970. This concept became familiar in all their production areas. This lead them to Industrial revolution and accelerated their economy to higher growth.
This concept can not be made a constraint to a certain domain or an area. This is the first baseline principle of Manufacturing/Production as well as Services industry.
Yes you are right friend, I was talking more about logistics company or so called 3PL(3rd party logistics companies). Most of the well known manufacturing companies outsourced their supply chain division to 3PL companies. So in the article i was talking about logistics sector..
Now this is what i call Comprehensive and crisp article. Great going..just to add some drama to my comment i would say,"The bar has just been raised".
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