INDUSTRIAL AWARENESS REPORT

on
TRANSPORT: LOGISTICS
submitted in partial fulfillment of the
requirements for the award of

Master of Business Administrative

NNN
submitted By
Group 1, Section B

Aakriti Kanyal (2019PGP520, +91-9015455777)

Ashish Bhiwapurkar (2019PGP086, +91-8655404038)
Fareen, (2019PGP144, +91-9716507886)
Manik Thakar (2016IPM, +91-9910535957)
Pushkar Pachpor (2019PGP321, +91-9022318005)
Raj Patel (2019PGP483, +91-9920088187)
Rituparna De (2019PGP342, +91-8617251032)

under the guidance of

Prof. Abhishek Mishra

(Associate Professor, Indian Institute of Management-Indore)
 EXECUTIVE SUMMARY

Logistics management is that part of the supply chain process that plans, implements, and
controls the efficient, effective flow and storage of goods, services, and related information from
the point of origin to the point of consumption in order to meet customers’ requirements. The
management of logistics can encompass the following business functions Inbound transportation,
Fleet management, Order fulfillment, Demand planning and Inventory management. Logistics also
helps in efficiently purchase, transportation, and storage of raw material. Coordinating resources
to allow for timely delivery and use of materials can make or break a company. The Indian logistics
sector is one the fast-growing sectors. According to the domestic rating agency ICRA, Indian
logistics sector is expected to grow at a rate 8-10 per cent. Last five years, the industry was growing
at compound annual growth rate (CAGR) of 7.8%.

Earlier, logistics was thought of in military terms. It had to do with procurement,

maintenance, and transportation of military facilities, materiel, and personnel. Although a few
authors before this time began talking about trading one cost for another, such as transportation
costs with inventory costs, and discussed the benefits to the firm of getting the right goods to the
right place at the right time, the organization within the typical firm around the activities currently
associated with logistics was fragmented. Logistics is now being viewed as a subset of supply
chain management. The scope of logistics is being limited to the boundaries of the function within
a firm and is primarily concerned with activity administration, which was not the early view. Inter-
functional and interorganizational management seem to be within the purview of supply chain
management rather than logistics. Logistics, as an identifying name, supersedes physical
distribution. According to a McKinsey & Company study by the year 2020, 80% of the goods in
the world will be manufactured in a country different from where they are consumed. The logistics
industry is going through an unprecedented and rapid transformation, paving the way for
innovation and upheaval in the near future. A myriad of emerging technologies are shaping the
future of logistics.

Under the dynamic business environment, there exits many new strategic and operational
challenges. The extent to which these challenges affect the logistics of business scenario varies
from industry to industry. The logistics sector is the backbone of an economy and it is critical for
the Indian perspective. In the last couple of decades, with the growth in the economy, the logistics
sector has expanded as well. Digital innovation enables logistics players to drive efficiency and
lower costs, as well as pursue new business opportunities. This transformation is leading to a
new paradigm called ‘Logistics 4.0’. Technology and also the level of the sophistication in
applying the technology for competitive benefits have long been recognized because the key
strategic challenges in provision management.
 TABLE OF CONTENT

Sr. Title Page No.

No

1. Executive Summary -

2. Introduction to Logistics 1

3. Traditional Logistic Processes 4

4. Future Trends 7

5. Major Players 8

6. Challenges with the Current Scenario 9

7. Technology and Logistics in India 10

8. Future Scope of Logistics in Industrial Revolution 4 13

9. References 15
 INTRODUCTION TO LOGISTICS

1.1 What is Logistics?

Logistics is defined as the process of coordinating and moving resources from one location to
storage at the desired location. Resources can be people, materials, inventory, and equipment.

Definition by Council of Logistics Management, USA:

“Logistics management is that part of the supply chain process that plans, implements, and controls
the efficient, effective flow and storage of goods, services, and related information from the point
of origin to the point of consumption in order to meet customers’ requirements.”

The CSCMP also defines logistics management as -

“[The] part of supply chain management that plans, implements, and controls the efficient,
effective forward and reverses flow and storage of goods, services and related information between
the point of origin and the point of consumption in order to meet customers’ requirement. Logistics
management is an integrating function, which coordinates and optimizes all logistics activities, as
well as integrates logistics activities with other functions including
marketing, sales manufacturing, finance, and information technology.” (CSCMP 2011)

Fig A: Definition of Logistics

1.2 Logistics v/s Supply Chain Management

Logistics refers to what happens within one company. It involves the purchase and delivery of raw
materials, packaging, shipment, and transportation of goods to distributors.
Supply chain management deals with a larger network of outside organizations. It requires
different networker to work together to supply products & services to customers. Different
networkers can be vendors, call centers, warehouse providers, transportation providers etc.

1.3 Logistics Component

The management of logistics can encompass some or all of the following business functions.
Different types of business functions are mentioned below:

 Inbound transportation
 Fleet management
 Order fulfillment
 Demand planning
 Outbound transportation
 Warehousing
 Inventory management
 Materials handling

Fig B: Big picture of Logistic activities

1.4 Why is Logistics important?

From business point of view: All the businesses either small or large scale, are focused to generate
revenue by providing services to customer and satisfying the customer needs in form of products
and services. What would happen if products are ready but cannot reach customers? Surely,
business will see a downfall and loss. That’s why we need logistics to fill the gap.
Logistics also helps in efficiently purchase, transportation, and storage of raw material.
Coordinating resources to allow for on time delivery and use of materials can either make or break
a company.

From customer point of view: If products cannot be reached to customer in a timely manner,
customer satisfaction can drop, as a result negative impact on a company’s profitability and long-
term viability.

Logistics is beneficial to both customer and business.

1.5 Contribution to Economy

The Indian logistics sector is one the fastest growing sectors. Domestic rating agency ICRA
reported that Indian logistics sector is expected to grow at a rate 8-10 per cent. Last five years, the
industry was growing at compound annual growth rate (CAGR) of 7.8 per cent .The logistics
industry of India is currently estimated to be around US$ 160 billion. As per the Economic Survey
2017-18, logistics industry of India is expected to have US$ 215 billion over the next two years
because of implementation of GST in the sector.

Global Ranking of the World Bank's 2016 stated India bounced to 35th position in 2016 from 54th
position in 2014 regarding overall logistics performance (Logistics Performance Index). This is
jump clearly indicates the growth of the sector. The experts forecast that it can be the biggest job
creator by 2022.
More than 22 million people in India are currently employed because of this sector. The report
also highlights that improving this sector would result in a 10% decrease in indirect cost which
would result in leading the growth of 5-8% in exports.

The Indian government has announced that policy related to new logistics plan set up in the country
is in progress. By 2035, this would create the most cost-effective method to transport goods. The
policy aims at preparing a holistic logistics plan. Newly formed division for logistics is working
on this national integrated plan, with the objective to identify and iron out any existing bottlenecks
and gaps in the industry. New logistics division is inside the department of commerce. This would
encourage tech-enabled startups in the logistics sector as they will be able to provide seamless
movement of goods across the country.
 TRADITIONAL LOGISTIC PROCESSES

The traditional logistics flow is defined by the Council of Supply Chain Management Professionals
glossary, as:
“The process of planning, implementing, and controlling the efficient, cost effective flow of raw
materials, in-process inventory, finished goods and related information from the point of origin to
the point of consumption for the purpose of conforming to customer requirements”.

Before the 1950s, logistics and supply chain was thought of only in military terms. It consists of
procurement, maintenance, and transportation of military facilities and various equipment. The
organization, on the other hand, currently associated with logistics was fragmented. Figure 1 shows
how a firm organized key activities at that time in terms of the responsibilities and objectives for
marketing and production. This fragmentation creates conflicts among those responsible for
logistics activities leading to, from the firm's perspective, costs and customer service were sub-
optimized. The reasons for fragmentation were said to be:
 Poor understanding of key cost tradeoffs
 The Rigidness of traditions and conventions
 More importance given to areas other than logistic
 Evolutionary state of an organization

Later, it was learned that there are benefits to eliminating the fragmentation such that (1) it
encourages important tradeoffs to occur that can lower total costs, (2) it focuses on an important,
defined area by top management, and (3) it sets the structure within which control can take place.
The study regarding distribution and logistics emerged in the 1960s and 1970s. Logistics costs
were high that time. Physical distribution along with outbound orientation was first to emerge,
since it is about two thirds of logistics costs and it regarded as component of the marketing mix
(product, place or physical distribution, promotion, and price) of essential elements. It was
followed by business logistics, with its broader scope that includes inbound movement.
There is a very little difference when comparing the early vision of physical distribution and
logistics with the current one for supply chain management. For example, the definition in 1962
offered by Smokey et al. (Smokey et al., 1962) was:
"Physical distribution can be broadly defined as that area of business management responsible for
the movement of raw materials and finished products and the development of movement systems."

Recently, the Council of Supply Chain Management Professionals (CSCMP), which is the premier
organization of supply chain practitioners, researchers, and academics, has defined supply chain
management as:
“Supply Chain Management encompasses the planning and management of all activities involved
in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it
also includes coordination and collaboration with channel partners, which can be suppliers,
intermediaries, third-party service providers, and customers. In essence, Supply Chain
Management integrates supply and demand management within and across companies.”
Nowadays, SCM is looked as “managing product flows across multiple enterprises (see Figure 4)
whereas logistics is seen as managing the product flow activities just within the firm. This is a
deviation from the view that the early visionaries had for logistics.”

Logistics is now being viewed as a subset of supply chain management. Inter-functional and
interorganizational management seem to be within the purview of supply chain management rather
than logistics. Logistics, as an identifying name, supersedes physical distribution.
The most likely place for SCM to occur is between the firm and its first-tier suppliers. Currently,
SCM is practiced as logistics and not the broad, theoretical scope envisioned for it. Although
supply chain management promotes coordination, integration, relationship building, and
collaboration throughout the entire supply channel, SCM currently takes place to a very limited
degree. Perhaps managers will begin to practice SCM when its benefits are better documented and
measured, and the techniques and tools needed to achieve the benefits are refined.
 FUTURE TRENDS

According to a McKinsey & Company study "By the year 2020, 80% of the goods in the world
will be manufactured in a country different from where they are consumed.”
The logistics industry is going through an unprecedented and rapid transformation, paving the way
for innovation and upheaval in the near future. A myriad of emerging technologies are shaping the
future of logistics. Here’s a brief evaluation of a few emerging technologies bound to influence
the future of logistics.
 MAJOR PLAYERS

The global logistics market presently produces revenues worth $8 trillion every year and has over
10% share in the global GDP. The Indian logistics industry market is formed after taking into
account the revenue of all the organized logistics companies in India, which is forecasted to surpass
$210 billion by the end of 2022, at a healthy CAGR of more than 10% compared to the present
revenue of over $150 billion in 2017, including the top courier companies in India.

The Indian logistics industry currently generates employment to over 22 million people in India
as the industry has grown at a CAGR of over 7% in the past five years.

The major players in the market include:

1. Rivigo – It boasts of a large network of owned trucks. They claim to be building the material
movement pipeline of India i.e. are establishing themselves as the creator of the logistics chain
which is faster and safe at a cheaper cost.

2. 4tigo – It is a platform which brings together all stakeholders in the process, right from fleet
owners and individual single-truck owners to the agents and transporters involved in the process
to the transport companies. By creating this platform, they are able to match the demand and supply
situations of trucks. This is important especially because in many cases logistics systems are not
utilized efficiently because there is no return or onward load. This platform would solve that issue.
The participants put up their availabilities on the platform which are shown to the people
demanding loads and the buyer can choose which option to go for based on time and price
expectation for their destination. It also covers the cost for en route payments and offers emergency
funds for drivers though an ATM card. They are additionally creating a payments platform which
is expected to facilitate the business of small- and medium- sized fleet owners. This has gained
precedence in the aftermath of the Goods and Sales Tax Network introduction which has made life
difficult for small users since the documentation involved can be tricky and complex for someone
who is not familiar with the terms and processes.

3. Elastic Run – They run a service-driven model, by keeping themselves asset-light and focus on
their app to run a logistics and distribution company. It offers supply chain services and claims
that they enable customers to prevent capital expenditure by not needing to develop a fixed-assets
logistical setup. This allows their consumers to focus on the actual operations and productions on
their own brands and core products rather than needing to worry about concerns of variations in
demand and supply. Its eventual aim is to gather vendors and space providers on its platform which
will help it create a virtual logistics network for the clients.

4. Allcargo Logistics Ltd – All cargo Logistics Ltd was founded in the year 1993 in Mumbai. It
is one of the top 10 logistics companies in India. It is offering multi modal transportation services.
This leading logistics firm headquartered in India and the part of Avvashya Group. It offers a
different range of multi modal transport services includes less than container load, non-vessel-
operating common carrier, and full container load.
5. Blue Dart Express Ltd – Blue Dart Express Ltd was established in the year 1994 and is
headquartered in Chennai, Tamil Nadu, India. It is one of the top 10 logistics companies in India.
It is South Asia’s premier courier and integrated express package distribution company. It is one
of the leading global brands. The company is voted as a super brand for 9th consecutive year.

6. Transport Corporation of India Ltd – Transport Corporation of India Ltd was founded in the
year 1958. It is headquartered in Gurgaon, Haryana. Transport Corporation of India Limited is an
integrated multi-modal logistics and supply chain solutions provider in India with a Global
presence, headquartered in Gurugram, Haryana, India.
 CHALLENGES WITH THE CURRENT SCENARIO

Under the dynamic business environment, there exits many new strategic and operational
challenges. There are at least four key strategic hurdles that will have the long-term impact on the
management process viz Market, Technology, Resource, Time. Following are challenges faced
with regards to logistics in an organization:

5.1 Market

Continuing demand volatility across the planet market has hampered several provide chains’
ability to manage the responsiveness effectively. Demand fluctuations at the patron market level
poses a heavy challenge to the asset’s configuration of provide chain, capability synchronization,
and lead-time management. The event of internet-based distribution channels and alternative
mobile promoting medias has created it implausibly easier for shoppers to change their usual
brands.

5.2 Technological

Technology and also the level of the sophistication in applying the technology for competitive
benefits have long been recognized because the key strategic challenges in provision management.
The key strategic challenges inside technological dimension area unit:

 The globally evolved technology development systems have created a replacement breed
of elite because the world technology leaders across completely different industries. They
capture the primary mover benefits and created the entry barriers for new comers.
 The second challenge comes from its tumultuous power. Shoppers are typically not
therefore desirous to get the ideas; they will not be therefore convinced that the worth the
technology created or the prices it additional in.
5.3 Resource
From resource-based perspective, international provide chain development is each motivated by
dinging new resources around world and by create higher use of its own already non heritable
resources to yield economic outputs. The term resource during this context suggests that any
strategically necessary resources, together with monetary resource, manpower resource,
intellectual resource, natural material resources, infrastructure and plus connected resources, then
forth.

5.4 Time

Most of the key world provide chain challenges area unit time connected, and it seems to be that
they're turning into even longer connected than ever before. provided that everything else is equal;
the variations on time may build or break a provide chain. once the new market chance emerges,
it's sometimes the one UN agency gets into the market initial reaps the most important benefits.
 TECHNOLOGY AND LOGISTICS IN INDIA

The logistics sector is the backbone of an economy and it is critical for the Indian perspective. In
the last couple of decades, with the growth in the economy, the logistics sector has expanded as
well. However, this expansion has been haphazard and has caused multiple issues in the situation
primarily it being unorganized and having poor infrastructure resulting in high costs. Regulatory
hurdles have only worsened the issue and made it difficult for companies to prosper in the absence
of a well-developed structure. The government is continuously changing the rules for public
transportation vehicles, in terms of a requirement to have Telematics devices installed. They have
brought about these changes through the AIS-140 and the same requirements are expected to
trickle down into the commercial transportation and logistics industry as well.

6.1 Enterprise Resource Planning (ERP)

ERP is one in every of the primary solutions adopted by the provision business for the automation
of backend operations and therefore the facilitation of seamless communication across
offices/departments. It provides associate integrated and endlessly updated read of core business
processes and tracks business resources (cash, raw materials etc.) and commitments (purchase
orders, payroll etc.). By facilitating info flow and information management across business
functions/departments within the provision sector, it's competed a serious role in making certain
economical provide chain management and synchronizing provide with demand to bolster the
capabilities of the provision domain.

6.2 Electronic Data Interchange (EDI)

EDI facilitates electronic exchange of

business information/documents in an
exceedingly standardized format across
supplying firms. The EDI software system
eliminates the manual steps concerned
within the exchange of purchase orders
associated invoices by making an electronic
version of the acquisition order and
automating its transfer to the provider long.
this permits transportation and supplying
firms that ar EDI compliant to relishes seamless electronic communications with all the parties
within the offer chain method.

6.3 Application Programming Interface (API)

APIs provide managed associate degreed controlled access to an organization’s assets like its
knowledge and services. API make sure that all stakeholders within the cargo area unit informed
regarding the location of the product. Within the supplying sector, API have created it attainable
to trace the carrier in real time through the driver’s smartphone or pill. By eliminating the extra
steps of integration of chase or communication devices, API have expedited bigger operational
potency, visibility and quality within the supplying trade.

6.4 GPS-enabled fleet management system

Satellite positioning system or GPS allows fleet management professionals to effectively manage
their vehicles, personnel and instrumentation. With fleet pursuit, a fleet manager will get real time
updates on all its vehicles, get an estimate of traffic on the route, and calculate delivery time
accurately. Its ability to revise routing supported time period data concerning traffic patterns and
weather has reduced maintenance prices and delivery time, thereby increasing the potency of
provision firms. It ensures that merchandise safely reach the correct place at the correct time within
the most cost-efficient approach, that is crucial in today’s competitive business landscape.

6.5 Blockchain

This is expected to be one of the most revolutionary aspects and is expected to transform the entire
Supply Chain. Business networks can be strengthened using block chain, through the creation of
database-cantered applications. This is an extension to the current database applications in use, as
block chain will allow extension of database services from one organization to a network of clients,
hosts, OEMs, regulators, and so on. Block chain can further allow creation of a synchronized
ledger that hosts shared information from parties performing transactions at various stages of the
logistics chain. Linked to this, the chains that share information across organizations would allow
the revelation of “immutable records”, which, in SCM, are often necessary in order to clear off
any miscommunications or such instances.
6.6 Telematics Devices

These are Internet of Things driven devices installed in most vehicles. Apart from GPS tracking
they also enable the owners to keep track of a multitude of data. This generated data can be
analyzed to be able to determine optimum allocation and utilization. It has allowed reducing
maintenance costs and delivery times and dynamically changing routes based on real-time weather
and traffic predictions. Firms will be able to keep a track of their vehicles, and even check basic
items such as when the engine was switched on at what location, at what fuel efficiency the vehicle
is operating at and so on. It will help to deal with erratic drivers and confirm veracity of their
stories and prevent pilferage. It also helps in insurance matters as to the usage of the vehicle and
provides accident reports as to what actually took place.
 FUTURE SCOPE OF LOGISTICS IN INDUSTRIAL REVOLUTION 4

Digital innovation permits supply players to drive potency and lower prices, also as pursue new
business opportunities. This transformation is resulting in a brand-new paradigm known as
“Logistics 4.0,” that relies on four key trends:

7.1 Data automation and transparency

Data has invariably been at the center of supply, and new advances in knowledge assortment
and analysis provide the chance for corporations to raised meet their goals:

 Strategically, such as by optimizing their route networks

 Tactically, such as by optimizing the no of trucks and drivers required each day
 Operationally, such as by tracking deliveries in real time

7.2 New methods of physical transportation

Driverless vehicles, handling robots and drone’s area unit already operational and showing
money edges to the businesses that have adopted them.

7.3 Digital platforms

By sectionalize the sharing of capital expenses around areas like warehouses and fleets, digital
platforms represent the largest disruption to the arena, because:

 It permits new, capex-free actors to enter the system

 It exposes new business-model opportunities

The platform model ends up in a race for size, usually leading to either a “winner-takes-all”
model, or a minimum of a awfully focused market crowdsourcing-based business models area
unit still rising. However, initial initiatives, like DHL My ways in which, that permits anyone
to hold out last-mile deliveries, open up the arena to new, tumultuous models.

7.4 New production methods

Techniques like 3D printing and additive producing have the potential to vary ancient supply,
sectionalize new, suburbanized business models. for instance, the necessity for transportation
of specific product can be replaced by on-the-scene 3D printing, in some cases. This creates the
chance for contract supply suppliers to integrate 3D printing services into their offerings,
providing last-mile customization.
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