Co operate November 2015

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From the Desk

It's an honour for us to bring you the November, 2015 edition of "Co-Operate", the Operations

magazine of SIBM Pune. This is the legacy which we acquired from our seniors and this time

around we are back not as an independent magazine, but as a part of the initiative of

OpCellence—Operations Club of SIBM, Pune.

Today’s global supply chains are becoming more and more complex. With the increased

complexity in organizations, it has become increasingly difficult to maintain efficient supply

chains. Inclusion of latest technological devices makes our job easy. But, Analysis of the data

generated by use of technologies has created an entirely new world of possibilities. IoT,

Business Intelligence, Artificial Networks, Cloud are all new buzz-words in a world which is

highly interconnected. It has made our supply chains more inter-dependent. A small shock in

supply chain in a far of country can lead to repercussions in another country. This brings us to

the theme of this edition which is "Supply Chains: Turning global into local". The articles

in this edition are focussed around this theme to re-iterate the same.

We continue the tradition of providing new insights through our columns – Fun Facts! We

sincerely hope that you will thoroughly enjoy reading this edition and encourage us in our

endeavour.

The Team!

Bhavik Makwana, MBA-II

Co-Editor & Cover-page design

Debopam Das, MBA-II

Co-Editor

Pooja Deshpande, MBA-II

Ideas Team

Gourab Deb Barma, MBA-II

Content Team

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Table of Contents

From the Desk ............................................................................................................................ 1

E-Commerce Vs Brick and Mortar Supply Chain ........................................................................ 3

Green Supply Chain Management: A Source of Global Competitive Advantage ...................... 6

Big Data Analytics for Supply Chain in Retail Industry ............................................................. 13

Modes of transportation in Latin America............................................................................... 20

Revitalizing the Shipping Industry............................................................................................ 25

Challenges of Air Cargo Logistics in India ................................................................................ 31

E-commerce companies reaching out to rural India ................................................................ 35

Humanitarian Logistics: Disaster Relief Management ............................................................. 38

Risk Mitigation in Global Supply Chain Management ............................................................. 43

Supply Chain Management in an age of Internet of things ..................................................... 46

Fun Facts! ................................................................................................................................. 51

Team OpCellence……………………………………………………………………………………………………………….54

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E-Commerce Vs Brick and Mortar Supply Chain -Amit Bonde

Due to rapid advancement in technology

and involvement of internet in almost each

and every sector of business, the traditional

way of retail management has also changed

in significant manner. In today's tech-savvy

world, it is essential to incorporate all these

new technologies in business in order to

sustain in the competition.

Brick and mortar retailing in the

conventional way of doing business in

which the buyer goes to retailer, enquires

about the product or services he wants and

finally buys it if he wants to. The new way

of retailing is ‘E-commerce’ also coined as

‘Click-and-Mortar’ or ‘Brick-and-Click’

retailing which deals with the selling of

products and services at one click via

internet through any electronic medium

such as computers, mobiles, tablets, etc. ‘E-

shopping’, ‘M-commerce’ are various

names that fall under the broad concept

called ‘E-commerce’.

There is always a tug of war

between the two supply chains as both

wants to remain in business. Attracting new

customers by enhancing the 'Trust’ factor of

older ones was the only obvious strategy

adopted by brick and mortar retailers while

E-commerce adopted many cost reduction

strategies to attract new advanced

generation. The middle man is totally

eliminated which results in direct and

effective relationship of manufacturers or

service providers and customers. Brick and

mortar requires hiring and management of

skilled workforce and their working hours

which limits the availability of shops and

services. If location of the brick and mortar

outlets is way beyond the reach of

consumers, then there are high chances of

getting declination in sales. On the other

hand, in click and mortar supply chain,

everything is digital and hence less amount

of workforce is required. Global reach by

one click and 24×7 availability makes e-

commerce more popular.

Discussing the main advantage of

Brick and mortar retailing is Personal touch

and feel, which is the main drawback of E-

commerce. Technology can be taken to any

advancement but it surely cannot overcome

the comfort zone of customer. Example:

apparels. One cannot ensure his/her

comfort without trying clothes, which is not

V/S

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possible in e-shopping. Although one may

get help from the 'reviews' and 'Expert's

opinions' sections available on e-shopping

websites, but as a consumer, it depends on

the individual that how much priority

should be given to these reviews. Another

reality check is that many people do not

trust online transactions and providing

credit card details while purchasing. Fear of

bank account getting hacked and problems

of identity theft lowers the interest of e-

shopping. Sometimes faulty goods are

delivered to customers and deliveries are

also not within the declaration period. But

again, these things vary from individual to

individual. Those can be solved by healthy

customer relationship management.

The brick and mortar supply chain

not only lacks in the global recognition but

it also lacks in providing the same service

to all the customers qualitatively as well as

quantitatively. This also proves the threat to

the traditional retailing. This can be

prevented by merchandising the available

stock into new franchisee. ‘Showrooming’

can also be put forward in order to attract

new customers for specific brand or newly

launched appliances. Organized players

have already started implementing

‘showrooming’ to enhance reach of

product. E-commerce provides all the

information regarding not only the product

of a particular brand but also same product

with other brands. It helps buyer to compare

two brands and also decide which product

is best suitable for his/her requirements.

Brick and mortar shops can deploy ‘kiosks’

for such purpose. E-commerce also offers

coupons for discount which is another

marketing strategy. To use these coupons,

customers get tempted which ultimately

hikes the sales. Brick and mortar shops

announce ‘sale’ in order to clear the stocks

which gets less response as compared to e-

commerce discounts. Thus, conventional

shops should establish the effective social

network which will definitely help to

increase sales in each season.

Both the supply chains have their

own pros and cons. Brick and mortar

retailing is more suitable for few sectors

such as textiles, grocery while E-commerce

is more reliable for selling electronic goods

and providing services such as mobile

recharge, online cab booking etc. but there

is always a golden way to bridge the gap

between both supply chains. ''Frenemy"

(friend + enemy) way of integration can

always be efficient which have all the pros

of both supply chains.

In modern way of retailing, growth

of “dark stores” has not only given the hike

to business dealer's profits but is also

beneficial for early delivery of products

ordered online. It also helps to outsource

the old stock in faster ways as well as it

helps to reduce the ‘bullwhip effect’ in push

based supply chain. In simple words, the

shop owners not only sell their products

offline in traditional ways but they also

outsource their product to the online store

or e-shopping websites. It's a kind of win-

win negotiation. Here, online stores get

inventory available whenever they get

particular product order. The shipping and

packaging of product is also ensured with

proper way from offline warehouses and

faster delivery can be provided by click and

mortar supply chain. On the other hand,

offline stores also get an opportunity to sell

their goods and enhance the business

globally.

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In general, customers prefer to pay

through retail outlets for products such as

apparels which require personal touch or

human interface. The next time when they

have to purchase the same or similar kind of

product, they will prefer E-commerce as

they already have experienced the basic

features of that product personally. Brick

and mortar retailers should also incorporate

the new technologies and innovations in

their businesses to attract new generation

but keeping own integrity untouched.

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Green Supply Chain Management: A Source of Global Competitive

Advantage -Arvind Kumar

What is Green Supply Chain?

The word “Green” refers to being

environment friendly. A green supply chain

is a strategy that involves the integration of

a traditional supply chain with the best

sociological and environmental practices

thereby resulting in a sustainable model that

optimises the trade-offs between

environmental consciousness and supply

chain effectiveness. With the increase in

global awareness regarding environmental

degradation, it is inevitable for companies

to move towards formulating a sustainable

supply chain strategy that will permit them

to compete at a global level.

Why would Companies Care?

This is a valid question that can crop

up in many of our minds. Is it that all the

companies are environmentally conscious

and want to preserve it in its pristine form

for future generations? Yes, there are some

organisations who are genuinely concerned

about minimising their carbon footprints

and reducing their contribution towards

instigating a negative climate change. But it

would be naïve on our part to assume such

a scenario with all the companies. Over the

last few years, organisations have started

looking at green supply chain strategy, not

as a hindrance, but as a means of gaining a

global competitive edge. Green supply

chain strategy minimises the usage of non-

renewable sources and reduces wastages at

all stages in a supply chain. The companies

are forced to harness other alternative

sources of renewable energy, which in the

long run, will prove cost effective. Also the

pollution control norms worldwide are

getting more stringent by the day and going

“green” will enable companies to foray into

global markets. Also, being

environmentally conscious will enhance the

reputation of a company and will create a

positive impact on the minds of the people

which will in turn, widen their customer

base. Green supply chain also improves

agility and adaptability as it can cater to the

changing demands of the customer and

facilitate implementation of the fruits of

discovery and innovation. There are two

facets involved in the implementation of a

green supply chain strategy. One is the legal

compliance which makes it mandatory for

companies to adhere to pollution control

norms and the other is the increased

effectiveness of the supply chain. Over

time, the legal compliance has begun to be

considered by the companies as something

mandatory which is part of their operating

costs and the benefits arising from going

green have far outweighed any perceived

drawbacks or ill effects. In a survey

conducted by WIPRO Technologies which

was mulling over going “green” in terms of

supply chain revealed the following as

perceived benefits by organisations,

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Source: Survey “Wipro Green exploring

green Supply chains” – April 2014

Organisations are seeking to go

green in every stage of the supply chain

right from product design and development

to procurement, transportation, packaging

and storage, manufacturing, delivery and

reverse logistics.



Product/Process Design and

Development:

Implementing optimum

environmental practices in product design

and development involves minimising the

wastages at various stages in the life cycle

of a process.

This can be achieved by lifecycle

analysis or assessment which identifies and

strives to eliminate the various potential

sources of wastes in the life of a product

spanning from sourcing raw materials for

that product, across product manufacturing

and right up to product disposal after final

usage by the customer. The product should

be designed in such a way that the energy

consumed during its manufacture is

minimised. Also, the scope for recycling

and reuse of the discarded end product must

be high. The product packaging also

influences the extent of “greenery” in the

supply chain. Non-toxic, mercury free

packaging that is devoid of PVC and DEHP

content is desirable. In industries there are

generally two types of packaging;

‘Industrial packaging’ that refers to

packaging of materials as it moves through

the supply chain and the final ‘customer

packaging’ that refers to packaging of the

final product that is to be delivered to the

consumer. Packaging is inevitable for

almost all the goods, more specifically food

items, volatile fuels and other hazardous

and perishable items. Thus a balance must

be worked out between providing sufficient

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protection to transported goods while not

adversely impacting the environment in the

process by introducing excess non-

disposable materials.

The concept of DFMA (Design for

Manufacture and Assembly) can be

tweaked a bit to accommodate green

manufacturing. In addition to technical

constraints, fuel, power and material

constraints from an environmental

perspective can be considered before

designing a particular product.

Procurement:

An organisation procuring raw

materials and other requirements from its

suppliers can use its superior purchasing

and bargaining power to coax the suppliers

into aligning with its environment-friendly

strategy. This will serve to increase the

goodwill for the organisation without

adversely impacting the supplier

performance. An organisation must

establish stringent quality norms to ensure

that the materials they receive from their

suppliers are not obtained by practices that

result in environmental degradation. This

stance, in the long run, will affect the

supplier as well as the customer.

Manufacturing and Re-manufacturing:

Manufacturing has a direct

measureable impact on the environment.

Green manufacturing would involve

minimising water, fuel and power

consumption in addition to reduction of

scrap, work in process wastes, raw material

wastes, wastes of overproduction, defects

(The 7 wastes of manufacturing) etc. The

concepts of six sigma and lean

manufacturing will serve to reduce scrap

and defects while energy consumption can

be reduced by using substitute materials

that are easy to machine, by locating the

facility in an environmentally conducive

place etc. The energy minimisation can also

be achieved using ‘pinch analysis’ which is

used for tracking the thermodynamic heat

A pioneer in this field is Coca Cola

which delivers 98% of its products in

plastic bottles that are recyclable or

reusable. They have also set up 6

recycling plants around the world for

this process. Another example is the

American Software Company,

Adobe Systems which, in 2012

minimised the amount of plastic used

in software packaging and discs were

packed with one layer of cardboard

overlap instead of three. Their aim,

by their own admission, was

“Dematerialise the packaging while

maintaining durability and a large

surface area for shelf presence in

stores”

An example is the American

pharmaceutical goods manufacturer,

“Johnson and Johnson” which

participates in the Carbon Disclosure

Project’s (CDP) Supply chain

program and encourages its suppliers

to measure energy consumption and

greenhouse emission in addition to

making it mandatory for them to

develop and report their reduction

plans publicly.

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flows in a process thereby identifying

certain energy targets which can be

achieved by optimising the heat recovery

systems such as heat exchangers.

The process of remanufacturing generally

deals with recycling the products discarded

by the consumers. Useful value can be

extracted from the discarded items even

after they have served their intended

purpose. Products, these days are

characterised by their high degree of

specialisation and small life cycles. This

has made recycling indispensable. For e.g.

when ink cartridges have breached their

refilling limit, they can be crushed and

made into fuel that is utilised by the cement

industry. This will contribute to secondary

sources of income for an organisation.

Transportation:

Logistics account for around 40-

45% of the total supply chain cost in India.

In order to design an efficient supply chain,

it is imperative to focus largely on

transportation. By completely utilising the

available transportation resources, it is

possible to minimise the risk of damage to

the environment. Optimisation in this

regard can be achieved by designing more

efficient routes, using alternative fuels and

utilising storage capacity completely. By

efficient routes, we don’t always mean the

shortest route in terms of distance. A route

that is shorter in terms of distance might

require traversing bumpy, steep inclines

which might result in higher fuel

consumption than a longer and level terrain.

Also ‘Shipping’ is preferred for long

distance transportation in many cases rather

than air freight as a result of lower cost.

However, ships are slower and this will

result in inventory accumulation for longer

periods which might incur higher storage

costs and also result in water pollution.

Thus various trade-offs are to be considered

before deciding the type of transportation

and devising the optimum route for it.

Disposal and Reverse Logistics:

A product, at the end of its lifecycle,

is disposed of in landfills. However, the

burial of wastes under the soil might result

in infrastructure disruptions in addition to

the release of “landfill gases” due to

anaerobic digestion of wastes by bacteria.

Thus in order to limit this, the discarded

items have been made the responsibility of

“HERO MOTOCORP” has

established a manufacturing plant at

Neemrana which is LEED (Leadership

in Energy and Environmental Design)

Platinum certified. This facility

incorporates Big Foot Technology to

regulate the temperature, maintain

optimum balance of Oxygen and CO2

and also reduce dust emissions. An

Automatic Storage and Retrieval

System, for vehicle dispatch, with a

capacity of 4500 vehicles, is

incorporated with an online vehicle

tracking system and fully automated

vehicle handling system.

Again, in the LEED certified factory

of HERO MOTOCORP, the waste

water from all sources is recycled

thereby ensuring zero liquid discharge

from the plant.

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the organisation. These organisation collect

used or discarded products, recycle, reuse,

rework, repair or remanufacture it in order

to extract more value out of it and also to

minimise the hazardous impacts of

landfills. The reverse logistics network

design plays a vital role in the seamless

execution of this process. Reverse logistics

can be defined as the flow of material and

information from the customer to the

supplier for repair, rework, recycling or

remanufacture. The framework for reverse

logistics in a supply chain is as shown

under. The importance of reverse logistics

has grown so much so that dedicated

organisations have been set up that focus

solely on the backward flow of defective or

poor-quality goods from consumers to the

source.

Reverse logistics helps in

establishing a closed supply chain wherein

the effective life cycle of a product is

increased or the customers are made a part

of another product lifecycle and all this

happens while wastage is simultaneously

minimised. Few examples:

Apple Inc. offers free

recycling of any Apple

Computer Product when a

customer purchases a new

product. If a product is

returned out of customer

dissatisfaction, then the

product is checked, the

problem is rectified and then

sold at a discounted rate.

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Tangible benefits of certain

Organisations:

Texas Instruments:

Texas Instruments saves 8million

dollars every year by reducing its transit

packaging budget for its semiconductor

business through source reduction

recycling and usage of re-usable packaging

systems.

Coke:

Coke saved 44 million dollars by

shifting from corrugated to re-usable plastic

shipping containers for 1 litre and 20 ounce

bottles thereby saving 196 million pounds

of corrugated material.

Hero Motocorp:

The green supply chain that was

implemented by Hero resulted in a

reduction in the consumption of water by

20K lakh litres. This can be used to satisfy

the needs of 8400 families in a year. Also,

considerable savings in electricity (50 L

kWh) have been achieved which can be

used to light 50000 homes in a year.

Commonwealth Edison:

Commonwealth Edison derived a

benefit of 50 million dollars in financials as

a result of managing its materials and

equipment on the basis of life cycle

assessment.

Having outlined the societal,

environmental and organisational benefits

of a green supply chain strategy, the

decision to implement it, will seem a no-

brainer. If only everything was so easy.

Barriers to green supply chain

implementation:

Green supply chain strategy will

involve modification and

sometimes obsolescence of existing

practices and technology. If the top

management of an organisation

takes a rigid stance in support of

preserving the “essence” of the

company and is reluctant to change

with the times, then implementation

will be a problem.

The next problem arises after

getting the nod of the top

management. Successful

implementation of a green supply

chain strategy will involve

comprehensive understanding of its

principles and practices. Inadequate

training and lack of relevant

experience will certainly hinder the

process of seamless supply chain

integration.

Another detrimental factor is the

huge initial investment in the face of

market risk and uncertainty. Also

the return on investment happens

over a long time period which might

plant second thoughts in the minds

of the organisations.

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CONCLUSION

Thus with the increase in

environmental awareness, technological

exposure and also in the sheer volume of

organisations coming up, it is imperative

for organisations to constantly innovate, re-

invent and re-orient their supply chain

strategies to achieve and sustain global

excellence. The types of products and

services offered by a company can be

rivalled by other organisations; an effective

and efficient supply chain is, therefore,

where one can gain a competitive edge.

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Big Data Analytics for Supply Chain in Retail Industry -Soham Biswas

It is a known fact that enterprise data is

inherently valuable. But it is important to

solve the problem of segregating the useful

data out of the huge junk and unstructured

volume. As data volume is ever increasing,

managing data and processing them to

make it useful becomes a challenging task.

In present business scenario companies do

not see data as mere information but

leverage them as a very powerful tool in

strategy making and important business

decisions. The scope of data integration has

broadened considerably over the past

decade. The value of data can only be felt

when correct information is provided to

right people at right time. The delivery of

data thus becomes a complex process. To

put the study in perspective it is important

to discuss a few terminologies which are

indispensable while handling these huge

volumes of data and make it useful for

business world.

Big Data – It is a term given to the

unstructured data sets so large in volume

that traditional data processing applications

are inadequate to handle such data and

process it for its proper utilization. Today

2.5 quintillion bytes of data are created

daily—so much that 90% of the data in the

world today has been created in the last two

years alone.

Extract is the process of reading

data from a database.

Transform is the process

of converting the extracted

data from its previous form into

the form it needs to be in so that

it can be placed into another

database.Transformation occurs

by using rules or lookup tables

or by combining the data with

other data.

Load is the process of writing

the data into the target database.

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Source: http://risnews.edgl.com/Libraries/RIS-Media/PDFs/rcas14_1010data.pdf

Data Warehousing - A data warehouse is

a subject-oriented, integrated, time-variant

and non-volatile collection of data in

support of management's decision making

process.

ETL (Extract, Transform and Load) - ETL

is short for extract, transform, load,

three database functions that are combined

into one tool to pull data out of one database

and place it into another database.

ETL is used to migrate data from one

database to another, to form data

marts and data warehouses and also to

convert databases from one format or type

to another

Hadoop - It is an open-source framework

that allows to store and process big data in

a distributed environment across clusters of

computers using simple programming

models. It is designed to scale up from

single servers to thousands of machines,

each offering local computation and storage

Big data analytics has become so affordable

and usable that its technology is touching

every industry for gaining advantages over

its competitors. This has given opportunity

to IT service industries to a great extent

where they are developing new tools and

software that implements and process data

for the businesses to build a strong base for

delivering cost effective and high quality

services and products.

Advantages of Big Data:

Retailers Obstacle with Data Analytics:

There is a need for “single version of truth”

in retail industry for optimization of the

business strategies. There are some of the

primary obstacles faced by the retail

Industry in data analytics given in figure 2.

Big Data Impact on Retail Business

Teams:

With Big data and tools to analyze and

understand the data, it has been a revolution

in retail business sphere. The business

teams like merchandising, e-commerce,

http://www.webopedia.com/TERM/D/database.html

http://www.webopedia.com/TERM/D/data_migration.html

http://www.webopedia.com/TERM/D/data_mart.html

http://www.webopedia.com/TERM/D/data_mart.html

http://www.webopedia.com/TERM/D/data_warehouse.html

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supply chain and store operations have

leveraged a great benefit in business in

terms of cost effectiveness, quality and

service optimization. Customer satisfaction

can be increased manifold with the timely

delivery of the products which can be

considered as a direct result of the Big Data

analysis.


Big Data Impact on Retail Business

Processes:

Big data analysis hugely impacts the

business processes like demand forecasting,

workforce management and store design.

On implementation of big data analysis

Retail players can be highly equipped to

handle challenges of Bullwhip effect where

a huge amount of cost is incurred to the

business house. Also the inventory

Management can be highly optimized as

demand forecasting and supply chain

modelling can be worked out efficiently

through the process. Also retailer can share

data suppliers which helps both the parties

in cost optimization and product/category

knowledge which ultimately results in

strengthening business partnerships.


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Benefits on supplier management:

With Big data analytics suppliers are also highly equipped to forecast and meet customer

demand. A detailed understanding can be viewed in Figure 5.


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Improving On-shelf availability with Big

Data:

On-shelf availability represents more than

$800 Billion+ worth problem in retail world

globally. Product assortment and

categorization through data modeling can

reduce this cost to a great extent.

Big Data handling and ETL tools:

Companies like Informatica, Oracle, HP

and IBM are handling data of huge volume

and are coming up with various products

that can process big data volumes and

categorize them according to the business

requirements. Informatica tools like Heiler,

HP tool like Vertica comes with the

properties of ETL processes which

transform data into potential business

information. Also they are capable of

generating timely reports which takes as

less as 30 minutes which previously needed

6 to 8 hours. This has revolutionized the

retail market which has shortened its lead

time for product delivery to the customers.


Big Data impacting businesses in a “Big”

way:

Amazon-

Amazon is leveraging big data in a highly

strategic way to bolster its service value

towards its customers. Amazon has

unparallel volume of data acquired from its

152 million customer base.

The company strategically uses this data to

feed a product recommender online to

create a big impact on its business. Amazon

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has continuously improved its state-of-the-

art recommender engine.

To give a better shopping experience to its

users. They have used customer click-

stream data and historical purchase data of

all those 152 million customers and

provided each user with customized results

on customized web pages. Amazon added a

remote computing service, via Amazon

Web Services (AWS), to their already

massive product and service offerings.

AWS was launched in 2002, but only

recently they added Big Data services and

they now offer tools to support data

collection, data storage, data computation

along with data collaboration and data

sharing. All are available in the cloud.

The Amazon Elastic MapReduce provides

a managed, easy to use analytics platform

built around the powerful Hadoop

framework that is used by large

companies, including Dropbox, Netflix and

Yelp. Amazon also uses Big Data to

monitor, track and secure its 1.5 billion

items in its retail store that are laying

around it 200 fulfilment centres around the

world. Amazon stores the product

catalogue data in S3. This is a simple web

service interface that can be used to store

any amount of data, at any time, from

anywhere on the web. It can write, read and

delete objects up to 5 TB of data each. The

catalogue stored in S3 receives more than

50 million updates a week and every 30

minutes all data received is crunched and

reported back to the different warehouses

and the website.

At AWS, Amazon also hosts public big

data sets at no cost. All available big data

sets can be used and seamlessly integrated

in AWS cloud-based solutions. Everyone

can now use this public data, such as the

data from mapping the Human Genome

Project.

Ace Hardware-

Ace Hardware is a leading hardware

wholesaler and retailer, stocking more than

4,800 independently owned and company-

owned hardware stores in all 50 US states

and more than 72 countries.

The enormous amount of the data of the

company has been managed on Informatica

Heiler platform to analyze and strategize

business potentials. Informatica integrates

critical data from 1,500 retail locations with

its wholesale and inventory systems for

strategic analysis by sales, marketing, and

pricing managers. Real time data analysis

enables Ace to replenish inventory systems

and in-store stock more quickly, reducing

inventory holding costs.

Ace has increased profit margins and

pricing structures. E.g. if a store sells a

hammer for $3.99, but other stores sell it at

$4.99, a recommendation is sent to the

region to standardize on the higher price.

http://gigaom.com/2011/10/18/amazon-aws-elastic-map-reduce-hadoop/

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Ace is empowered to target customers more

effectively by analyzing historical buying

habits detecting trends.

Walmart-

Walmart was, by revenue, the world’s

largest company last year. It is the largest

retailer in the world, employs over two

million people and takes in $36 million

dollars at its 4,300 US stores every day.

Their attempts to use data to predict

customer behaviour reportedly date back to

at least 2004, when chief information

officer Linda Dillman examined sales data

after Hurricane Charley to determine what

would be needed following the forecasted

Hurricane Frances.

Walmart empowered predictive analysis

which led to the creation of @WalmatLabs.

Since its inception in 2011 it created the Big

Fast Data Team with the purpose of finding

pioneering uses for data in retail.

One recent development is the Social

Genome project, which aims to increase the

efficiency of advertising on social networks

by guessing what products people are likely

to want to buy based on their conversations

with friends. According to their blog, its

syntax analysis is sophisticated enough to

tell from a conversation about “salt”

whether the customer is speaking about the

movie Salt, or the mineral.

Conclusion:

As the data volume has increased

exponentially over the years and

requirement for its analysis has become

indispensable, it is very important that the

technology should improve with the

growing requirement. Handling customer

demand with agility and appropriate cost

and time utilization by the retails

companies is considered to be the primary

goal for growth in business. In this context,

Big Data gives a great leverage and

opportunity to spread business network

globally.

References:

1. https://www.datapipe.com/blog/20

15/01/19/retailers-increasingly-

turning-to-big-data-analytics/

2. http://www.zdnet.com/article/five-

big-data-trends-revolutionizing-

retail/

3. http://www.webopedia.com/TERM/E/

ETL.html

4. https://www.1010data.com/company/p

ress_detail/1010data-retail-study-

executives-discuss-the-impact-and-

further-potential-of-big-data-in-the-

retail-industry 5. https://www.linkedin.com/pulse/big-

data-walmart-future-retail-bernard-

marr 6. https://www.informatica.com/about-

us/customers/customer-success-

stories/ace-

hardware.html#fbid=MvOmPoeOI60

7. https://datafloq.com/read/amazon-

leveraging-big-data/517

https://www.datapipe.com/blog/2015/01/19/retailers-increasingly-turning-to-big-data-analytics/



http://www.zdnet.com/article/five-big-data-trends-revolutionizing-retail/



http://www.webopedia.com/TERM/E/ETL.html

http://www.webopedia.com/TERM/E/ETL.html

https://www.1010data.com/company/press_detail/1010data-retail-study-executives-discuss-the-impact-and-further-potential-of-big-data-in-the-retail-industry





https://www.linkedin.com/pulse/big-data-walmart-future-retail-bernard-marr



https://www.informatica.com/about-us/customers/customer-success-stories/ace-hardware.html#fbid=MvOmPoeOI60




https://datafloq.com/read/amazon-leveraging-big-data/517

https://datafloq.com/read/amazon-leveraging-big-data/517

20

Modes of transportation in Latin America -Manoj Kankani

Introduction:

When thinking about writing an article for

the next edition of Co-Operate the thing that

came to my mind was FIFA world cup

concluded almost a year back. That night

the entire world was tuned to one location,

the legendary Maracanã Stadium in the

heart of Rio de Janeiro. Another notable

thing about the world cup was, a lot of Latin

American teams qualifying for the quarters.

A lot of effort was put behind organising

that event. One of the biggest challenge is

the supply chain in this vast continent, I

thought why not focus on the transport

facilities in this wonderful and culturally

varied yet underutilized region with vast

opportunities.

Many companies are on a look out of new

locations or countries to be precise, for

better growth opportunities all around the

globe. One such region is the Latin

American region. From Nuevo Laredo to

Tierra de Fuego lies a land with immense

prospects for businesses to develop and

expand their supply chains. The economy

growth, attractive free-trade agreements

(FTA), growing education standards and

biggest advantage of all, the proximity to

the USA have rendered these regions to be

hot investment destinations.

Latin America significantly lags behind in

the availability of modern logistics

infrastructure and efficient transport

facilities. This calls for an urgency to create

and improve, generate consistency,

flexibility and the opportunity for supply

chains to adapt to contemporary

requirements of trade, isn’t it?

In this article we are going to look at the

transportation aspects in Latin America.

Here is an overview of the state of modes of

transportation in Latin America:

Inland Transport: Roads

Roads are an utmost important mode of

transport here because it is a very large

region with diversity of physical

environments. Roads provide a cost-

effective means of primary passenger

transport for majority of people as well as

moving goods.

The road density in Latin America is around

15 km (per 1000 sq. km) against the world

average of around 32 km which is quite

low. But road network is swiftly expanding

in the region. Still, a relatively small

percentage of the roads are concrete roads.

The other roads are not wide enough or are

of poor quality.

21

The figure shows that with the exception of Costa

Rica, the road density in all the countries in Latin

American countries is less than the world’s average

The dearth of proper maintenance of roads

especially secondary and access roads is

another major problem plaguing LA.

Talking of development of international

highways, a lot of effort is put to road-

integration projects across the countries.

The Inter-American Development Bank

and the World Bank had funded a lot of

these projects, in the 70s. As far as major

roads are concerned, a road connecting

Venezuela and Brazil allows north-south

movement through the Amazon basin.

Brazil has the lions share in the Pan-

American Highway system that extends

throughout the region.

Railways

Railways in Latin America are not as

developed as some of the other regions of

the world. The various reasons for this

being the terrain and the political

instability. The Andes Mountain ranges that

stretches across the continent of South

America creates a lot of barriers for railway

network. Moreover, railway is dogged by

operational snags and obsolete equipment.

Majority of the rail lines are single-tracked,

which renders movement

The figure above shows the extent of variability in

the railway gauges in South America

Some of the cross border railway networks

with the same gauge have become

dysfunctional due to various reasons. Major

countries like Mexico, Bolivia, Brazil and

Uruguay to some extent have decent rail

network. Certain other countries like

Nicaragua, Honduras, Costa Rica have very

little or no dedicated railway network.

Last year, China signed a memorandum of

understanding with Honduras to build

railway and is showing immense interest in

other countries in the region.

Maritime Transport

The Latin American region has a very large

coastline spanning across most of the

countries. Sea transportation is of utmost

important for the region and has long been

a vital component of the transport systems.

There are many natural harbours, such as

Rio de Janeiro, Salvador, Montevideo, and

22

Valparaíso, along with several developed

ports.

Countries, such as Chile and Brazil, are

making a unwavering effort to improve and

extend their state merchant marines. These

countries are forced to make these efforts

for 2 basic reasons, first to arrest flow of

Majority of their trade by ships from other

parts of the world and other to encourage

regional integration and improve the

balance of payments of the countries in this

region.

“Latin American and Caribbean ports have

seen outstanding growth of containerized

The Panama expansion

When discussing transportation and logistics one just cannot ignore the “Panama

canal”. Panama is of huge strategic importance to the global trade platform as it lies at

the crossroads of the North and South America as well as connects the Atlantic and

Pacific oceans.

Annually, around 14,000 container ships make an eight-hour journey through this

waterway. But this was proving to be insufficient for the ever increasing cargo traffic

through this region. Eventually in 2007, the Panama Canal Authority (ACP) started work

on the $5.25 billion Panama Canal expansion project (also called the Third Set of Locks

Project). This expansion project is of utmost importance for the world trade as well as to

the waterway’s competitiveness and augment the value of the canal. The economies of scale

in maritime trade is the rationale behind the expansion of Panama Canal. Once completed,

its capacity is intended to double by 2015 by creating a new lane of traffic and allowing

more and larger and wider vessels through the canal.

23

traffic with the growth and expansion of

port infrastructure. Port facilities and the

hinterland have replied with infrastructure

investments “Transport infrastructure

capacity must be supplemented with freight

logistics reliability, effectiveness, and

resilience”.

However, Latin America’s port

infrastructure is still rated “below average”

by the World Bank. Channel capacity at

most ports is inadequate, with productivity

and berthing delays a continuing issue.

Waterways Transport

South America has thousands of miles of

navigable waterways. There are two inland

international waterway systems, the

Amazon basin (Amazon-Solimoes,

Madeira - Beni -Madre de Dios, Negro,

Putumayo-Ica, Huallaga-Marañón,

Ucayali) passing through 6 countries and

the the Paraguay-Uruguay basin through 4

countries. The Paraguay-Parana rivers

waterway system also known as Hidrovia

or HPP (running through Brazil, Bolivia,

Paraguay, Argentina and Uruguay.) has a

potential to be the definitive axis for cargo

movement in the sub-region. It can also act

as possible integration mechanism for the

MERCOSUR countries. However, 90% of

freight in the sub-region is moved by road

transport. For over a decade and half the

Southern cone countries have tried to

harmonize their policies to improve the

navigability of the HPP to make this as the

game changer in the region but still it is

underutilized,. Very limited investment is

needed to make the HPP the principal low-

cost, low-impact freight transport system in

the sub-region, it is meaningful to scrutinize

the reasons for the inability of HPP to fulfil

its promise.

Furthermore, there are three other minor

systems: the Magdalena in Colombia, the

Orinoco Basin: (Orinoco - Apure -

Portuguesa, Casiquiaré -Negro, Orinoco –

Meta) in Venezuela, and the São Francisco

in Brazil. Even though there are many

rivers in the region, many of them are not

navigable due to natural conditions. Hence

there is a relatively small movement on

these waterways.

Air Transport

Air transportation is another important

mode that can take the countries trade to

very high level. Air transportation is crucial

for economic development in general and

for market integration in particular. This

mode of transport has seen a rise in the

region but it is predominantly passenger

traffic rather than the handling of freight.

Each country in the region has internal air

services system of its own. Historically they

were chiefly operated by government or by

heavily subsidized private companies, but

privatization in the airline industry has

spread to internal carriers. All the capital

and other important cities in Latin America

are connected by direct air services to the

major centres of the United States and

Europe. As far as airports are concerned

Brazil leads the pack of the busiest airports

in the region as expected. The major

airports are São Paulo, Bogota, Rio

de Janeiro, Brasilia, Santiago, Lima,

Caracas, Buenos Aires etc.

24

The challenges that exist for businesses

tapping different Latin American markets

are manifold. But there are also

opportunities for companies to work with

logistics services providers that can help

orchestrate solutions, and provide support

and leverage in a region that is primed for

growth.

In a summit between China and 11 Latin

American and Caribbean leaders, China has

shown a lot of interest in infrastructure

construction and development in the region

thereby demonstrating China's interest in

Latin America. Also due to the proximity to

USA many US based companies are

interested in this region. Once all the

regulations are streamlined and the issues

resolved among the countries, this region

has a tremendous potential and can unlock

25

Revitalizing the Shipping Industry -Nirmal Misra

Overview

The shipping industry is a global service

industry that has been the one of the

primary ingredients for achieving

globalization & is the backbone of the

global supply chain. Approximately 90% of

international trade happens by sea. Yet

despite its vital importance to global trade,

the container industry has seen several

years of extreme unprofitability, driven in

part by economic turmoil stemming from

the financial crisis, but also self-inflicted

over-capacity and overbuild. In this article,

we look into the issues & trends prevalent

in the ailing shipping industry and attempt

to provide solutions to achieve that ever

elusive profitability.

Introduction:

Shipping deals with the transport of goods

(cargo) and people (passengers). With the

proliferation of the aviation industry, much

of the people traffic has reduced; however,

it still remains the cheapest & primary

mode of transport of goods despite CAF

(currency adjustment factors) being added

to the costs.

The shipping industry is categorised into

two market sectors – the bulk shipping

sector, dealing with the transport of raw

materials such as oil, coal, iron ore, grains

etc. & the liner shipping sector dealing with

transportation of final and semi-final

products such as computers, textiles etc.

Bulk shipping operates as taxi service, a

contractual relation between the cargo

owner and the ship owner, expiring on the

completion of the trip. Large and

unsophisticated ships, such as tankers and

bulk-carriers are used. The industry is

highly competitive with prices (freight

rates) fluctuating wildly within time periods

as short as a week. Network modelling for

this sector is based on supply-demand

functions and freight-rate forecasting.

Liner shipping on the other hand is geared

towards high-capacity, ocean-going ships

providing regular service between specified

ports, at prices negotiated in advance and a

weekly timetable. Up until the 1960s, liner

shipping cargo (known as general cargo)

was packed in pallets, boxes, barrels and

crates and transported by relatively small

vessels, known as general cargo ships.

These were twin-deckers and multi-

deckers, i.e., ships with holds (cargo

compartments) in a shelf-like arrangement,

where goods were stowed in small pre-

packaged consignments (parcels) according

to destination. This was a very labour-

intensive process and, often, ships were

known to spend most of their time in port,

waiting to load or discharge. Congestion

was therefore, a common problem in many

ports and these delays added to the

transportation costs in the form of

warehousing & large holding stock costs

thus hindering international trade and

economic development.

26

The liner shipping sector saw a revolution

with the introduction of containerization,

where general cargo would be carried in

steel boxes (containers) of standardized

dimensions (most common is the 8×8×20

feet unit known as TEU –Twenty (feet)

Equivalent Unit). Containers can be packed

(stuffed) and unpacked (stripped) away

from the waterfront, either at the premises

of the exporter (consignor) and/or the

importer (consignee), or at Inland

Container Depots (ICD), warehouses, and

distribution centres. Standardized

containers could be moved seamlessly

between ships, trucks and trains simplifying

the whole logistical process, reducing port

space pressure & ship in port time and

eliminating the expensive, unionized port

labour.

The container shipping industry is one of

the fastest growing segments of both

domestic and international markets. In

1990, world container port throughput

volumes were around 85 million TEUs, and

they have since grown six-fold to 572.8

million TEUs over 20 years (Review of

maritime transport, 2012).

However, despite facilitating deep-

connectedness and low-cost transport of

goods, the industry has been suffering the

past few years. The recent financial crisis

created a significant slow-down of global

trade which there has only been a very

spotty recovery. The industry, based on past

good cycles extrapolated the good times

and increased capacity that now seems un-

needed. Corporates have also begun

looking into ways to cut costs, thus

reducing profit –margins.

As a way to combat these issues, industry

has redoubled efforts to control costs,

consolidate through extensive M&A, and

27

employ improved and more fuel efficient

vessel technologies. However, hidden

behind these challenges, lie another set of

more systemic issues plaguing the industry.

Most container liners rely on outmoded

approaches to design their routes and suffer

from the heavy costs created through the

“empty leg”, wherein trade imbalances

necessitate that liners transport backhaul

containers partly or completely empty.

Operationally, bunker (fuel) is treated as

another operating costs with no regards to

optimize consumption and procurement.

From sales perspective, liners still charge

based on cost of goods rather than value

perceived by customers.

Issues and Trends

Excess Capacity

A big part of the problem is that the industry

continues to add capacity. By 2020, the

typical vessel delivered will handle about

15,000 TEU and not surprisingly, pressure

to fill this capacity and capture the

efficiency benefits of larger vessels has led

to hasty decisions by carriers causing

profits to become exceptionally volatile.

Market Saturation

The quest to acquire, retain and expand

market share is squeezing out smaller

players and has started another wave of

price wars. Guidelines on pricing, both in

spot rates and general rate increases are

ignored to acquire new customers and

remain outwardly competitive.

Ineffective Cost Management Systems

Non-standardized contracts, aggregate

invoices, marginal costing, etc. all cause

IMAGE COURTESY – VIRTUAL CONTAINER YARD GONE GLOBAL, BY KATHERINE IRELAND, OPENFORUM.HBS.ORG

28

Inaccuracies in determining the prices to be

charged by the industry. For example, when

using cost management to determine

pricing, fuel costs are only partially priced

into many charters. When marginal costing

is brought into effect, companies begin

passing on all of the cost savings they have

achieved in recent years to customers.

While valid for some companies, if the

entire industry starts doing so, it hurts the

industry.

Stagnant Service Offerings

Due to lack of innovation in service

offerings, carriers generally do not get to

add premium pricing for value added

services such as intermodal and guaranteed

delivery times. This failure to add new

service offering causes the industry to lose

out on new ways to increase revenue and

create a niche service offering for willing

customers.

Outdated Network Models

Fleet changes have caused existing network

models to become inadequate in

maximising profits. Introduction of ultra-

large container ships has caused a

cascading effect on smaller ships and

resulted in the creation of complex hub-

spoke intermodal networks, leaving a large

number of un-used mid-size ships on the

balance sheets.

Management Dilemma

There exists great conflict between asset-

management, transportation optimization

and the general inflexibility of the industry.

The owners wish to maximize asset value,

the operation heads wish to optimize

transportation costs whereas the ship

operators are inflexible to changes to

current SOP. Most lines invest only basic

amounts in analytics, either in the corporate

centre or the business units and decisions

are often undertaken and forecasts made

with only a minimal information, much of

it often borrowed from external providers

that also supply their competitors.

Opportunities for Profitability

Of the many challenges the industry faces,

some, such as supply/demand imbalance

and swings in demand, are systemic. They

are often caused by a cyclic effect of the

global economy. But the rest are readily

addressable. Three sets of

actions―commercial, operations, and

network and fleet―can be taken by the

companies within the industry to improve

performance and earnings.

Commercial Changes

The industry needs to change from a cost-

driven valuation to a value-driven valuation

of its prices. Lines should get paid full value

for the services they provide. Companies

should create targeted sales campaigns to

pursue and capture high-contributing

customers to maximize return on sales.

There needs to be a better

commercialization of last miles services,

including standardization detention &

demurrage through accurate invoicing and

expedient collections. Companies should

also adopt a flexible contracting system to

exploit the opportunities during peak

pricing and privileged capacity events.

Carriers can also extract higher prices from

customers in certain industries, to whom

smooth and reliable transport and the

resulting stable inventory are quite

valuable.

Operational Changes

Unlike the commercial changes requiring

customer ‘wrangling’, these are completely

in the companies’ wheelhouse. Bunker

29

management is a must to create any sort of

improvement in the profitability of a

company. Bunker often accounts for nearly

40% of all costs. Reducing fuel

consumption can be done through a variety

of manners – optimizing vessel speeds to

reduce speed variability, more frequent hull

& propeller cleaning for better propulsion,

inventory management for better weight

distribution & port turnaround times,

automated dispatch for incoming and

outgoing intermodal transfers through IT

integration between carrier and port for lean

terminal operations etc. A lot of the above

changes can be achieved via real-time

reporting, data analysis and greater

integrated planning between carriers and

ports. Finally, though bunker is a

commodity, companies can achieve savings

through better sourcing processes, drawing

from a wider range of suppliers and using

lower-quality fuels where available.

Port costs are another area where costs can

be reduced. Shipping lines can make it

happen through tough negotiations with

competitive ports, service-line agreements

that cement the deal, and guarantees of

berth availability.

Companies can use RFQs (request for

quotation) to ensure best prices for various

legs of the intermodal network. RFQs can

ensure best prices for terminals and

accessorial services such as storage,

security etc., Lines should understand

suppliers’ cost of the next phase of the

network such as truck prices, rail prices etc.

and associated logistics to ensure best

possible choices for reducing costs. RFQs

and other approaches can also help find

optimal partners for maintenance and

repairs, container purchasing and logistics

such that the value is best in a longer period

of time.

Network Modelling and Fleet Changes

As is obvious from the above figure, larger

vessels provide a significantly better cost

benefit over the longer run. They have a

lower capital cost per shelf, require smaller

crew per volume space and have a greater

overall cost effectiveness with respect to

bunker.

The proliferation of these larger vessels has

led to vast changes in the traditional models

of shipping lanes. The capital intensity of

these ships obliges them to limit their ports

of call at each end to just a few hub ports or

load centres from where huge surges of

containers are further forwarded (feeders)

with smaller vessels to regional and local

ports. Complex hub-and-spoke networks

have thus evolved whose fine-tuning and

optimization bears directly on overall

transportation costs.

There also exists and great imbalance in the

direction of trade as well as cost and

competition of different shipping routes.

The Asia to Europe head-haul offers high

volume whereas the back-haul significantly

lesser. There is a need for updated network

models balancing all of the above issues –

large vessel feeding smaller vessels,

30

exploiting the hub-spoke network,

managing vessel capacity imbalances.

The shipping industry has been through

volatile tiees in the last ee years and

reeains in poor health. It eust transeore

and re-invent theeselves to extract itsele

eroe the trenches oe its current state.

References:-

Hidden Opportunity in Container Shipping

– McKinsey & Company

Balancing the Imbalances in Shipping

Industry – ATKearney

Structure and Operations in Liner Shipping

- H.E. Harlambides

Virtual Container Yard Gone Global -

Katherine Ireland, openforum.hbs.org

WorldShippingCouncil.Org

31

Challenges of Air Cargo Logistics in India

The strong relationship between growth in

international trade and logistics

infrastructure is widely acknowledged.

Growth in trade induced requirement for

supporting infrastructure while availability

of infrastructure at competitive rates

promotes trade and improves global

competitiveness of the country.

Availability of infrastructure is also a key

determinant of foreign direct investment

(FDI) inflows. In developing countries like

India an efficient logistics infrastructure

can reduce cost of transportation which in

turn can contribute directly to global

competitiveness of the country. Efficient

logistics industry acts as an economic

catalyst by opening up new market

opportunities, moving products and

services with speed and efficiency.

The demand for air cargo transportation

has increased significantly over the last

few years, because product life cycles have

shortened and demand for rapid delivery

has increased. Changing business models

such as Just- in-Time Manufacturing and

Global outsourcing models have

contributed to the rapid growth of air cargo

logistics business. In such a changing

business environment, where speed-to-

market is a competitive imperative,

movement of inventory is no longer

viewed as a compartmentalized process.

Rather, the sourcing of inputs, parts and

components and the delivery of final

product are all viewed as a continuous

value-adding chain. Efficient supply chain

management therefore offers significant

benefits including lower inventory and

intermediary costs; and simplicity in order

-Yashica Shetty

Placement, delivery and management of

suppliers and customers. These benefits

directly contribute to making businesses

more competitive.

The logistics performance (LPI) is the

weighted average of the country scores on

the following six key dimensions:

1) Efficiency of the clearance process (i.e.,

speed, simplicity and predictability of

formalities) by border control agencies,

including customs;

2) Quality of trade and transport related

infrastructure (e.g., ports, railroads, roads,

information technology);

3) Ease of arranging competitively priced

shipments;

4) Competence and quality of logistics

services (e.g., transport operators, customs

brokers);

5) Ability to track and trace consignments;

6) Timeliness of shipments in reaching

destination within the scheduled or

expected delivery time.

The final scores demonstrate comparative

performance—the dimensions show on a

scale (lowest score to highest score) from 1

to 5 relevant to the possible comparison

groups—of all countries (world), region

and income groups.

These findings are especially relevant

today, as developing countries need to

invest in better trade logistics to emerge in

a stronger and more competitive position.

India’s LPI rank in 2012 was 46 and fell

down to 54 in LPI 2014. This should be a

matter of grave concern to India.

32

Key Challenges - Infrastructure

Bottlenecks

The Root cause analysis of the issues

discussed in the previous chapter reveals

challenges in the form of lack of enabling

infrastructure, complicated regulatory

processes and procedures, inadequate and

poor quality of human resources

deployment and lack of effective

technological enablement of cargo

handling supply chain are responsible for

the current state of affairs in the air cargo

logistics sector in India. These challenges

are discussed in greater detail in the

following sections.

Inadequate and overloaded infrastructure

facility

Airports were developed primarily from

passenger stand point of view, and thus

requirement of cargo facility development

was not taken seriously. Cargo is generally

the last part to be thought of and is

relegated to that part of the airport,

considered not important otherwise. This

leaves the entire logistics of cargo –

infrastructure and facility in woefully

inadequate and poorly managed area of the

airport.

Cargo infrastructure at any airport is just

not the cargo terminal building that houses

the warehouse but also the related facilities

including special facilities for express

freight, frozen foods, airmail, and

hazardous goods. Infrastructure also

includes specialized equipment,

connecting roads, truck parking terminal,

public amenities like offices for

intermediaries, public car parking area etc.

The development and design of any

warehouse including airport cargo terminal

is mainly dependent on the business model

and processes to be adopted which in turn

is dependent on

Nature of operations e.g. Air express

Mix of different types of cargo

Level of automation planned

Volume of cargo to be handled

Peak time load factor

Customs procedure in a particular

location

Nature of cargo to be handled - loose

versus palletized

Storage period of import cargo prior to

delivery of cargo amongst other

conditions.

Unfortunately in most cases in the past, it

is the other way round. The warehouse

facility is first created and then the

LPI GLOBAL RANKINGS COMPARISON - INDIA VS BEST

Country Year

LPI

Ran

k

LPI

Scor

e

Custo

ms

Infrastr

ucture

Internati

onal

Shipmen

ts

Logistics

Compete

nce

Trackin

g &

tracing

Timel

iness

INDIA 2012 46 3.08 2.77 2.87 2.98 3.14 3.09 3.58

SINGA

PORE 2012 1 4.13 4.1 4.15 3.99 4.07 4.07 4.39

INDIA 2014 54 3.08 2.72 2.88 3.2 3.03 3.11 3.51

GERM

ANY 2014 1 4.12 4.1 4.32 3.74 4.12 4.17 4.36

33

processes are fitted into it leading to

inefficient operation and poorly developed

infrastructure. It is important therefore the

warehouses are planned based on the

processes and business model adopted.

Gaps in Key facility infrastructure at Cargo

terminals in Gateway airports

There has been a lack of planned and

integrated development of airports to cater

to the needs of cargo business. Lack of

adequate and appropriate air-cargo

infrastructure at airports remains the key

stumbling block to the future growth of the

air cargo sector in India. Some of the key

facility infrastructure which are lacking at

majority of the air cargo complexes are:

i. Shortage of landside truck docks, vehicle

holding area and airside operational space

ii. Insufficient entry gates and lack of

upgraded handling equipment and trolleys

iii. Lack of specialized storage and

handling facilities for hazardous,

radioactive and valuable cargo

iv. Lack of sufficient cold storage capacity

for perishables cargo

The tabulation below shows some glaring

infrastructure gaps of cargo operations in

India, when compared with global best

Practices.

Bottlenecks in truck docking

The floor area at the truck dock is the first

entry point for offloading the cargo before

shifting for clearance. Reports25 received

from the users of cargo terminals indicate

that dwell time for trucks waiting outside

the Air Cargo Complex ranges from 8 to 12

hours in one of the major gateway airports

during peak seasons. In today’s

competitive environment it is ironic that

export cargo vehicles are not off loaded

due to lack of adequate space availability.

Limited number of truck docking bays for

imports also is said to severely limit the

ability of the cargo terminal operator to

clear the cargo on time resulting in delay

and accumulating daily back log of

undelivered cargo.

Global best practices Cargo operations in India

Segregated facilities for different types

of cargo

Most terminals don’t offer separate facilities,

except cold rooms

Dedicated and specialized perishable

handling facilities that cater to end to-end

supply chain needs

Inadequate investments in cold chain

infrastructure (temp-controlled warehouses,

trucks) to handle agricultural, pharma and other

perishable commodities

Proper waiting area for trucks Agents use the cargo terminal landside as a

truck parking / holding area, leading to

congestion

Agent warehouses, office spaces and

other processing facilities close to cargo

terminal

Agent warehouse are often located within the

city

Promotes trans-shipment handling/ hub

operations

Promotes trans-shipment handling/ hub

operations

Dedicated facilities for Air Express

Operations with air side and city side

access, multiple freighter parking bays

No fixed model and dependent on decision of

individual airport operators. Very few dedicated

freighter parking bays.

34

Nature of equipment to be deployed will

depend on the process adopted by terminal

operators for handling of cargo. It is also

essential to install efficient and effective

container device loading equipment in

areas such as loading and unloading docks

as well as relevant entrances for the freight

movement

The cargo terminal should be equipped

with closed truck docks with dock levelers

which can accommodate trucks platform

height from 0.8 to 1.4 metres.

Inadequate X-ray screening facilities and

lack of associated trained manpower

The lack of adequate screening machines,

coupled with the fact that there is a lack of

machines that can screen built-up pallets

(BUPs) creates accumulation of cargo at

the land side, particularly more so when a

large part of the cargo is tendered at the

same time. There is an absence of ULD

screening facilities for heavy and palletized

cargo. Machines frequently break down,

and there are no on-site engineers who can

trouble-shoot and provide the solutions

immediately. This stalls the clearance

process and leads to a pile up.

Air Cargo is becoming an increasingly

important aspect of Indian external sector.

Though some improvements have been

witnessed in the recent past, numerous

bottlenecks continue to bedevil the chain of

air cargo sector. As a result, the turnaround

time for exports/imports at gateway Indian

airports is significantly longer compared to

other major air ports in the Asian region.

This compromises the competitiveness of

Indian industry and also compromises

Indian trade potential and thus it needs to

be addressed on priority. Given the critical

need to enhance efficiency of Air Cargo

operations in Indian Airports and to meet

challenges of growing needs of business

and industry for their air freight operations

it is essential to lay down a comprehensive

policy framework governing air cargo

operations in the country.

35

E-commerce companies reaching out to rural India

-Nitin K. Nandan

According to 2011 Census, 70% of the Indian

population live in rural areas. But there is no

democracy in the distribution of the basic

amenities or infrastructure. Rural India lacks

road connectivity, clean drinking water and not

even basic education. But future is not bleak,

slowly and steadily India is growing and Tele-

com revolution is on the driver seat of this

change.

A vast untapped market

Many economists have come up with

the theory that lack of informed

decisions prevent the poor from

breaking the barrier.

The lack of information about the

policies and ignorance about their rights

force them to live on what has been

handed over to them. Over time the

government and telecom companies

have realised the need for rural

connectivity and had forayed into this

untapped market. TRAI (Telecom

Regulatory Authority of India) data

suggest the jump shift in the volumes if

data being consumed in the rural India

over the last few years.

At a time when internet connectivity

is fast reaching nook and corner of the

country through novel government

and corporate initiatives (Ex. Bharat

Broadband, Airtel Jaldi and

Facebook.org), millions of new smart

phone users are born every year.

36

Smartphones have opened a whole new

world to the Rural populace, it is acting as

the lead foot of rural spending, It is like a

chain reaction; Once a person buys a

smartphone, he tends a lot more via the

smartphone. With India at such a Cusp,

how can ecommerce companies stay

behind? Ecommerce companies such as

Flipkart, Snapdeal and Amazon were

competing for the same 30% Indian

population, few years back, until Snapdeal

finally decided to expand its market and go

all out on rural areas.

Why Rural Logistics?

In India, semi-urban and rural areas are seen

as drivers of growth for manufacturers, but

cost of marketing and logistics has always

been a challenge. As the Indian retail,

manufacturing and infrastructure sectors are

poised for rapid growth, they are faced with

new challenges when it comes to logistics

and supply chain issues particularly in the

untapped rural areas for farm produce and

delivery of goods and services.

According to Professor Viswanadham,

Executive Director of the Centre for Global

Logistics and Manufacturing Strategies

(GLAMS), at the Indian School of

Business. With over 70 per cent of the

economy centred around the rural parts of

the country, logistics players are now

seeking ways to address this issue as about

$100 billion worth potential is latent in the

rural parts of the country. As consumerism

fuels buying in rural India, a growing

number of start-ups are finding space to

mark their presence by providing last-mile

linkage for delivery of goods and services

by tying up with NGOs, microfinance

organisations, government bodies and

farmers.

After moving towards Tier-2 and Tier-3

cities, Snapdeal is now moving its focus

towards the rural markets. Snapdeal will

launch around 5,000 e-commerce kiosks

across 65 cities and 70,000 rural areas by

the end of next year with the help of FINO

PayTech, an Indian financial inclusion

solutions company. These e-commerce

centers will be manned by village-level

entrepreneurs, have personal computers

and tablets, and also serve as collection

and delivery points of packages since

most people living in these areas usually

have no permanent addresses.

Additionally, they will help consumers

with zero internet connectivity to shop

online.

Rural markets are often the centers of

agricultural production, with E-tailers such

as Bigbasket and Local Baniya on the rise,

the importance of a stable and potent food

supply chain is important for the timely

delivery of quality products to the

customers.

COD– An unassailable dream?

E-Commerce companies struggle to reach

the unreachable in many remote areas

including many states in Northeast India

due to poor transportation facility adding to

it more than half of the online sales being

dependent on COD and unavailability of

third party logistics services in rural areas.

Online retailers in order to meet their Pan-

India demand, use private courier services

which then doesn’t allow companies to

accept COD. But, retailers have revived an

old and existing mechanism to hedge these

37

tides; it is the India Post. India Post is

promises to deliver Pan-India and that too

on COD, but their how reliable it is, is the

Million Dollar question-commerce players

should think in the lines of Toyota and

bank of Keiretsu, invest in the

infrastructure of India Post for mutually

beneficial proposition.

Trends in Agri-logistics

Private players like Star Agri that provide

integrated post-harvest management

solutions have entered the space to fill

these gaps. Apart from providing

warehousing services, provides collateral

management and other value added

services (quality testing, agri insurance,

bulk procurement and rural retailing) to its

clients.

ColdStar Logistics provides customized

solutions for cold storage and refrigerated

transportation across India for fresh and

frozen commodities. Their services include

specialized refrigerated storage¸ ware-

housing¸ transportation¸ distribution and

logistics.

Future look bright

With Value added products being produced

and consumed in fast pace, rural areas and

tier-II& III cities are posing to be hot spot

destinations for E-Commerce and

Logistics majors. With global attention

comes huge investments and job

opportunities in turn leading to more

revenue generation.

References:

Wikipedia.org

Global Logistics and

Manufacturing Strategies

(GLAMS), ISB

38

Humanitarian Logistics: Disaster Relief Management –Huzaifa Zohair

Introduction

Humanitarian logistics is a branch of

logistics that specializes in organization and

implementation of warehousing and

delivery of necessities during natural as

well as manmade disasters to the affected

people residing in that area. The primary

purpose is to prevent further loss of lives

and to avail immediate treatment to those

with injuries.

The effect of the disaster will be taken into

account as to how much logistics effort

would be required. There are basically four

types of disasters:-

1. Calamities – These are natural

disasters with extremely sudden

occurrences like earthquakes,

hurricanes.

2. Destructive Actions – These are

manmade causes with sudden

occurrences like terrorist attacks,

industrial accidents.

3. Plagues – These are natural causes

with slow occurrences like famines,

drought.

4. Crises – These are manmade causes

with slow occurrences like political

and refugee crises.

The logistics effort required is from highest

to lowest in the order mentioned above. A

calamity will require a greater effort then

compared to plagues or even crises. This is

because you cannot predict a calamity in

near future, but you can in case of a plague.

Humanitarian efforts are organized along

two broad lines. Firstly, disaster relief that

deals with calamities, destructive actions

and plagues. Second, continuous aid work

that deals with plagues and crises.

Use of Humanitarian Logistics

Logistics as well as supply chain

management are both crucial in case of a

disaster occurs. Logistics is more focused

on the movement of necessities to the

affected area and supply chain management

manages the actors that make such

movements possible.

Logistics is the most important element in

any disaster relief operation. The efficiency

and effectiveness of a logistics set up can

make the difference between a successful

and a failed operation in a disaster relief

situation.

Since it is the most important part of the

disaster relief operation, it is also the most

expensive. It comprises about 80% of the

total cost of the disaster relief effort. An

estimated $15 billion dollars out of $20

billion of the annual expenditure by aid

agencies is the cost of logistics.

(Christopher and Tatham 2011).

39

Disaster management Cycle

Disaster management cycle constitutes of

mainly four phases:-

Focusing on logistics and supply chain

management, the phases that most concern

the logisticians are preparation, response

and reconstruction and together these

constitute humanitarian logistics stream.

1. The preparation phase or the

planning phase refers to the

operations before the disaster

occurs. This phase is important

because it is one in which the

physical network design,

communication and information

systems are developed.

2. The response phase refers to the

operations that are carried out

immediately once a disaster occurs.

In this stage co-ordination and

collaboration among all actors like

the donors, suppliers, NGO’s that

are involved in the humanitarian

agency deserve particular attention.

3. The reconstruction phase addresses

the problems from a long term

perspective. It relates to the

operations that are carried out after

a disaster has occurred. The effects

can continue for a longer period on

the affected population as well as

the companies.

With regard to humanitarian logistics

stream, the transition between the stages

shifts focus from speed, that is carrying out

the relief task as soon as possible to

minimize the effect of the disaster to cost

reduction in terms of operational

performance. Each stage have certain

objectives that can be achieved by two

principles as follows:

Agility refers is responding to

unexpected situations related to

unpredictable demands with short

lead time. It focuses on

effectiveness and speed.

Leanness refers to carrying out the

operations in a better and bigger

manner when demand is

predictable. It focuses on efficiency

and cost saving.

In Humanitarian logistics, effectiveness

means the saving of time and efficiency

means saving of costs of the logistics

operation. When time is saved, more lives

are saved and when cost is saved, more

lives can be helped with available money.

1. The objective of the response stage

is to save time which can be done

through agility while

2. The objective of reconstruction

stage is to save cost which done

through leanness.

Stakeholders Involved in Humanitarian

Logistics

Humanitarian relief operations

management involves Stakeholders with a

high degree of heterogeneity in terms of

culture, interests, mandates, capacity and

Mitigation Preparation Response Reconstruction

40

logistics expertise. Stakeholders include

governments, aid agencies, donors, NGO’s,

military, private sector companies among

which the logistics companies like DHL,

FedEx are preeminent.

Governments – which include the host

governments and the governments of the

neighbouring countries are the initiators of

humanitarian logistics stream as soon as the

disaster strikes since they have the power

and resources needed to authorize the

operations. Without the authorization of the

host government, no other agencies except

for the military can operate in the disaster

struck areas.

Private logistics companies are one of the

best contributors in every stage of the

disaster relief operations as logistics is their

area of expertise. Thanks to their

capabilities in carrying out relief operations

in an effective and efficient manner, these

companies are assuming a prominent role in

humanitarian organizations. For example

DHL – the have their own AID, Relief and

Humanitarian services.

Contribution by Private Logistics Service

Providers

1. FedEx for Nepal - FedEx pledges $1

million relief aid for the series of

earthquakes that occurred in Nepal.

They are working with international

relief organizations and utilizing their

massive global transportation network

in assisting the recovery effort.

Specific contributions include:

Transporting large volumes of IV

supplies, medicines, surgical

supplies and other medical

essentials on behalf of Direct

Relief.

Sponsoring Heart to Heart

International’s mobile medical

clinic, which contains tents, vital

medicines, medical supplies,

portable medical equipment,

communication equipment, non-

perishable food and water

purification systems.

Donating $250,000 cash

donation to American Red Cross

Society which works directly

with Nepal Red Cross Society.

2. UPS for Nepal – The UPS foundation,

the philanthropic arm of UPS, commits

$500,000 in cash and kind as well as

logistics expertise to aid in the response

and recovery effort for the devastating

effects due to simultaneous earthquakes

in Nepal. Those funds had gone to the

United Nations High Commissioner for

Refugees (UNHCR) for shelter supplies

and solar lanterns as well as to The

World Food Program for emergency

food supplies and to CARE for

blankets, toiletries etc. They are also

working closely with United Nations

Logistics Cluster for other logistics

support needed once immediate and

long term requirements are determined.

http://www.hearttoheart.org/

http://www.hearttoheart.org/

41

Challenges faced by Humanitarian

logistics

1. High Uncertainty in Demand – For

example in case of two earthquakes with

similar magnitudes, both may have

different outcome based on their place of

occurrence. If one is in a highly populated

area in a developing country and the other

one in a better prepared city in a developed

nation, their relief demands will vary and

also other will be hard to measure like

disaster characteristics, local economy,

infrastructure, politics etc.

2. High Uncertainty in timing – In general,

it is difficult to predict when a disaster will

strike. One needs to be in a state of

readiness to plan and execute an efficient

and effective operation when such an event

arises.

3. High Uncertainty in supply – Donations

given by donors in cash or in kind may not

match the demand and building up

relationships with local vendors in a very

short time span can be a difficult task.

4. Challenges faced in the area of

transportation and communication –

Transportation infrastructure might be

disrupted that could take extra time and

incur extra cost to get the supplies to the

affected location. Telephones and internet

towers could be damaged causing a major

problem of communication, as in the case

of Hurricane Katrina in USA.

Future Scope in Humanitarian Logistics

One of the challenges faced by

humanitarian logistics is the transportation

of relief supplies to the areas affected by

disasters such as earthquakes where there is

a huge possibility of road infrastructure

being damaged and further limiting the

access to such areas. One of the ways to

counter this problem is the development

and use of Unmanned Aerial Vehicles

(UAVs) or specifically in humanitarian

logistics aspect “Disaster drones”.

First time a drone was used in a

humanitarian capacity was in Bosnia 1994,

when the US deployed the GNAT 75 to

provide overhead surveillance for NATO

convoys. Since then they have been used

for mapping disaster sites as well as in

search and rescue operations for various

institutes.

Apart from military contractors, civil

manufacturers are also investing heavily in

developing everyday use of UAVs which

can also be used in the field of humanitarian

logistics. For example:-

OpenRelief Project: This project

is launched by developers at the

2012 Linux Japan conference,

which aims to build a cost

efficient – remote controlled

42

airplane that will assess disaster

damage in hard-to-reach area.

Matternet Project: The vision of

this project is to create “the next

paradigm for transportation”.

Through a network of small

drones, goods and medicines will

be delivered to remote areas. As a

trial Matternet delivered

medicines to a relief camp in

Haitian capital Port-au-Prince.

There is high potential for the use of drone

technology in the humanitarian logistics. It

could contribute in achieving extreme

agility and leanness in the humanitarian

supply chain management which in turn

could save more lives and cost.

References

http://www.analytics-

magazine.org/spring-2009/208-

supply-chain-management-

humanitarian-logistics

http://www.supplychain247.com/ar

ticle/ups_commits_500000_and_lo

gistics_expertise_in_support_of_ne

pal_earthquake

http://www.supplychain247.com/ar

ticle/fedex_pledges_1m_relief_aid

_for_nepals_recovery

http://www.springer.com/978-3-

642-30185-8

http://www.odihpn.org/humanitaria

n-exchange-magazine/issue-58/the-

promise-and-perils-of-disaster-

drones

http://www.analytics-magazine.org/spring-2009/208-supply-chain-management-humanitarian-logistics




http://www.supplychain247.com/article/ups_commits_500000_and_logistics_expertise_in_support_of_nepal_earthquake




http://www.supplychain247.com/article/fedex_pledges_1m_relief_aid_for_nepals_recovery



http://www.springer.com/978-3-642-30185-8

http://www.springer.com/978-3-642-30185-8

http://www.odihpn.org/humanitarian-exchange-magazine/issue-58/the-promise-and-perils-of-disaster-drones




43

Risk Mitigation in Global Supply Chain Management

-Karan Neralakatte

In today’s world, Supply Chain

Management is considered as a lifeline of

any organization. Any disruptions in the

supply chain will have huge impact on the

complete functioning of the organization.

Hence it becomes a top priority for the

organization to make sure the supply chain

flows without any hindrance or at least try

to identify possible risks associated with it

and mitigate its impact.

To manage the risks, the organization has to

develop a process in which a proper

documentation is made to identify the

different types of risk that is associated with

the current supply chain, to prioritize the

documented risks and the steps that needs

to be taken in order to avoid or lower the

impact of the risk on the supply chain.

1. Risk identification

Identifying what could go wrong?

2. Risk Assessment/Prioritizing

Anticipating the probability of

occurrence of a risk

Gauging the magnitude of the

consequences and also the overall

impact on the firm?

Assessing the probability of how

early the problem can be detected?

3. Risk mitigation and management

Analyzing the various options that are

available to mitigate the risks?

What are the costs involved and

benefits of each option?

Identification

The Supply chain strategy team of a

company sets aside time to evaluate the

risks faced by the company’s supply chain.

The team then gathers data on the suppliers

and on the countries in which the business

is planning to run or currently working.

Few types of risks that is identified are

Routine supply chain risks: These

usually involve the day to day

events like an unexpected delays in

transit, changes in customers’

requirements, problems with

suppliers, theft, and warehouse or

production malfunctions, all of

these issues can cause serious

delays in customer shipments.

Natural disasters: These are

unpredictable, but still a few firms

try to anticipate climatic disruptions

and develop suitable contingency

plans to counter it. If a company has

its facility/warehouse on a costal

line area which is hurricane-prone,

then it can assume it’s only a matter

of time before the odds catch up

with the location.

Quality problems: Quality issue is

one of the key aspects in any supply

chain. This risk often causes

companies to carry more

44

inventories. One firm,

manufacturing consumer durable

products, discovered a quality

problem and was mortified to find

that it had two months’ worth of

supply in transit on the Pacific

Ocean, all with the same defect.

Forecast error: The Long-range

forecasts done by global supply

lines can be at times inaccurate.

Forecast error over long global lead

times often results in major

availability issues and excess

inventory problems.

Damage: Whether the company is

importing or exporting, the chance

of goods being damaged

exponentially increases because

there is a significantly more

handling in the supply chain.

Laws and regulations: This

becomes a very important aspect

especially when the company wants

to expand and set its manufacturing

unit in a foreign country. The laws

and regulations of a particular

country can have a huge impact on

the company’s supply chain.

Customs or port issues: Customs

regulations are always in flux.

Failure by shippers to understand

the rules and regulations can often

cause excessive shipment delays

and fines.

Source: Illustrative sample from

Deloitte’s database of supply chain

risks

Risk Prioritizing

Once the team identifies the risks involved

in the supply chain, the next daunting task

would be to assess the risks and prioritize it

based on the impact it would have on the

supply chain. The different risks are

tabulated and weightage is given to each

risk based on the severity, probability of

occurrence and the chances of it being

detected etc.

45

Mitigation of Risks

Once the risks are identified, assessed and

prioritized the next step would be to

develop mitigation plans for the top priority

risks. Some of the frequently used

mitigation plans are given below.

Budget: Many companies try to cut cost

in risk mitigation strategies in favour of

more efficient and cost effective supply

chain, but the recent natural disasters has

exposed the huge financial

implications/losses caused to the

company due to such events. Hence

companies should have a dedicated

budget allocated to have a strong risk

mitigation plan.

Insurance: Organizations need to work

with insurance providers and create a

suitable plan to use suitable insurance

appropriate coverage’s to mitigate risks,

based on an objective cost-benefit

analysis.

Reserve Inventory: It is very popular

among small and large firms alike. This

strategy can be costly, so having an

appropriate financial strategy in place is

critical. For example, a firm might have

access to a flexible credit facility that

allows funds to be advanced at many

stages along the supply chain.

Disaster preparation: Establish a crisis

team that is responsible for making

decisions and communicating those

decisions throughout the supply chain.

Run scenarios with the team ranging

from the best case to the worst case and

document consensus responses that can

be used in real time.

Forward buying or hedging: Hedging is

a way for a company to minimize or

eliminate foreign exchange risk, as well

as the risk of commodity price increase.

Design for globalization: The simpler

the product design and the fewer parts

involved, the less risk there is in a global

supply chain. Leading firms design for

globalization

Lean/Six Sigma: When firms apply the

principles of Lean and Six Sigma to their

global supply chain, along with value

stream mapping, they find a multitude of

ways to reduce cycle time and variation

by eliminating wasteful activities in the

process. Risk diminishes as cycle time

and variation decline

In conclusion we can say that supply chain

risk mitigation management plays a very

important strategic role in the operations of

a successful business, protecting its most

valuable assets while creating a unified and

high performance risk mitigation model.

References:

https://en.wikipedia.org/wiki/Supply_c

hain_risk_management

http://globalsupplychaininstitute.utk.e

du/publications/documents/Risk.pdf

https://longitudes.ups.com/risk-

mitigation-in-the-supply-chain/

https://en.wikipedia.org/wiki/Supply_chain_risk_management

https://en.wikipedia.org/wiki/Supply_chain_risk_management

http://globalsupplychaininstitute.utk.edu/publications/documents/Risk.pdf

http://globalsupplychaininstitute.utk.edu/publications/documents/Risk.pdf

https://longitudes.ups.com/risk-mitigation-in-the-supply-chain/

https://longitudes.ups.com/risk-mitigation-in-the-supply-chain/

46

Supply Chain Management in an age of Internet of things

- Natesh Kaarthik NRR

Introduction

The Internet of things (IOT) is the

connection of every object on the earth,

more precisely, devices talking to each

other!

In today’s world we expect every item we

buy to be connected to the internet. An

average individual nowadays has a laptop,

a smartphone, a smart TV and even a smart

refrigerator and smart AC all connected to

the internet. Various devices such as the car

GPS, traffic system, weather stations and

many more are connected to each other and

share information among them. All these

information when placed in Big Data over

internet can enable to take better decisions

such as which alternative route to choose in

case we know about a traffic jam in the

highway or based your car position your

Smart AC can even optimize your room

temperature for your arrival or all this

enormous information can be analyzed to

ensure better business solutions. Real time

customer demands can be analyzed and this

information is made to be visible to the

entire supply chain network making it a

reactive supply chain network by

optimizing the operations and logistics to

meet this demand in the most cost effective

and timely manner.

All these devices connected to each other in

the internet and constantly sharing

information constitute the Internet of

Things (IOT). According to Gartner

Statistics, by 2020 it is estimated that there

will be anywhere between 26 Billion to 50

Billion devices connected to the internet.

Not only devices but customers will also be

connected through wearables and body-

fitted sensors. IOT will evolve the business

process and supply chains to meet the

newer customer or user expectations.

How does IOT transfer and connect

information of devices in a supply

chain?

The critical components in the Internet of

things are RFID tags and Sensor networks.

Tags are characterized by a unique

identifier which can be applied to objects to

monitor them in real time without being in

the line of sight. Sensory networks

cooperate and synchronize with these RFID

systems to ensure better track of the status

of the objects such as their location,

temperature, movements etc. NFC (Near

field communications), Wireless sensors

and Actuators along with RFIDs are

utilized to ensure faster and optimized

connectivity of devices and their relevant

information.

47

Fig: 1 Information Value Loop

Source: “Forging Links into Loops- The internet of

Things potential to recast supply chain

management”, by Joe Mariani, Evan Quasney, &

Michael E. Raynor

IOT connects information and devices.

Fig.1 portrays the Information Value loop

of how the data is created, collected and

acted upon in an IOT and supply chain. An

Act or response given by any device is

monitored by a sensor. This sensor creates

the information and the status of the device.

This information is communicated over the

supply chain and the data is collected and

aggregated. This information is analyzed by

corporates by utilizing augmented

intelligence systems. Then decisions are

made using an Augmented behavior

technology that enable automated actions

which results in decisions that improve the

productivity and efficiency of the supply

chain.

To illustrate this with an example, consider

a delivery truck which is facing a

mechanical difficulty. A sensor in the

engine and other critical parts can alert the

driver, an automated system can alert the

nearest repair center and part supplier to get

the necessary repairs done promptly, the

customer and other stakeholders are

intimated by the system regarding the issue

and potential delay in the delivery of goods

so that necessary actions can be taken. All

these actions and decisions are done in real

time.

Real time monitoring of almost every link

in the supply chain makes it more agile.

• Consumer data can be analyzed to

predict future demands

• Visibility of real time and accurate

information throughout the supply chain

thereby eliminating bullwhip effect

• Manufacturing orders can be re-

configured or changed in a timely manner

to match the new demand

• Systems can be configured to make

automated decisions based on the analyzed

data

• Entire upstream and downstream

logistics can be tracked and optimized more

efficiently and effectively

• Inventory management and

procurement can be automated based on

demand

• Various services such as machine

repair, parts replacement request can be

automated based on the collected

information of device status

Industry examples to illustrate the

improvement of supply chain through

IOT:

Hero MotoCorp, needed a way to improve

its visibility on the fleet of vehicles that are

available in different locations to ensure

that their dealers were provided with

prompt information regarding the

availability of vehicles. They GPS-enabled

48

their fleet to get real time data of truck

location and linked it with sales and

distribution data. This enabled dealers and

sales teams to get real time information on

location of the vehicles.

IOT enables supply chains to not only

minimize variations but also to respond to

these variations to mitigate it. General

Motors (GM) installed a network of sensors

in its various plants to measure humidity in

its buildings. In case the measurements

from the sensors are above acceptable

limits for painting vehicle bodies, then the

next vehicle body on the line is

automatically routed to a different

manufacturing process to ensure that there

are no adverse effects. This reduced the

repainting and downtime and saved GM

millions of dollars.

A connected supply chain of IOT enables

location tracking, remote inventory level

monitoring and automatic reporting of

material consumption as they move through

the supply chain. Dell’s supply chain is

example of connected supply chain. Dell

ensures an effective CRM (Customer

Relationship Management) which ensures

that employees are actively engaged with

the customers to identify customized choice

to fit their needs. These orders are then

translated to manufacturing facility, which

is able to build more than 20,000 custom-

built products. As and when parts are

required the communications to suppliers

are set to ensure that required materials are

delivered to specific buildings and

manufacturing lines.

The IOT data and automation of specific

process enables complete plant floor

automation control. Sensors continuously

detect the operating parameters and in case

of abnormalities send instructions to

actuators to adjust the process to ensure

normalcy of operations. Apotex, a

Canadian pharmaceutical manufacturer

utilized automated guided vehicles, RFID

Tracking, and process flow tracking to

enable consistent batch production which

included automatic identification of

materials, ingredients and additions of the

same at the right time and also constant

communication with the operators. This

increased the productivity, quality, safety

and lowered costs. Further, the facility was

also honoured with the “Facility of the

Year” award by the International Society

for Pharmaceutical Engineering.

Problems faced in implementing IOT

technology for supply chain

improvement:

1. There are a myriad of networks,

sensors and technologies. They should be

selected in such a way to ensure

standardized communication over the

internet which is both effective and

efficient

2. IOT software platforms must

integrate with enterprise systems to

manage, analyze and share data

3. The entire chain of information

must be secured and encrypted to ensure

that the data shared is secure

4. The network and infrastructure

should be flexible and scalable to meet the

increase in number of connected devices

and Big Data shared over time

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Future Scope of IOT in Supply Chain

Consider an entirely interconnected world

of things. A smart refrigerator can detect

the things stored in it and makes an entry

about each item stored over a regular period

of time. Augmented intelligence

technology can be utilized to enable the

fridge to detect if has a shortage of items.

Based on the regularly stored items in the

fridge augmented automation systems can

be programmed to connect to the network

and place an order for the replenishment of

the items in the nearby supermarket in

online.

The supermarket regularly analyzes the

items maximum sold to identify the market

demand. Sensors are placed in the

supermarket to detect the brands most

viewed, most purchased and least

purchased by customers in real time. Based

on this data the supermarket inventory and

procurement system can be designed to

forecast the customer demand. This

analysis is utilized accordingly by the

system to place automated orders to the

manufacturers and suppliers to meet the

demand.

The Based on the orders received from the

supermarket the manufacturers and

suppliers source raw materials and produce

the ordered products. They are faster and

are more reactive to the change in demand

by optimizing or adjusting the

manufacturing process as all the

information transferred is real time and

accurate. Thus eliminating wastage,

improving revenue and reducing costs.

Consider a fully automated logistics

system. The entire transportation industry is

taken care by unmanned vehicles which are

controlled by intelligently programmed

systems which shares data regarding the

road traffic, status of vehicle, location,

speed of the vehicle and destination. This

can be used by the entire Internet of things

to aggregate the information and enable an

optimized transportation system which has

vehicles travelling in the optimum speed,

route and position to ensure timely, safe and

accurate journey plan to reach to

destination.

With the advent of Internet of Things the

world is changing in a rapid pace. Supply

chains, business processes and everyone’s

way of life is changing. Soon from just

smart items such as phones, TVs,

refrigerators and homes, the technology is

evolving to form fully smart cities. The next

phase will be to develop and sustain a smart

world where each and every object

communicates with everything else to

maintain a comprehensive smart supply

chain where every link is synchronized

everywhere. And that day of developing

such a technology is not too far ahead.

References:

1. Designing for Manufacturing’s

‘Internet of Things by Cognizant.

http://www.cognizant.com/InsightsWhitep

apers/Designing-for-Manufacturings-

Internet-of-Things.pdf

2. Forging Links into Loops- The

internet of Things potential to recast supply

chain management.

http://dupress.com/articles/internet-of-

things-supply-chain-management/.

50

3. Supply Chain Management in the

era of Internet of Things

http://www.happiestminds.com/whitepaper

s/supply-chain-management-in-the-era-of-

internet-of-things.pdf

4. The Internet of Things : A survey.

http://www.elsevier.com/__data/assets/pdf

_file/0006/97026/The-Internet-of-

Things.pdf

5.http://economictimes.indiatimes.com/ma

gazines/corporate-dossier/the-internet-of-

things-five-challenges-that-cios-

face/articleshow/48001826.cms

6.http://articles.economictimes.indiatimes.

com/2015-07-10/news/64283085_1_iot-

devices-hero-motocorp

51

Fun Facts! -Pooja Deshpande

“All work and no play makes Jack a dull boy”, well said!

Even though “Co-Operate” stands for all the new supply chain trends and creatively innovative

ideas, here are some of the fun facts about Supply Chain:

The term “logistics” is actually used since 1898.

Isn’t “logistics” too old for us?

A pack of Wrigley’s gum was first scanned in a supermarket in 1974; realizing

efficiency of barcodes.

However; barcodes were FIRST used to label railroad cars!

According to the Council of Supply Chain Management Professionals (CSCMP), it is

estimated that it costs approximately $0.37 to deliver a box of cereal to the U.S.

consumer.

I wonder how much it would cost in India to deliver one “Roti”!

53% of supply chain practitioners surveyed across industry think of cloud computing as

“interesting, but unclear usefulness”.

Pure Ignorance or a Resistance?

If Wal-Mart were a country, it would be 26th largest economy in the world.

Now, that’s a real ECONOMY!

10% say they are supporting a “smaller” number of SKUs in response to digital

demand. This proves that there is macro trend towards more SKU complexity.

Seems like a CRUCIAL opportunity!

35% of hi-tech companies have fully implemented social and environmental

responsibility initiatives with key suppliers whereas only 9% of the Healthcare and

pharmaceuticals companies have made such moves.

Huge gap - 9% to 35%!

52

The 2nd highest rated “disruptive and important” technology among respondents

is digital supply chain, which is a light-speed version of production and distribution

delivering any value-add that can be digitised, like print-on-demand packaging, vehicle

entertainment systems, etc.

Industry is leveraging EVERY opportunities that a customer is willing to pay for!

Logistics operations deliver the equivalent of 16,000 swimming pools of milk every

year.

Hats off to the capacity!

Only 31% say that they use social media to inform product innovation priorities.

Do other 69% companies, without a social media presence, actually exist?

Fewer than 17% view emerging markets primarily as low-cost sourcing opportunities

while 34% are looking mainly for new sales growth and 48% equally seek sourcing and

sales in emerging markets.

Globalization is indeed a two-way street!

Mexico is the 6th highest rated growth opportunity, trailing only the BRICs and the

United States.

Emerging markets to the target markets jump looks like a sweet journey!

31% declare sales an “essential” skill for supply chain professionals, giving them direct

experience in sales. Considering how highly respondents rate change management,

74% say it is essential.

May be this is really about selling INTERNALLY!

Geopolitical instability jumped 20% as a risk concern between 2013 and 2014, which

is a point of concern for all the international supply chain organizations.

Pretty big jump, compared to the small jump in natural disasters!

If you joined together all the sausages that the logistics industry delivers in a year, they

would reach beyond the moon.

That’s more than 384,400 Km!

The biggest lorry in the world carries 300 tons of material.

That’s 272,155 Kg or almost equal to 43 elephants!

The biggest ship in the world can carry the Eiffel Tower and an Airbus comfortably.

"Barzan", one of the container ships that is still in service!

53

Logistics operations deliver nearly 4 billion meals to pubs every year in the UK.

That’s enough to feed 2/3rd of the world’s population!

Amazon's warehouses have more square footage than 700 Madison Square Gardens and

could hold more water than 10,000 Olympic Pools.

Jeff Bezos truly rules!

12 million RFID tags were used to capture data and track movement of objects in the

physical world had been sold in by 2011 and by 2021, it will be 209 billion.

Thanks to the Internet of Things!

References:

https://cscmp.org/media-center/facts-global-supply-chain

http://www.integracore.com/blog/supplychainmanagement/suprising-and-fun-facts-

about-the-history-of-the-supply-chain/#.Vdc2VPmqqko

http://www.scmworld.com/columns/beyond-supply-chain/top-10-supply-chain-facts-

of-2014/

https://www.linkedin.com/pulse/see-some-interesting-facts-supply-chain-around-

world-mohammad-mamun

https://cscmp.org/media-center/facts-global-supply-chain

http://www.integracore.com/blog/supplychainmanagement/suprising-and-fun-facts-about-the-history-of-the-supply-chain/#.Vdc2VPmqqko

http://www.integracore.com/blog/supplychainmanagement/suprising-and-fun-facts-about-the-history-of-the-supply-chain/#.Vdc2VPmqqko

http://www.scmworld.com/columns/beyond-supply-chain/top-10-supply-chain-facts-of-2014/

http://www.scmworld.com/columns/beyond-supply-chain/top-10-supply-chain-facts-of-2014/

https://www.linkedin.com/pulse/see-some-interesting-facts-supply-chain-around-world-mohammad-mamun

https://www.linkedin.com/pulse/see-some-interesting-facts-supply-chain-around-world-mohammad-mamun

54

Team OpCellence OpCellence is Operations Club of Symbiosis Institute of Business Management, Pune. The

club has started its journey in January, 2014 and the first year itself has seen many activities

like Internship guidance sessions, Six Sigma Green belt certification, Certification guidance

sessions to name a few. Now it’s time to assign responsibility to the newest members of the

club. As a part of yearly selection process, we are welcoming three new members as Junior

Team:

J-Team S-Team

Parvathy Sundaresan Bhavik Makwana

MBA-I, Operations MBA-II, Operations

Nitin K. Nandan

MBA-I, Operations Debopam Das

MBA-II, Operations

Natesh Kaarthik

MBA-I, Operations

We congratulate the J-Team and wish them all the best for the future!

Co operate November 2015

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