Author: March 21, 2007
By Rajabahadur V Arcot
SCM Logistics India 2007, organized by Terrapin at Delhi on March 15-16, 2007, brought together supply chain and logistics experts from global and domestic manufacturing companies doing business in India. Harry Lagad, Logistics Director, Nokia, chaired the first day proceedings, and David Pieper, Global Director Supply Strategy, Hewlett Packard, conducted the second day proceedings. In his keynote address, Tim Cawley, Senior Vice President, Motorola, spoke about “Harnessing an integrated supply chain strategy for competitive advantage in the global market”.
Speakers at the Forum presented some excellent case studies that included. among others: supply chain optimization by Indian Oil Corporation; pull-based and consumer-driven supply network by Procter & Gamble; demand driven supply chain by LG Electronics; vendor-managed inventory strategies by Marico; demand-driven supply chain by Dr. Reddy’s Laboratories; and automating S&OP to maximize resources by GlaxoSmithKline. While global companies spoke about the successful extension of supply chain strategies to cover their operations in India, the case studies by domestic manufacturing companies provided food for thought. Their narrations included how they are innovatively leveraging technologies and discovering new business opportunities.
For example Marico, a leader in coconut oil business, implemented e-auction procurement strategies and empowered small farmers living in remote villages to use cell phones to participate in the bid process. It is a win-win story both for the company and its vendors. Mahindra & Mahindra, an automotive major in India, facing the challenge of comprehensively addressing its inbound and outbound logistics, established a division to handle its complex transportation requirements. Soon, realizing a business opportunity in the logistics space, the company established Mahindra Logistics, which has grown into a complete logistics service provider. Extending this concept further, Mahindra Logistics has begun to provide clients with GPS tracked fleet to transport employees to their workplaces.
In India, industries such as Automotive, Electronics, Pharmaceutical, and Refining, are the frontline industries facing daunting supply chain issues. The reasons are not difficult to gauge. The growing demand for a wide variety of electronics products, such as mobile phones, personal computers, and televisions, has resulted in manufacturing companies setting up production facilities in the country, and sourcing components from global sources.
Pharmaceutical companies in India are strong in the generic drug marketplace. With the global generics pipeline worth around $30-40 billion and remaining full in the foreseeable future, India’s pharmaceutical companies have ample growth opportunities. Their strengths in developing alternate chemical-processes backed by production facilities that conform to global industry standards have given them a strong foothold in the global pharmaceutical market.
Emerging as a major automotive market, India is the third largest manufacturer of compact passenger cars and the fifth largest commercial vehicle manufacturer in the world. Exports of Indian made automobiles and auto parts are on the increase. While domestic automotive majors, such as Tata Motors and Mahindra & Mahindra, are making successful forays into global markets, global companies such as Daimler Chrysler, Ford, Hyundai, Rover, and Suzuki, having built production capacities in India, are using them as global sourcing centers for completely built vehicles. Auto component players, such as Bharat Forge, Delphi, Visteon, and TVS Group are turning India into an auto components supplier. Clearly, the country is on the global automotive industry’s radar screen.
Paradoxically, while India is a net importer of crude, the country is emerging as a net exporter of refined products. Refineries in India are well engineered to process sour crude, and therefore they enjoy healthy refining margins. Their success calls for the use of robust upstream and downstream supply chain management.
Numerous manufacturing companies in the country have successfully implemented strategies to achieve supply chain efficiencies and are leveraging technologies, but their challenges are more on the logistics front. India’s infrastructure in terms of roads, rail, ports, warehouses, and others are woefully inadequate to support the country’s manufacturing growth. With India emerging as retailer’s goldmine providing further impetus, logistics providers see a great opportunity to enter and conquer the market.
ARC believes that India of7 Hills, IBM, and JDA, but also for logistics providers such as APL Logistics; these companies are among the Terrapin’s SCM Logistics India 2007 Forum sponsors. Logistics providers would not only find the challenge more formidable, because the country lacks the physical infrastructure, but would find providing the service more rewarding with their ability to bring capital that addresses the country’s dire needs.