There is an interesting programme here in XIME on entrepreneurship which is being sponsored by Hewlett Packard (HP). The duration of the programme is for two months, the first month, is classes on finance, accounts, HR, marketing, operations etc for half day and the other half is for factory visits. The second month the candidate will be placed in an industry of his liking for three weeks and then the eighth week will be mentoring in XIME. the candidate will be introduced to many aspects of financing, accounts, marketing, operations, human resource management etc etc. during these eight weeks. The fee for whole two months is only rs 3000/=.
having this exposure will be beneficial for students wanting to start their own enterprises., if he is interested as he will get good idea of how industry works, management etc.. the course starts on May 5 and is up to July 5.
the stay can be organised in the boys hostel and food can be had from the nearby hotels. as students are out on their summer projects in industries, the hostel is free and mess is not working.
in case of any doubts, pl call me on 09739527110 for any clarifications .if some of your other friends are also interested in entrepreneurship etc, they can also apply.
regards,
george easaw..
--
Article Dated: 11/9/2005
Author: Jimmy Olsson / EFT Research
India is being touted as the land of opportunity for logistics service providers all over the world.
The demand for logistics services has been largely driven by the remarkable growth of the Indian economy, which was 7.3% in 2004-05 and is predicted to grow between 6% and 7% in 2005-06.
The Indian logistics market, valued at around US$14 billion in 2004, is expected to grow at a compounded annual growth rate of around 7%.
This growth will continue as European companies continue to set up manufacturing operations in India and large retailers such as Shoppers Stop, RPG, and Big Bazaar expand to smaller cities.
Logistics management in India has become complex, with about ten million retail outlets to cater to the needs of one billion people. Indian entrepreneurs are forming new companies and taking advantage of government policies designed to promote greater efficiencies in a sector where large global businesses have yet to make their mark.
Indian players are realizing the potential in the outsourced logistics market, and are expanding their range of activities to include added-value services and customized supply chain management solutions.
The Indian government plans to execute most of its infrastructure projects through public-private partnership initiatives to relieve pressure on public finances. It is also removing obstacles to foreign direct investment (FDI) and focusing on free trade agreements with other countries. These actions will promote a more efficient and competitive domestic logistics services market and offer investment opportunities for smart global companies.
Enter - new players
Although most transport and logistics companies have barely tapped the surface of the fast growing Chinese market, those at the forefront of the global industry are already turning their attention to a new land of opportunity – India – where corporates are increasingly outsourcing their logistics requirements to specialized operators.
The Indian market has thus become of prime interest to logistics, express and mail companies, with some believing it will eventually rival China in terms of opportunities.
DHL is already in the process of buying its way to market leadership, whilst rival FedEx has stated that, after China, India will be its next major frontier. One of the prime reasons for the interest is that India is forecast to overtake China as the most populous country in the world within fifteen years, which will lead to increased domestic demand for parcels and logistics services.
The latest foreign logistics services provider to climb on the Indian bandwagon was Swift, a subsidiary of Swift Freight LLC of UAE. Rhenus AG, a subsidiary of the $2.4 billion German major Rethmann Group, is also setting up shop in India, by tying up with Hyderabad-based Seaways Shipping Ltd. The joint venture, Seaways Rhenus Logistics Ltd, launched its Indian operations in January 2005.
Adapt or die
While foreign players like APL Logistics, Panalpina and Maersk Logistics have been operating in India for some time, a number of Indian players who, until recently provided minimum logistics services, are also planning to broaden their areas of operation.
India's fast emergence in the biotechnology sector has inspired leading international logistics firms (TNT Express, DHL, FedEx and UPS) to offer medical and clinical sample transportation services to India, transporting human organs, tissues and specimens. Despite the huge risks, it is fast becoming a multi-billion-dollar business.
A survey by the Transport Corporation of India (TCI) and the Management Development Institute (MDI) shows that e-logistics is a growing segment. More than 47% of the 130 companies surveyed felt that integrating IT systems with traditional logistics services was important. About 57% of the companies plan to outsource reverse logistics within the next five years, while 54% plan to outsource inventory management and 53% order processing.
As companies realize the need to be more competitive and cut costs, the vehicle tracking system or e-logistics market in the country is set to boom. Though the numbers may not look impressive at present – only an estimated 30,000 commercial vehicles have tracking systems – various industry estimates put growth in the range of 50-100% for the next five years. Already, a who's who of the auto, telecom and software industry are scrabbling for a slice of the potential 1.6 million-vehicles-a-year market.
The likes of Bharti, Taco MobiApps, Patni Computers, Reliance, etc. are all focusing on telematics – a technology based on telecommunications plus computing – which is being increasingly adopted by the automotive industry worldwide. Many have begun pilot projects in this area. For instance, the Karnataka State Road Transport Corporation has implemented a fleet management system (on a limited basis) to track the operational parameters of its fleet to improve on-time performance and track schedules.
Pitfalls and challenges
The Indian logistics industry suffers from inadequate infrastructure, complex tax laws and insufficient technological aids.
In India, around 65% of goods are transported by road. In respect of the road transport sector, vehicle ownership is firmly in the hands of individual truck owners, 67% of whom have fleets of less than five vehicles.
A fragmented market increases paperwork costs and efforts required to channel resources. The poor condition of roads translates directly to higher vehicle turnover, which increases operating costs and reduces efficiency. These inefficiencies are passed on to the logistics industry, with transportation costs accounting for nearly 40% of logistics costs.
As the average fleet size is small, individual truck owners are unable to contract their vehicles directly to companies, and thus freight consolidators and brokers take a commission to provide truck owners with consignments. Truck owners lack the bargaining power necessary for negotiating prices, and provide transportation services at minimum profit. Increasing costs and dwindling profits affect truck owners' ability to upgrade and expand their fleets.
Jakob Sorensen, MD of Maersk Logistics (India) Ltd, says: "The Indian logistics market is not sophisticated from an infrastructural and procedural point of view. We don't see the Indian market conditions as limitations, but as opportunities. With a 'can do' attitude, we inspire our Indian clients to be winners and work on eliminating given constraints. Our services in the Indian environment are, in fact, allowing the Indian clients to compete on international terms."
In India, logistics costs are still higher than those in developed markets – it is estimated to be around 13% of the GDP, compared with 8% in the US. Transportation costs account for nearly 40% of production costs.
Inventory carrying costs account for approximately 24% of logistics costs, and order processing and administrative costs account for a significant 10%. Stock filing and warehouse management is, in many cases, done manually, which increases administrative costs and adds an element of inefficiency.
The three major hurdles faced by India's logistics industry are insufficient knowledge and under-exposure of logistics solution providers, inadequate infrastructure, and ineffective usage of information technology.
Lack of an integrated transport policy has hampered growth of the logistics sector in India. The major problem is the road transport sector, which, despite being a major link in the system, does not enjoy industry status. Consequently, road transport operators do not have access to low-interest funds.
"India needs to invest in railways, which are environmentally friendly and the most cost effective system. Inland waterways, neglected over the years, are to be developed as well," pointed out MP M Menon, former Indian ambassador to Brazil.
A characteristic feature of the industry structure in India, particularly in the express and logistics segments, is the many players offering homogenous services. Consequently, there is near-commoditization of services, especially in the express document business where demand is price-sensitive. The top end of the market is controlled by a handful of multi-nationals and large domestic players. Industry consolidation is, however, starting to occur.
DHL has acquired local express major Blue Dart Express and, in the port terminal business, Maersk and P&O Ports have consolidated their position by acquiring controlling stakes in private container terminals in Gujarat. The pace of mergers and acquisitions will most certainly develop in the years to come as the market is progressively liberalized.
Outsourcing logistics services – a growing trend
The TCI-MDI survey showed that the benefits of outsourcing logistics activities range from improved delivery schedules and reduced operating costs to expanded geographic reach and improved operational flexibility. The study also showed that less than 55% of Indian companies subscribe to 3PL services, compared to more than 75% globally, which implies potentially brisk market growth.
Present trends indicate that the cement sector has reaped the maximum benefits by outsourcing logistics requirements to 3PLs, especially as logistics constitute between 10% and 15% of their operating costs. For the automobile and engineering sectors, logistics accounts for 5% to 10% of their operating costs, and between 3% and 7% for FMCG.
Logistics service providers face the same set of external challenges as companies. However, logistics service providers have an inherent flexibility to overcome external challenges such as managing multi-modal transportation and compliance with regulatory requirements and agencies. Internal factors that need to be addressed are those likely to have a high impact on the level of outsourcing, such as the customer's costs in relation to the benefits, and the control that needs to be exercised on the logistics service provider. With Indian companies' increasing focus on exports, superior logistics planning is crucial in order to remain competitive.
Third and fourth party logistics
Third party logistics covering the transportation and warehousing industries has undergone major changes. The level of service is now the main differentiating factor between competitors, as opposed to service costs.
With Indian corporates increasingly adopting outsourcing policies, the domestic logistics services market may see the emergence of a new set of players in the form of 4PLs.
Having outsourced traditional logistics activities such as outbound/inbound transportation, customs clearing, import/export management and outbound/inbound warehousing, the new generation of corporates are looking to outsource non-traditional logistics requirements such as reverse logistics, inventory management, order processing, distribution, labeling and packaging.
"Although 3PLs provide a whole range of supply chain services, they are unable to satisfy the corporates' total logistics requirements," says Dr B.S. Sahay, chairman of the Center for Supply Chain Management of the MDI, Gurgaon. "Consequently, companies have to assemble a combination of in-house and outsourced service components to effectively manage their supply chains."
This may lead to the 4PL concept, with the service provider acting as a single interface between the client and multiple 3PLs.
However, some logistics players feel that while the 4PL concept will emerge, it will take time in India, since the domestic 3PL market potential is yet to be fully tapped. Also, for the 4PL concept to click, there needs to be a strong network of 3PLs handling all aspects of supply chain management.
Meanwhile, the 3PLs should broaden their operations and sharpen their efficiencies. The MDI-TCI survey revealed that while more than 50% of the companies have outsourced activities like transportation, warehousing and customs clearing/forwarding, outsourcing the rest of the supply chain activities is uncommon due to "fears related to poor infrastructure and concern about the 3PL's capability."
The Indo-China equation
China, with a population of 1.2 billion, and India, with one billion and an affluent brand-conscious middle-class of 200-300 million, are the largest emerging and unsaturated markets. These markets have experienced the fastest growth rates in the last decade.
China is thirteen years ahead in economic reforms. India's reforms have been much slower due to the political system. FDI into China ($60 billion) exceeds that into India ($3 billion).
With the quantum of trade rising every year between China and India, plus China's accession to the World Trade Organization (WTO), China's logistics market is expanding at a frenetic pace. The 2008 Olympics will further boost materials movement, and Indian service providers are aiming for a slice of that pie.
XPS Global, TVS Logistics and Gati were quick off the starting block in '04-05, striking alliances and joint ventures in China.
XPS Global tied up with Zhenhua Logistics Group, which has investments from China Harbour Engineering Company, and a government-ratified logistics group to offer complete logistics services including freight, customs clearances and IT services to customers dealing with India.
Already operating in Europe and Sri Lanka, TVS Logistics is eyeing the Chinese and Thai markets sometime in '05, and plans to leverage its experience in automobile parts logistics. Apart from tapping China's logistics market, Indian service providers are also looking to pick up business from Indian multinational companies like Tata and M&M.
Gati opened its first office in Beijing in May and in Shanghai in July. Its strategy is to tap the India-centric freight and logistics solutions market between the two giant neighbors as well as offer door-to-port and door-to-door services to India from other Asean and Saarc countries. Gati is also looking at coastal shipping in China.
In terms of road networks, the US tops the list with 6.4 million km; India (with 3.3 million km) has nudged China (1.8 million km) from the second slot. Roads occupy an eminent position in transportation as they carry nearly 65% of freight and 85% of passenger traffic according to current estimates. Road traffic is growing at the rate of 7-10% per annum, while vehicle population growth for the past few years has been around 12% per annum, and is now estimated to be around 66 million vehicles.
The future perfect
Despite all the challenges faced by the logistics industry, it contributed a hefty 13% to the country's GDP in 2003. The logistics market is likely to grow at a CAGR of 7% during the next five years. Chemicals, metals, FMCG, cement and textiles have been identified as the top five contributors to logistics revenues.
Although India's extensive transport system network (rail, road, sea, inland waterway and air) has expanded rapidly since independence in 1947, the growth was unable to keep pace with the country's booming domestic and international trade. As a result, India's foreign trade growth suffered to some extent, particularly in the 1990s.
The Indian government is making great efforts to improve trade by privatizing ports, increasing the number of gateway ports, investing in highway projects, streamlining customs and excise procedures, implementing EDI systems and improving the rail network.
To facilitate the country's economic development, the government plans to invest $17 billion in transport infrastructure by 2010. At present, bottlenecks and delays are endemic within the country's road, air and sea networks.
Escalating imports and exports have led to congestion at India's docks, with ship turnaround time at the country's twelve major ports taking up to three and half days. Plans to overcome these problems include new container terminals at several locations throughout India, and an ambitious project to dredge the channel between Sri Lanka and India, thereby significantly reducing transit times for ships with a draft of more than 12.8m. The government is also building 10,000 km of new roads.
There are no major players in the Indian logistics market, only a few small players who provide some service to dedicated clients. A certain amount of flexibility could significantly boost India's logistics market, which is presently governed by rules and regulations and has not yet achieved its growth potential.
