analysis of transportation and logistics industry

8/2/2019 Analysis of Transportation and Logistics Industry

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B. Objective s & Limitations Of The Study

Objectives:

To study the planning and scheduling of transport operations through proper fleet

management, with an effective inventory control system that manages the flow of

raw materials.

To observe how it entails validating vehicle particulars and accessories to avoid

delays and additional cost from Governmental agencies.

To present an introductory profile of the Shakti Transport Private Ltd.

To provide an introductory profile of the product, process, and other technical

aspects of logistics

To give overall information about with reference to global and national

environment

To study in detail the logistics management of Shakti Transport.

To draw a conclusion regarding logistics of Shakti Transport.

To study the general management and organization of Shakti Transport.

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Limitations:

This study is limited to Shakti transport.

This study is exclusively related with logistics management.

This study is presented on the basis of the information and knowledge which could

be gained during the course of Summer Internship programme at Shakti Transport

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C. Research Methodology

Two approaches have been used to make this project: Primary Data and Secondary data.

Primary Data:

Primary Data is collected by interviewing the people working for the logistics and

transportation industry.

Secondary Data:

This data is collected from various sources such as internet, various books, newspapers and

magazines on logistics and transportation industry.

Example

Statement and Significance (of product and company)

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CHAPTER 1

1.1 Introduction

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Overview

The term logistics is often misinterpreted to mean transportation. In fact, the scope of

logistics goes well beyond transportation. Logistics forms the system that ensures the

delivery of the product in the entire supply hierarchy. This includes transportation,

packaging, storage and handling methods, and the information flow.

The industrial policies in India have prompted manufacturers to build plants in remote

and backward areas due to inexpensive land and tax benefits. This poses a few serious

logistical problems. Apart from poor roads and shoddy transportation networks, the

existing communications system in India does not match up to the international standard. It

is in this context that logistical services have to be improved in India. Logistics demands an

extensive understanding of the total supply chain, the elements of which include

inventories, packing, forwarding, freight, storage and handling.

Logistics is responsible for all the movement that takes place within the organization

whether it is inbound logistics of incoming, raw materials or movement within the

company or the physical distribution of finished goods. Typical logistics framework mainly

consists of a Physical Supply, Internal Operations and Physical Distribution of Goods and

Services. Simply put, the material supply logistics starts from the base level of the

generation of the demand, through the process of purchase and supply of material from

the vendor right through to the final acceptance and the payments to the supplier and

issue to the indenter and has to be considered as an entirely singular activity with each

stage impacting on the price/cost of supply of materials. Logistics is in itself, a system; it is

a network of related and codependent activities with the purpose of managing the orderly

flow of material and personnel within the logistics channel.

Travel and Transportation is the backbone of infrastructure it is undoubtedly the most

important and a major sector of any economy. Millions of people and businesses rely on an

extensive, inter-related network. The transportation industry is in an era of unprecedented

change. Marked by unending demands for increased services and severely

Limited budgets for infrastructure, the industry is facing continuous challenges. Thanks to

technology, the travel industry is exploring new horizons in the way it does business.

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Today, with the help of technology the travel industry is creating new propositions for

its customers such as online booking, remote travel management, and new age CRM

programs. On the other hand, 3PL and Logistics provider industry that is heavily dependent

on infrastructure set by transportation has been embryonic to offer greater scope and more

complex solutions. Expansion of networks through rapid globalization with mergers and

acquisitions amongst logistics providers and need to fulfill complex global contracts calls

for higher performance through greater and deeper end-to-end integration and state of the

art visibility tools. The underlying objective is, seamless flow of information across the

complex and growing value chains, leading to effective and faster decision making which

in turn leads to better transparency and visibility.

1.2 History of Logistics

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vision and a drive within to deliver results under strict deadlines in addition to his usual

responsibilities.

Business Logistics

Logistics as a business concept evolved in the 1950s due to the increasing complexity of

supplying businesses with materials and shipping out products in an increasingly

globalized supply chain, leading to a call for experts called supply chain logisticians.

Business logistics can be defined as "having the right item in the right quantity at the right

time at the right place for the right price in the right condition to the right customer", and is

the science of process and incorporates all industry sectors. The goal of logistics work is to

manage the fruition ofproject life cycles,supply chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus(outbound logistics) covering the flow and storage of materials from point of origin to point

of consumption. The main functions of a qualified logistician include inventory

management,purchasing,transportation, warehousing, consultation and the organizing

andplanning of these activities. Logisticians combine a professional knowledge of each of

these functions to coordinate resources in an organization. There are two fundamentally

different forms of logistics: one optimizes a steady flow of material through a network

oftransport links and storage nodes; the other coordinates a sequence of resources to carry

out some project.

Logistics is the management of the flow ofgoods, information and other resources,

includingenergy and people, between the point of origin and the point of consumption in

order to meet the requirements of consumers (frequently, and

originally,military organizations). Logistics involves the integration of

information,transportation, inventory, warehousing, material-handling, andpackaging,

And occasionally security. Logistics is a channel of thesupply chain which adds the value

of time and place utility. Today the complexity of production logistics can be modeled,

analyzed, visualized and optimized by plant simulation software.

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Logistics is considered to have originated in the military's need to supply themselves with

arms, ammunition and rations as they moved from their base to a forward position. In

ancient Greek, Roman and Byzantine empires, there were military officers with the title

Logistics who were responsible for financial and supply distribution matters.

1.3 Main divisions in logistics are:-

Military logistics

Production logistics

Business logistics

Warehouse management system and warehouse control system

Third-party logistics

Logistics management

Professional logistician

Military logistics

ILSIntegrated Logistics Support is a discipline used in military industries to ensure an easy

supportable system with a robust customer service (logistic) concept at the lowest cost and

in line with (often high) reliability, availability, maintainability and other requirements as

defined for the project.

In military logistics, logistics officersmanage how and when to move resources to the

places they are needed. In military science, maintaining one's supply lines while disrupting

those of the enemy is a crucialsome would say the most crucialelement ofmilitary

strategy, since an armed force without resources and transportation is defenseless.

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Logistics management

Logistics management is that part of the supply chain which plans, implements and

controls the efficient, effective forward and reverse flow and storage of goods, services and

related information between the point of origin and the point of consumption in order to

meet customer & legal requirements. A professional working in the field of logistics

management is called a logistician.

Third-party logistics

Third-party logistics involves the utilization of external organizations to execute logistics

activities that have traditionally been performed within an organization itself. According to

this definition, third party logistics includes any form of outsourcing of logistics activities

previously performed in-house. If, for example, a company with its own warehousing

facilities decides to employ external transportation, this would be an example of third party

logistics. Logistics is one of the emerging business areas in many countries.

Warehouse management system and warehouse control system

Although there is some functionality overlap, the differences between warehousemanagement systems (WMS) and warehouse control systems (WCS) can be significant. To

put it simply, the WMS plans a weekly activity forecast, based on such factors as statistics,

trends, and so forth, whereas a WCS acts like a floor supervisor, working in real time to get

the job done by the most effective means. For instance, a WMS can tell the system its

going to need five of SKU A and five of SKU B, hours in advance, but by the time it acts,

other considerations may have come into play or there could be a potential logjam on a

conveyor. A WCS can prevent that problem by working in real time and adapting to the

situation by making a last-minute decision based on current activity and operational

status. Working synergistically, WMS and WCS can resolve these issues and maximize

efficiency for companies that rely on the effective operation of their warehouse or

distribution center.

Business logistics

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Logistics as a business concept evolved only in the 1950s. This was mainly due to the

increasing complexity of supplying one's business with materials and shipping out products

in an increasingly globalized supply chain, calling for experts in the field who are called

Supply Chain Logisticians. This can be defined as having the right item in the right

quantity at the right time at the right place for the right price in the right condition to the

right customer and is the science of process and incorporates all industry sectors. The goal

of logistics work is to manage the fruition ofproject life cycles, supply chains and resultant

efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus

(outbound logistics) covering the flow and storage of materials from point of origin to point

of consumption (supply chain management). The main functions of a qualified logistician

includeinventory management,purchasing, transportation, warehousing, consultation and

the organizing andplanning of these activities. Logisticians combine a professional

knowledge of each of these functions so that there is a coordination of resources in an

organization. There are two fundamentally different forms of logistics. One optimizes a

steady flow of material through a network oftransport links and storage nodes. The other

coordinates asequence of resources to carry out some project.

Production logistics

The term is used for describing logistic processes within an industry. The purpose of

production logistics is to ensure that each machine and workstation is being fed with the

right product in the right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow through the

value adding processes and eliminates non-value adding ones. Production logistics can be

applied in existing as well as new plants. Manufacturing in an existing plant is a constantly

changing process. Machines are exchanged and new ones added, which gives theopportunity to improve the production logistics system accordingly. Production logistics

provides the means to achieve customer response and capital efficiency.

Production logistics is getting more and more important with the decreasing batch sizes. In

many industries (e.g. mobile phone) batch size one is the short term aim. This way even a

single customer demand can be fulfilled in an efficient way. Track and tracing, which is an

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essential part of production logistics - due to product safety and product reliability issues -

is also gaining importance especially in the automotive and the medical industry.

Professional logistician

A logistician is aprofessional logistics practitioner. Professional logisticians are often

certified by professional associations. Someuniversities and academic institutions train

students as logisticians, by offering undergraduate andpostgraduate programs.

1.4 The Logistics & Transportation Industry

Globally, the logistics industry is valued at US$ 3.5 trillion.

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The U.S., which contributes to over 25% of the global industry value, spends close

to 9% of its GDP on logistic services.

The Indian Logistics Industry is presently estimated at US$ 90 billion.

The industry has generated employment for 45 million people.

In the country in comparison with the IT and ITeS sector which employs

approximately 4.3million people.

It is predicted to grow at a Compound Annual Growth Rate (CAGR)

of approximately 8% over the next three to five years.

Third Party Logistics (3PL) Solutions, is slated to grow at a compound annual

growth rate (CAGR) of over 16%.

Consequently,3PL service providers are expected to corner an increased share of

the Indian Logistics pie, from 6% to 13% in the year 2012, at a CAGR of 25%The

primary growth drivers of this industry are as under:

Investments in the infrastructure sector amounting to US$ 350 billion increased

efficiency and productivity of the transport system would result in lower transit

times.

Streamlining of the indirect tax structure: The introduction of Value Added Tax

(VAT) and the proposed introduction of a singular Goods and Services Tax (GST)is expected to significantly reduce the number of warehouses manufacturers are

required to maintain in different states, thereby resulting in a substantial increase in

demand for integrated logistics solutions.

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Robust trade, strong economic growth and liberalization have led to a considerable

increase in domestic and international trade volumes over the past five years.

Consequently, the requirement for transportation, handling and warehousing is

increasing and is driving the demand for integrated logistics solutions.

Globalization of manufacturing systems coupled with advancements in technology

is increasingly compelling companies across the world to concentrate on their core

competencies and avail the cost saving potential of outsourcing. This is expected to

contribute to a spike in the need for integrated logistics solutions, which is the niche

of every multinational company.

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CHAPTER 2

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2.1 Indian Logistics & Transportation Industry: a $125 Billion Goldmine

India's logistics market is all set to experience a period of explosive growth, judging

by independent market analyst Data monitor's latest research. The Data monitor report,

"India Logistics Outlook 2010-2011" predicts high double-digit growth rates for both

outsourced and contract logistics in India.

With India's gross domestic profit (GDP) growing at over 9% per year and the

manufacturing sector enjoying double digit growth rates, the Indian logistics industry is at

an inflection point, and is expected to reach a market size of over $125 billion in year

2010.Strong growth enablers exist in India today in the form of over $300 billion worth of

infrastructure investments, phased introduction of value-added-tax (VAT), and

development of organized retail and agri-processing industries. In addition, strong foreign

direct investment inflows (FDI) in automotive, capital goods, electronics, retail, and

telecom will lead to increased market opportunities for providers of logistics services in

India. However, as a result of the under-developed trade and logistics infrastructure, the

logistics cost of the Indian economy is over 13% of GDP, compared to less than10% of

GDP in almost the entire Western Europe and North America. As leading manufacturers

realign their global portfolios of manufacturing locations, India will have to work on such

systemic inefficiencies, in order to attract and retain long-term real

investments.3PL/outsourced logistics is the outsourcing of a company's logistics operations

to a specialized firm, which provides multiple tactical logistics services for use by

customers as opposed to the respective company having a business unit in-house to oversee

its supply chain and transportation of goods.

With increased geographical distribution of incomes in India, the consumer markets are

extending beyond the five metros of Mumbai, Delhi, Bangalore, Chennai and Hyderabad.

However, rather than being pre-emptive, the companies are only following with new

distribution outlets. As such, the increased competition across industry verticals is forcing

firms to focus on product distribution, and logistics outsourcing is gaining further

momentum with this. At just above one-quarter of the entire $90 billion Indian logistics

market, is slated to grow at a compound annual growth rate (CAGR) of over 16%.

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Industry Scenario:

The recent economic changes are proof enough to establish India as an evolving super

power. The seventh-largest nation in terms of geographical area and a prominent force

among emerging countries in terms of technology and infrastructure, India is now well

ahead on the growing curve of the world economy .In wake of this, India is witnessing a

renaissance of sorts across all sectors, especially manufacturing, telecommunications, retail

and services, as global as well as local players converge to cater to the worlds biggest

marketplace and consumer community.

As India surges ahead on transforming itself from a developing nation to a

developed state, one of the core sectors that are a crucial part of an upward swing is -

logistics. As big money gets pumped into manufacturing and other growth-centric sectors,

especially retail the role and potential of logistics companies is on the upswing as crucial

business operations like supply chain management and contract logistics become key issues

of managing the titanic surge in national business, both locally, nationally and globally. As

more and more organizations think and act global, it is time for third party logistics

service providers to follow suit by establishing networks and logistics infrastructure across

Asia. On the logistics front, India has picked up good momentum over the last decade.

With an estimated market worth Rs. 260,000 crores, the industry contributes 13 per cent to

the national GDP

2.2 Changing logistics landscape in India

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India is already a global heavyweight in the services sector. Manufacturing still makes

up only a relatively small proportion of GDPabout 20 per cent compared to China's 45

per centbut it is growing, both in terms of domestic focus and exports. India's container

trade has been growing at around 15 per cent over the past five years. That means the

logistics services business will be growing at a multiple of the box trade, probably around

20 per cent and more per year.

The growth in demand presents significant opportunities for the logistics industry, as

also many challenges. Looking ahead, India is going to play an increasingly important role

in driving the world economic trade, maybe even rivaling the phenomenal growth and

transformation of China, a manufacturing superpower. India's current trade profile provides

important clues about the development of logistics industry. In India the logistics costs are

still higher than in the developed markets. The transportation cost accounts for nearly 40

per cent of the cost of production, with more than half the goods in India still being moved

by road.

Gaps that India Post can fill

Limited presence of operators in rural and semi-urban areas that are growing

markets.

Lack of door to door service.

Lack of a national level integrated service provider.

Existence of multiple contact points like freight forwarders, aggregators, transport

agents, multiple transporters.

2.3Third Party Logistics

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A firm that provides multiple logistics services for use by customers. Preferably, theseservices are integrated, or "bundled" together, by the provider. Among theservices 3PLs provide are transportation, warehousing, cross-docking, inventorymanagement, packaging, and freight forwarding."

Third-party logistics providers are:

freight forwarders

couriercompanies

Other companies offering logistics and subcontracted transportation service

3PL providers can be divided into four categories they are:-

Standard 3PL provider: this is the most basic form of a 3PL provider. They would

perform activities such as, pick and pack,warehousing, and distribution

(business) the most basic functions of logistics. For a majority of these firms, the

3PL function is not their main activity.

Service developer: this type of 3PL provider will offer their customers advanced

value-added services such as: tracking and tracing, cross-docking, specific

packaging, or providing a unique security system. A solid IT foundation and a

focus on economies of scale and scope will enable this type of 3PL provider to

perform these types of tasks.

The customer adapter: this type of 3PL provider comes in at the request of the

customer and essentially takes over complete control of the

companys logistics activities. The 3PL provider improves the logistics

dramatically, but do not develop a new service. The customer base for this type of

3PL provider is typically quite small.

The customer developer: this is the highest level that a 3PL provider can attain with

respect to its processes and activities. This occurs when the 3PL provider integrates

itself with the customer and takes over their entire logistics function. These

providers will have few customers, but will perform extensive and detailed tasks for

them.

Examples of advanced logistics provider

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There are more and more such "advanced logistics 3PL" or "total logistics 3PL" on the

market. It is mostly because logistics services stabilize customers longer than the simple

delivery of freight services.

While the list of "advanced logistics 3PL" ranges in the thousands, some of the most

famous in the market are JSI Logistics, C.H. Robinson Worldwide, DHL, Kuehne &

Nagel, Schenker.

Simply put, 3PL (Third Party Logistics) refers to the outsourcing of a logistical

function. It could be the use of a transportation carrier, a warehouse, or a third party freight

manager to perform all or part of a companys production, distribution functions. The

industry has been at the receiving end of increasing interest from the private equity sector.

The year 2011 witnessed just under US$ 1 billion in private equity investments in this

industry, representing approximately 7% of total private equity investments during the

year, against 3% in the previous year.

The principle reasons of for this function are as under:

o Globalization of sourcing, manufacturing and distribution leading to an

increase in the complexity of material movement.

o Competition has forced companies towards better responsiveness and a

reduction in inventories. A growing need for small but frequent shipments

with 100 percent reliability requires core competence in logistics

management.

o Resource constraints that require companies to concentrate only on their

core manufacturing or new product development activities.

The Indian logistics industry is characterized by dominance of a disorganized market.

Transporters with fleets smaller than five trucks account for over two-thirds of the total

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trucks owned and operated in India and make up 80% of revenues. The freight forwarding

segment is also represented by thousands of small customs brokers and clearing &

forwarding agents, who cater to local cargo requirements. In order to reduce logistics costs

and focus on core competencies, Indian companies across verticals are now increasingly

seeking and using the services of third-party logistics service providers (3PLs). Realizing

the potential in the contract logistics market, 3PL service providers are expanding their

basket of services as companies are now looking for more than just transportation of their

products and raw materials. Trucking and courier companies are now leveraging their

network to provide express distribution and warehousing. Similarly, freight forwarders are

moving towards owning assets in the form of Container Freight Stations (CFS), Inland

Container Depots (ICD) and container trains. Furthermore, 3PLs are also increasing

investments to become end-to-end integrated players. As per the investment plans of the

leading 3PLs in India, the logistics industry's capital expenditure is progressively

increasing to almost match its revenue growth, a strong indicator of both 3PLs desiring to

become integrated service providers and the industry enjoying investment-driven growth.

\

2.4Infrastructure congestion

The key challenge according to Data monitor, the logistics industry in India is

currently hampered due to poor infrastructure such as bad roads (over 70 % of freight

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transportation in India is via roads), communication, ports and complex regulatory

structures. The National Highways (NH) form only 2% of the entire road network in India,

but handle over 40% of the national road freight traffic, putting enormous pressure on the

highway infrastructure. Also, on an average a commercial vehicle in India runs at a speed

of 20 miles per hour (mph) compared to over 60 mph in the mature logistics markets of

Western Europe and the USA. In addition, the twelve major ports of India handle volumes

higher than their full capacity, resulting in pre-berthing delays and longer ship turn-around

time compared to even the East Asian counterparts like China and South Korea. With the

collective economic interaction of growing per capita disposable incomes, fast growing

manufacturing and organized retailing sectors, increasing external merchandise trade,

infrastructure investments by the government and 3PLcapex plans, both India's logistics

industry and the 3PL sector of this market are set to witness explosive growth by 2012.

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CHAPTER 3

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3.1Transportation and logistics

Transportation: is the movement of people and goods from one place to another .The

term is derived from the Latin word Trans (across) and Porte (to carry). Industries which

are in the business of providing transport equipment, transport services or transport are

vital in national economies and are referred to as transport industries.

Aspects of transportation

The field of transport has several aspects: loosely they can be divided into

infrastructure, vehicles and operations. Infrastructure includes the transport networks that

are used, as well as the nodes or terminals (such as airports, railways stations, bus stations

and seaports). Vehicles operating on the network will include automobiles, bicycles, buses,

trains, marine vehicles and aircrafts. The operations deal with the way the vehicles are

operated on the network and the procedures set for this purpose including the legal

environment (laws, codes, regulations, etc). Politics, such as how to finance the system (for

ex, the use of tolls or gasoline taxes) may be considered a part of the operations.

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3.2 Modes and categories

Modes are combination of networks, vehicles, and operations including walking, the

road transport system, rail transport, ship transport and modern aviation.

Air transport

Cable transport

Conveyor transport

Human-powered transport

Hybrid transport

New mobility agenda

Rail transport

Road transport, including human powered transport such as walking and cycling

Ship transport

Space transport

Sustainable transportation

Transport on other planets

Proposed future transport

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Logistics: is the management of the flow of goods, information and other resources,

including energy and people between the point of origin and the point of consumption in

order to meet the requirements of consumers (frequently, and originally, defense

network).Logistics involve the integration of information, transportation, inventory,

warehousing, material-handling and packaging.

The simplest way to describe logistics is to say that it is all about ways and means of

meeting the demand for materials i.e. satisfying the consumer with what he wants, where

he wants etc.

Definition includes outbound, inbound, internal and external movements and returns of

materials for environmental purposes. The logistics concentrates on dynamic processes,

related to the flow of materials and the relationship between the materials and their use at

different facilities.

The most wide spread definition from the council of logistics management says that

logistics is the part of supply chain process and plans, implement and control the efficient,

effective flow and storage of goods, services and related information from the point of

consumption in order to meet customers requirement.

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3.3 Major cost elements

Transportation 35%

Inventories 25%

Losses 14%

Packaging 11%

Handling and warehousing 9%

Customers shopping 6%

3.4 Logistics Infrastructure in India

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Logistics involved global movement of materials, information and funds from country to

country.

Requires excellent state of the art infrastructure airports, sea ports, Internet and other

related facilities.

Indian infrastructure is poor as compared to developed and developing countries and stands

at 54 amongst the 59 countries.

Road 56/59

Rail25/59

Seaport..51/59

Airport...10/59

The underlying institutional problem.

Fragmentation and overlapping of responsibilities among various government

agencies.

Complexity of international trade documentation process and lack of IT

infrastructure.

Complex tax laws.

Lack of professionally competent logisticians.

Industry readiness: Weak asset or System management skills.

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Roadways

National Highway Development Project (NHDP), US $13 billion.

Four/six lanes on the highway connecting Mumbai to the rest of the country

North-South and East-West corridors (NS-EW)

Kashmir to Kanyakumari and Silchar to Porbandar

The end to end transport to be optimized by controlling loading densities through

packaging and palletizing standards and loading and unloading services automation.

Slow speeds, traffic congestion, high wear and tear of vehicles are some of

the problems

Air

The air cargo consists of express mail, computers, chips, electronic and optical

equipment, precision instruments and perishable food stuffs.

The six major airports carry 88% of the total cargo.

Privatization of the major airport, airlines is a popular headline.

Railways

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During the year 2010-2011 the Indian Railway carried 513.5 million tons of freight

worth Rs 23,305 crores (69%)

89% of its freight is commodities like coal, fertilizers, cement, petroleum products,

food grains, finished steel, iron ore and raw material to steel plants.

5,150 million passengers, Rs 11,213 crores (31%)

High Density Network (HDN) connecting Bombay, Delhi, Calcutta, and Madras

carries 65% of the total rail freight and 55% of passenger traffic.

Concur in the Flag ship route

Although cheaper freight is moving away from the Indian railways.

Seaports

Vast coast line of 7517kms handles 95% of foreign trade

12 major ports and 184 other (minor & intermediate) ports

Traffic in major ports: 2010-11 was 333 million tones

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CHAPTER 4

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4.1 Business Drivers

The following are the business drivers in logistical operation:

Cost Drivers: The average materials moved by manufacturers to export market is

low, but where as to import market is high in figure. The high technology portion

reaches to 60% to 72% of imports. Number of labour hours is a factor, tonnage of

imports; size of inventory, number of suppliers, number of batches, number of

employees etc. are all major concern in cost. Shakti roadlines and Logistics keep a

major favorable concern on the above, as from the basic get-together of employees

during the off peak hours in work. I was able to figure out, employees were not

happy with their present situations in office and in the working hours. The situation

has a major impact in operational stability. The situation leads to lengthening/of

delivery bills and other major invoice forms. As to managers words, it is

deciphered that situations are improving day by day. By using Activity Based

Costing (ABC) method of costing the organization can identify unprofitable

warehouse practices, other cost measures in logistics. If Shakti roadlines and

Logistics implement cost based on ABC, the firm can improve and eliminate

unprofitable situations, improve and implement new facilities with much broader

focus on future. To any organization cost reduction is the ultimate method to get a

much wider profit. As with the help of questionnaires and through formal

interviews with officials not many organizations have this generally. All

organizations will be implementing the cost method within the near future.

4.2 Demand Chain Management

Understanding demand requires a comprehensive knowledge of your customers, You

should know what products / services are demanded by your customers; how do they make

their purchases, how often they order and what constraints they face on the purchasing

process. Very few companies have mastered this concept. Shakti roadlines and Logistics

was able to know all the above concepts through considerable focus into customer needs

and grievances

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4.3 Achieving Competitiveness in Logistics, Freight, Supply Chain

Reduced lead time, inventories, lower operating costs, product availability and customer

satisfaction are the benefits which grow out of effective logistics and supply chain

management. The decisions usually carried on by Shakti roadlines and Logistics (3PL);

cover both the long term and short term. Strategic decisions deal with the corporate

policies, and look at overall design and logistic chain structure. Tactical, Operational

decisions are those dealing with everyday activities and problems of the organization.

Change is the inevitable factor for each and every day situation within and outside the

organization. The decisions must take into account the strategic decisions already in place.

Therefore organization must structure the logistics ideas through long term analysis and at

the same time focus on every time situations. Furthermore, market demands, customer

needs, transport considerations and pricing constraints are the factors in order to structure

the logistics, freight. Shakti roadlines and Logistics realized the fact and are prepared to

face any unexpected situations like inflation/ deflation in the economy, price factors,

climatic problems etc.

4.4 Operational Fleet Routing & Loading

The organization derives routes in transportation are mainly long-haul (Optimization). For

short haul deliveries, there are ready solutions that are tightly integrated to warehouse

management systems (outsourced facility), to efficiently route fleets of vehicles and vessels

and plan picking and loading. Stipulated time windows for pick-ups and deliveries and

vehicular weight and spatial capacities would be used, as will constraints such as delivery

within specified period minutes upon pickup (useful for perishable goods). Time required

at various stops - in terms of fixed time to park and variable time dependent on amount to

be loaded or off-loaded - can be specified. Travel speeds along various types/zones of

roads can be stipulated by traffic information services. The organization schedules arrival

and departure times for each stop can thus be worked out quite accurately. Routes can be

generated dynamically and ad hoc backhaul or other opportunities can also be assigned to

the most suitable vehicle. The benefits of operational fleet routing include considerable

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reduction in fleet operating cost and improved customer service with better estimated

arrival time.

4.5 Vendor Managed Inventory

Vendor managed inventory, coordinated by an integrated logistics system, allows inventory

to be optimized together with transportation. Shakti roadlines and Logistics try to know the

product value as well as storage capacity (mainly warehouse how much to outsource). As

a routine job the company collects information on consumption rate, current inventory

levels, forecasted demand and status of shipments. Thus the system can optimize the right

quantities of replenishments to be sent at the right time to ensure that service levels are

maintained while minimizing cost of inventory and transportation.

4.6 Mode of Transportation

Transportation generally is movement of product, goods, raw materials to different stages

in supply chain. Essentially in supply chain logistics plays a major role, the manner in

which product is moved from one location to another is through road, rail, truck, air, sea.

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4.7 The Challenge Faced by Organizations

In todays world, competence is taking on new dimensions. The ability to compete is

being determined by the degree of responsiveness to customers and key issues handling.

How fast you deliver the goods/ products, what the price paid by customers and what value

customer is getting throughout the service is considered in a schematic and ordered way.

Markets are quick demanding and customization of each logistics activities is essential for

each customer, and has become the essential factor in logistics management.

Shakti roadlines and Logistics faces lot of ups and downs in each operation and improves

operation on each situation while dealing with each customer. Shakti roadlines and

Logistics dominant improvement methods used are:

i. What are the customer expectations?

ii. How are your competitors performing in each aspect of operations?

iii. Determining the gaps in each phase and try to fill it.

4.8 Economic Ordering Quantity (EOQ)

Efficient order quantities consider the Purchase Order Cost (POC), the Annual Demand

rate (AD), the Inventory Carrying Rate (ICR), and Unit Inventory Volume (UIV). Large

Order Quantities yield high inventory levels and high inventory carrying costs but fewer

orders and lower ordering costs. High ordering costs and demand rates suggest large order

quantities. High ICRs and high unit inventory values suggest small order quantities.

Generally during research the analysis shows, few organizations believe EOQ analysis is

outdated and quite few with enhanced focus on it. There is relevant need for EOQ in this

era. EOQ analysis should be completed as a part of any inventory strategy. The analysis

suggests appropriate reordering intervals for all items each organization is handling.

Competitors focus on reducing the costs of placing purchase orders. The lower the

purchase order cost, the more economical it becomes to order in small increments and the

less inventory will be there in the system. The purchase order costs is typically dominated

by the labour and paperwork costs of planning, negotiating, executing and tracking

purchase orders. Large number of organization extent to which these functions can be

automated via automated purchase order planning, e-procurement, online catalogs, online

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bidding and online exchanges, is the extent to which inventory levels and lost sales costs

may be reduced in the supply chain and there to the efficiency of logistic operations. Shakti

roadlines and Logistics have a considerable drawback in this scenario comparing to the

other firms. Cost is high in this situation for ordering costs to the firm.

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CHAPTER 5

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5.1 Role of government

Several initiatives undertaken by the Government of India as well as increased IT penetration

have boosted the Indian logistics segment, which is set to grow manifold in the coming years.

The Indian logistics sector, which was pegged at US$75.19 billion in 2009, has greatly

evolved with enhancement and improvisation of logistics services. In the past, logisticswas

limited to movement of goods through rail, road and waterways from restricted number of

cities and ports. Presently, logistics services are not only restricted to the movement of goods

but have expanded to include warehousing, storage, packaging, disposal, tracking, supply

chain management and much more.

The industry has grown rapidly since the past 10 years and various drivers have contributed to

the rapid growth of the sector. Major drivers of this robust growth are initiatives undertaken

by the government, increased usage of IT, improved service offerings and organised nature of

retail and manufacturing sectors, among others.

Role of government

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The Government of India (GoI) has played a significant role in providing the right impetus

to this sector by implementing various laws and taxes. Some of the measures undertaken by

the government include:

Increase in private participation of rail freight

Setting up of special economic zones (SEZs) resulting in increased trade

Privatisation of inland container depot (ICD) for sea freight

Airport expansion with dedicated cargo terminals

Improved road infrastructure with better connectivity

Foreign direct investments (FDI) in the commercial vehicle segment leading to usage

of better quality vehicles

Revision of import duty for fast moving consumer goods (FMCG)

Bilateral agreements to promote export-import (EXIM) trade

5.2 IT penetration

IT is the other major growth driver of this sector. Currently, IT solutions are being used for

all supply chain management functions. Most of the ports use electronic data interchange

(EDI) facility for electronic transmission of data. This has lead to reduced emphasis on

manpower, thereby further optimising operational costs. Innovative logistics solutions have

enabled conventional forwarders to use newer and improved methods of transportation for

their services resulting in customer retention as well as customer acquisition.

The growth of IT hardware,FMCG and automotive sectorshas a direct relationship with the

success of the logistics business. These sectors constitute the major market for logistics

service providers generating business opportunities worldwide.

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CHAPTER 6

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6.1Company Profile

Basic Information

Company Name: Shakti RoadlinesBusiness Type: Transport contractors & commission agent

Product/Service

(We Sell):Logistic, transport .and warehouse.

Address:49/53 cavel x-lane, no.3, Ramwadi , Kalbadevi, Mumbai

-400 022Tel. 22061255,22063450.

When it comes to supply chain management, the answer is: Leadership, Innovation andQuality Solutions

What Shakti Roadlines and Logistics does:

Freight Movement

Full Truckload & Solution Providers

Contract Packaging & Other Services

Warehouse Operations (Outsourced) and Management Logistics 3PL

6.2 Shakti Roadlines & Logistics LLC Overall View:

Vision and Mission

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a. Vision

Our vision is to be the most valued freight and logistics partner in the eyes of our

clients, by providing solutions that matter!

b. Mission

We focus on international freight forwarding, transport, logistics and express solutions

and want to exceed the expectation level of our clients. Competition is healthy and

welcome, as this creates a stable and healthy relationship with our clients and our

people!

The main areas Shakti Roadlines focuses on are:

a. Customer service to a higher level.

b. Partnering to seeking the right answers.

c. Finding solutions that optimize cost and service.

d. Their Motto: How can we serve you better?

e. Analyzing every opportunity, every challenge to provide a custom solution that works

best for the customer.

Warehouses

Kolkata Office :- P-27, Nimtalla Ghat Street, Kolkata - 700006

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Ahmedabad :- City Mill Compound, Kankariya Road, Ahmedabad - 380022

Andheri :- Godown No.8 ,90 Feet Road, Krishana Nagar, Saki Naka Andheri

Aslali :- Warehouse No 1 ,Radha Krishna Estate, Nr.Parichay Hotel Asali.

Bhiwandi :-Godown No 1, Singh Warehouse, Purna Village,Bhiwandi

Narol :- 32 Shiv Shakti Estate, Narol Char Rasta ,Narol - 382405

6.3 Product category:

Shakti transport provides complete LOGISTICS AND TRANSPORTATION solutions.

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Shakti offers a truly integrated Logistics Services to its customer.

Custom Bonded-warehousing, bonded-trucking and excise bonded warehousing are

additional unique features of Shakti Roadliness offerings to complete the bouquet of total

Logistics Services.

Product range:

Shakti provides a variety of services to its customers that includes Transportation solutions,

Warehousing & Distribution Solutions, International Freight Management Logistics &

Supply Chain Solutions

6.4 Services Offered By Shakti Roadlines

Transportation solutions:

Shakti has the capability to provide Transportation of all kinds of material within India.

The broad line segmentation of Transportation Services is as below;

Domestics Transportation

Bonded Trucking

Project Transport

Scheduled Transport

Multi Modal Transport

Customized Transport (Milk Run, Hub & Spoke etc.)

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6.5 Warehousing & Distribution Solutions

The ranges of warehousing services currently offered to the customers are

following;

Bonded Warehousing (Custom bonded and excise bonded)

General Warehousing (for all industry types)

Export Stuffing warehouse

Export Vendor Consolidation

6.6 Competitors

Shakti roadlines which provides complete logistics solutions faces cut throat competition

from companies from India .with globalization at present and the realization of the huge

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amount of potential for logistics and transportation industry in India there are companies

from other countries entering into the logistics business in India.

Major competitors:

Best Roadways

Carvan Roadlines

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CHAPTER 7

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Work Report

49

WEEK

NO.

TASKS STRATEGY ACHIEVEMENTS

1 To know about company and its

policy thoroughly.

Neither formal inductionprogram nor companywebsite was in operation so I

collected the informationfrom the owner of thecompany Mr. Ashish Arora.

Successfully learnt

about company and

its policy.

2 To talk with employee andgather a info about the workprocess.

Displayed keen interest to thelearning.

prasentation was

liked and appreciated

by all.

3 To study the logistic and

transportation through internet

and magazine provided by shakti

roadlines.

Collected data from bothinternal sources (Employees)and External sources (otheroutsider).

Successfully prepared

the report on time.

4 To analyse the demand andquality of work in the market.

This is possible by talking

through customer .

Successfully

completed the task on

time.

5 To take more knowledge about

logistics and transportation, wevisited to see the warehouses.

More sharing process

between worker and me.

Successfully


time.

6 To visit Bhvandi warehouse,know how theoreticalknowledge converted intopractical application.

To know more about the

industries to get permission to

visit another division\part of

the company.

Successfully


time

7 Start to write the project. Successfully


time.


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7.2 Experiences during training

Exposure to the logistics industry.

Learning the basics in the dealings of the local transport operators

Fleet Management

Efficiency and accuracy of the firm.

Problem solving

Handling complex industry worst case scenarios

Optimizing warehouse space and accommodation of materials logisticaly

Tackling government and legal permission to approval issues

Capabilities of workers and owner to do any task from top level to ground level.

Exposure to the full range of contract logistics.

Service excellence and process strengths to deliver more to clients.

Learning during T raining

Planning & Execution.

Organize Jobs to Ensure.

Monitor Delivery Most Efficient Deadlines and Transit.

Prepare Load Plans Times.

Coordinate Transportation.

Track Daily consignments.

Prepare Bills.

Prepare Customized delivery Facility Invoices & Timely Billing.

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CHAPTER 8

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8.1 SWOT Analysis of Shakti transport

Strengths:

Strong Brand Image

Quality and reliability.

Superior performance vs. competitors in terms of delivery.

Some staff has experience of end-user sector.

Direct delivery capability.

Product innovations ongoing.

Management is committed and confident.

Willingness of staff to adapt to change

Weaknesses:

Customer lists not tested.

Paperwork

We cannot supply end-users abroad.

Need more sales staff.

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Refresher training not practiced.

Delivery-staff need training.48

Opportunities

Large, Potential Domestic and International Market

Could extend to overseas.

New specialist applications.

Could seek better supplier deals

Threats

Competition from other developing countries, especially China.

Bad roads

Retention of key staff critical.

Vulnerable to reactive attack by major competitors

Problems of logistics industry

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8.2 Problems /challenges faced by transportation industry

There are a number of problems faced by the logistics and the transportation industry

which are discussed below:

1. Cut throat competition:

The logistics and the transportation industry have been exposed to cut throat competition

from the Indian and the overseas competitors in the recent past. Due to globalization theindustry has seen entries of new companies from the overseas markets which offer

excellent services at competitive rates .though there has been a significant growth in the

sector of logistics analyst believe it is era of survival of the fittest.

2. Heavy Maintenance cost:

The logistics and the transportation industry is concerned with the movement of goods

from the place of manufacturing to the place of consumption for this it requires trucks,

trailers, low bed trailers, well bed trailers, which vary from 20 feet to 40 feet depending

upon the clients requirements. The cost incurred to maintain these modes of transports

contributes to a large amount of the total expenses incurred.

3. Changing government policies:

A changing government policies regarding transportation, octroi, freight is also one of the

major challenges faced by the logistics and the transportation industry. change in these

policies lead to increase in the total cost incurred by an organization.

4. Heavy advertisement cost:

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In order to market its product a huge amount is spent in the advertisement in business

newspapers like economics times, business standard etc in order to market its products and

make ones presence felt in todays highly competitive market.

5. Entry of foreign companies:

Due to globalization, privatization and liberalization the logistics and the transportation

sector in the recent pat has seen new companies from the overseas market entering in the

sector .This has resulted in cut throat competition which ultimately directs a company to

achieve exceptional customer experience and generating brand loyalty amongst clients

6. Increasing fuel/diesel prices:

The logistics and the transportation are primarily concerned with the movement of goods

and services from one place to another. To achieve this it requires the use of trucks, trailers

etc and to run these vehicles we require fuel. With a constant rise in fuel prices the overall

cost increases as well. Rise in fuel prices is one of the major challenges before the

transportation and logistics industry.

7. Creditors collection period:

On a number of occasions the industry provides credit facility to the clients &faces the

problem of not receiving the payment from its creditors on time .it is important to provide

credit facility to the customers and on the other hand a inappropriate credit policy can lead

to blockage and idealization of funds which in turn would hamper the organizations

success.

8. Availability of inadequate infrastructure facilities:

Availability of adequate infrastructure facilities is vital for the acceleration of the

economic development of a country .one of the greater challenges India is facing today

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perhaps is that of developing and deploying countrys infrastructure to keep pace with a

constant change that is revolving around us.

Eg. Trucks get stuck in muddy roads, work sites remain unapproachable, and serious

vehicular accidents are caused, obstruction by trees on highways while carrying goods

which are taller in nature etc.

CHAPTER 9

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9.1 Conclusions and Recommendations

Conclusion

Logistics is the one of the most important function in any business. No marketing,

manufacturing or project execution can succeed without proper logistics support.

Logistics is key in India because of the country's size, geography, population density,

natural and man-made calamities etc. The transport facilities being inadequate and the bad

roads, India lacks a well-developed road network and the waterways are still underutilized.

Due to cut throat competition, globalization and easy information availability, logistics

has gained extra importance The days are gone when a manufacturer had a better raw

material supplier than competitors. Then, the operations in a manufacturing process were

transparent. The processes are more or less standard. Also, technology is available to all.

The only area where one can score over competitors is logistics. There is gain only if

logistics cost is reduced. Logistics is a critical factor for effective marketing as well, if a

company cannot transport the right thing at the right place, then, regardless of the

marketing efforts, there is failure. Logistics is one of the areas of the supply chain that is

growing at a tremendous rate as the Internet and E-Commerce is drastically changing the

range, delivery time and the speed of information as well as ordering and payment process.

Due to the boom in information technology which is greatly influencing and enhancing the

potency of logistics, the time is not far when logistics services would prove to be one of the

major contributors to the National Income.

The industrial policies in India have compelled manufacturers to build plants in remote,

backward areas for incentives of inexpensive land and tax benefits. This poses a few very

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serious logistical problems. Apart from a poor road and transportation network, the existing

communications systems in India do not match up to the international standards. With

increased geographical distribution of incomes in India, the consumer markets are

spreading beyond the five metros of Mumbai, Delhi, Bangalore, Kolkata and Chennai.

However, rather than being pre-emptive, the companies are only following the new

distribution outlets. As such, the increased competition across the industry verticals is

forcing firms to focus on product distribution, and logistics is gaining further momentum.

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Recommendations

Market research.

To track down competition and customers in the market.

Timely supervision and maintenance of vehicles.

A dedicated supervisor to monitor the repairs and performance of fleet.

Appropriate credit policy.

Company can further enhance operations of Value Adding through proper methods.

It is observed that most of the organizations operate with other logistical providers.

Most of organizations are doing it and remaining organizations stays independent.

It is inferred that for efficient logistical activity, support from other organizations is

essential.

Tactical decisions are mostly followed by organizations followed by operational

and a few strategically.

Commenting on ease of service, website and employee efficiency, the organizationneeds to further improve.

The efficient methods for retaining customers are Phone, Email, Sales Agents and

least preferred methods are Fax and Gif.

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CHAPTER 10

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Bibliography & Webiliography

http://www.wikipedia.org/

http://managementparadise.com/

Economic Times

Exim India

Business Standard

DNA Money

Transportation Magazines

Times Shipping Journal61

analysis of transportation and logistics industry

Documents