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Prepared by : Hardik Choksi Ankita Goyal

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We would like to take this opportunity to express our deep gratitude to all those who have offered their valuable help and time to help us complete the project. We would like to thank Prof. A.B.Raju (Project Guide) for providing us the support and guidance in the project, for providing us the necessary information and motivation to go about the project and sparing his valuable time to share his knowledge about the topic in depth. We would also like to thank IIPM Ahmedabad, who gave us this opportunity to prove our talent and provided a platform for development.

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In the competitive world of manufacturing, companies are often searching for new ways to improve their process, customer satisfaction and stay ahead in the game with their competitors. Logistics has been considered a strategy to bring these things to life for the past decade or so. This project work tries to shed some light on the basics of logistics and how logistics can be used as a management strategy. This paper points out the fundamentals of logistics and looks into what kind of decisions todays logistics managers have to take on a daily basis for the improvement of their logistics model. A growing concern has been developing to control rising global pollution, this paper also brings out some of the effects of logistics decisions on the environment and vice versa. The project starts out by compiling the works of researchers and logistics experts in the field of logistics in the theoretical background section. Through a survey conducted in a few logistics firms, a small picture of the extent to which logistics has penetrated the manufacturing world has been drawn.

Keywords: Logistics, , Logistics activities, Returns.

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This section of the paper will give the reader an idea of the fundamentals of the project. The reader will be able to get a fair idea of what this Project is all about. In the following subsections one can understand the objectives and obstacles for this project.

1.1 Background
Competition can be seen in every field these days, and the manufacturing world is now different. Companies are always looking for newer and newer opportunities and defects in the system so they can be tackled. Logistics plays an important role in any manufacturing firm, as it involves the optimal use of man, machine and material. Logistics is a small part of the company. Logistics deals with the handling of the goods that are being returned to the manufacturer by the customer. It covers all the activities that determine the fate of these returned goods. This project tries to understand the basic concepts of logistics. It tries to give an idea of how various researchers and logistics experts have defined logistics and how they have made out of it the Operational Excellencies. It also covers some basic logistics activities and how these activities affect the decisions that managers have to make on a regular basis in their company. The ever growing manufacturing world and the advent of automation has resulted in mass production and increased the number of products released into the market. This exponential growth has resulted in the overuse of the natural resources thus increasing the amount of industrial waste. This project also sheds some light on what activities in the logistics help companies to move towards the Operational Excellencies in the market.

1.2 Project Specifications

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This project gives me the opportunity to put together a study on the concept of Logistics. It also gives me the opportunity to show my skills as a Masters student, and showcase the skills that we have learnt over the past two years. This project mainly focuses on the concept of logistics and what role it plays in the manufacturing world today to bring out the excellence in business

1.2.1 Aim
The aim of this project is to understand the concept of Logistics and its potential in the various industries. It also focuses on learning different aspects of the logistics and how these aspects affect the decisions made by various firms and try to get good returns through it.

1.2.2 Problem Definition

Logistics companies tried to focus on its effects on the managerial decisions but some time it fail in the operational excellence. Researchers have found that logistics can play an important role in improving the operational part. The main focus of this thesis would be to answer the following questions:

The literature review in this paper gives a clear picture about the concept of logistics. Further the questionnaire also has been formulated so as to get clear and well defined answers. Through the literature study, interview and survey conducted with logistics and supply chain personnel at a few companies, this thesis tries to understand and analyze the concept of reverse logistics.

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1.2.3 Problem Delimitation

Logistics has been found to play an important role in almost any manufacturing firm, regardless of size, product and geographical reach of the firm. The focus initially conduct the survey and/interviews in various firms After which a quick decision was made to change the target group to the manufacturing firms in India. And by the time this decision was made there was very little time for choosing the companies and conducting survey and/or interviews. Somehow we managed to get few people from different companies to respond to the questionnaire. Also some sort of an interview was conducted through telephone calls and chatting over the internet to get a better understanding of the responses given by them. As mentioned in the problem definition this thesis will focus on understanding the knowledge of the participants with respect to logistics, and to what extent they have implemented logistics concepts within their companies and how this affects their decisions.

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2. Methodology
The methodology followed to achieve the set objectives of this project is in three parts: Secondary research, survey and interview.

2.0 Secondary Research

Secondary research was conducted through various means like internet, various articles, journals, periodicals and also the Mckinsey and KPMG reports.

2.1 The survey

A thorough literature study on the topic of this paper: Several articles were found on the topic over the internet. After getting somewhat of a fair idea about logistics, a preliminary set of questions were formulated for the survey. Companies were contacted by me us over the telephone and through email. Most of the respondents had filled the survey questions completely.

2.2 Interview
After receiving the responses to the survey for this project, interviews were conducted with the respondents to better understand their responses and also to get a better idea of their understanding of the concept of logistics. The interviews more like discussions were conducted with the respondents over the phone and through online chats. These discussions were mainly along the lines of the survey questions, since some of them had failed to answer the survey completely. Further the purpose of this project was explained to the respondents in brief, so as to give them an idea of the objectives and goals of the project. This led to open up the discussion,

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and give the respondents an opportunity to throw light on their thoughts on supply chain and logistics. Thus the results and analysis sections are based on both the survey and interviews.

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Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers' requirements rather to the customers delight. A professional working in the field of logistics management is called a logistician.

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 and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and services where they are needed or when they are desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible

Origin and Definition of Logistics: The term "logistics" originates from the ancient Greek "" ("logos""ratio, word, Calculation, reason, speech, oration"). 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 Logistikas who were responsible for financial management and distribution of supplies.

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The Oxford English dictionary defines logistics as: The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities. The American Council of Logistics Management defines logistics asthe process of planning, implementing and controlling the efficient and effective flow, and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.

c. Objective of Logistics Management: The primary objective of logistics management is to effectively and efficiently move the supply chain so as to extend the desired level of customer service at the least cost. Thus, logistics management starts with ascertaining customers needs till their fulfilment through product supplies. However, there are some definite objectives to be achieved through a proper logistics system. These can be described as follows:

1. Improving customer service: An important objective of all marketing efforts, including the physical distribution activities, is to improve the customer service. An efficient management of physical distribution can help in improving the level of customer service by developing an effective system of warehousing, quick and economic transportation, andmaintaining optimum level of inventory.

2. Rapid Response:

Rapid response is concerned with a firm's ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory. 3. Reduce total distribution costs:

The cost of physical distribution consists of various elements such as transportation,

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warehousing and inventory maintenance, and any reduction in the cost of one element may result in an increase in the cost of the other elements. Thus, the objective of the firm should be to reduce the total cost of distribution and not just the cost incurred on any one element.

4. Generating additional sales:

A firm can attract additional customers by offering better services at lowest prices. For example, by decentralizing its warehousing operations or by using economic and efficient modes of transportation, a firm can achieve larger market share. Also by avoiding the out-of stock situation, the loss of loyal customers can be arrested.

5. Creating time and place utilities:

The products are physically moved from the place of their origin to the place where they are required for consumption; they do not serve any purpose to the users. Similarly, the products have to be made available at the time they are needed for consumption.

6. Price stabilization: It can be achieved by regulating the flow of the products to the market through a judicious use of available transport facilities and compatible warehouse operations. By stocking the raw material during the period of excess supply and made available during the periods of short supply, the prices can be stabilized.

7. Quality improvement:

The long-term objective of the logistical system is to seek continuous quality improvement. Total quality management (TQM) has become a major commitment throughout all facets of industry. If a product becomes defective or if service promises are not kept, little, if any, value is added by the logistics. Logistical costs, once expended, cannot be reversed.
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8. Movement consolidation:

Consolidation one of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product, size of shipment, and distance. Many Logistical systems that feature premium service depend on high-speed, small shipment transportation. Premium transportation is typically high-cost. To reduce transportation cost. It is desirable to achieve movement consolidation.

d. Logistics Management Function

Logistics is the process of movement of goods across the supply chain of the company. This process is consist of various functions, which have to be properly managed to bring effectiveness efficiency in the supply chain of organization.

1. Order processing: The starting point of physical distribution activities is the processing of customers orders. In order to provide quicker customer service, the orders received from customers should be processed within the least possible time. Order processing includes receiving the order, recording the order, filling the order, and assembling all such orders for transportation, etc. the company and the customers benefit when these steps are carried out quickly and accurately. The error committed at this stage at times can prove to be very costly.

Order processing activity consist of the following Order checking in any deviations in agreed or negotiation terms Prices , payment and delivery terms Checking the availability in of the material stocks Production and material scheduling for storage Acknowledge the order, indicating deviation

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2. Warehousing:

Warehousing refers to the storing and assorting products in order to create time utility. The basic purpose of the warehousing activity is to arrange placement of goods, provide storage facility to store them, consolidate them with other similar products, divide them into smaller quantities and build up assortment of products. Generally, larger the number of warehouses a firm has the lesser would be the time taken in serving customers at different locations, but greater would be the cost of warehousing. Thus, the firm has to strike a balance between the cost of warehousing and the level of customer service.

Major decision in warehousing is as follow: Location of warehousing facility Number of warehousing Size of warehouse Design of the building Ownership of the warehouse

3. Inventory Management:

Linked to warehousing decisions are the inventory decisions which hold the key to success of physical distribution especially where the inventory costs may be as high 15 as 30-40 per cent (e.g., steel and automobiles). No wonder, therefore, that the new concept of Just-in-TimeInventory decision is increasingly becoming popular with a number of companies. The decision regarding level of inventory involves estimate of demand for the product. A correct estimate of the demand helps to hold proper inventory level and control the inventory costs. This is not only helps the firm in terms of the cost of inventory and supply to customers in time but also to maintain production at a consistent level. The major factors determining the inventory levels are: The firms policy regarding the customer service level, Degree of accuracy of the sales forecasts, Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs to the factory and get the products in the market. The cost inventory consists of holding cost
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(such as cost of warehousing, tied up capital and obsolescence) and replenishment cost (including the manufacturing cost).

4. Transportation:

Transportation seeks to move goods from points of production and sale to points of consumption in the quantities required at times needed and at a reasonable cost. The transportation system adds time and place utilities to the goods handled and thus, increases their economic value. To achieve these goals, transportation facilities must be adequate, regular, dependable and equitable in terms of costs and benefits of the facilities and service provided.

5. Information:

The physical distribution managers continuously need up-to-date information about inventory, transportation and warehousing. For example, in respect on inventory, information about present stock position at each location, future commitment and replenishment capabilities are constantly required. Similarly, before choosing a 16 carrier, information about the availability of various modes of transport, their costs, services and suitability for a particular product is needed. About warehousing, information with respect to space utilization, work schedules, unit load performance, etc., is required. In order to receive all the information stated above, an efficient management information system would be of immense use in controlling costs, improving services and determining the overall effectiveness of distribution. Of course, it is difficult to correctly assess the cost of physical distribution operations. But if correct information is available it can be analyzed systematically and a great deal of saving can be ensured.

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6. Facilities:

The Facilities logistics element is composed of a variety of planning activities, all of which are directed toward ensuring that all required permanent or semi permanent operating and support facilities (for instance, training, field and depot maintenance, storage, operational, and testing) are available concurrently with system fielding. Planning must be comprehensive and include the need for new construction as well as modifications to existing facilities. Facility construction can take from 5 to 7 years from concept formulation to user occupancy. It also includes studies to define and establish impacts on life cycle cost, funding requirements, facility locations and improvements, space requirements, environmental impacts, duration or frequency of use, safety and health standards requirements, and security restrictions. Also included are any utility requirements, for both fixed and mobile facilities, with emphasis on limiting requirements of scarce or unique resources.

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The Logistics Industry SNAP SHOT

Globally, the logistics industry is valued at US$ 3.5 trillion. 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. (CII)
the industry has generated employment for 45 million people in the country in

comparison with the IT and ITeS sector which employs approximately 4.3 million People. It is forecast to grow at a Compound Annual Growth Rate (CAGR) of approximately 8% over the next three to five years. (CII) Third Party Logistics (3PL) Solutions, is slated to grow at a compound annual growth rate (CAGR) of over 16% from 2007-10. Consequently, 3PL service providers are expected to corner an increased share of the Indian Logistics pie, from 6% in FY06 to 13% in FY11, at a CAGR of 25% (CII). The primary growth drivers of this industry are as under:

o Investments in the infrastructure sector amounting to US$ 350 billion: Increased efficiency and productivity of the transport system would result in lower transit times.

o Streamlining of the indirect tax structure:

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The introduction of Value Added Tax (VAT) and the proposed introduction of a singular Goods and Services Tax (GST) are 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. o Robust trade growth

Strong economic growth and liberalization have led to considerable increase in domestic and international trade volumes over the past five years. Consequently, the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions.

o Globalization of manufacturing systems

Globalization of manufacturing systems coupled with advancements in technology are increasingly compelling companies across verticals to concentrate on their core competencies and avail the cost saving potential of outsourcing. This is expected to contribute to an increase in the need for integrated logistic solutions, which is the niche of every Third Party Logistics Service (3PL Services) provider.
The industry has been valued at US$ 125 billion in 2010. (CII) A snapshot of the FDI regulations governing the industry is as under:

i. 100% FDI under the automatic route is permitted for all logistic services except

services mentioned in points ii and iii below.

ii. FDI up to 100% subject to FIPB approval is permitted for courier services.

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iii. FDI up to 49% under the automatic route is permitted for air transport services,

including air cargo services. It is pertinent to mention in this context, that Press Note 1 (2007) that is expected to be imminently notified by the DIPP proposes to increase the limit of FDI on air cargo services in 74%.
The industry has been at the receiving end of increasing interest from the private equity

sector. The year 2007 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.

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Wars have been won or lost on the strength of logistics capability or lack of it. Although quite an old concept, logistics has been becoming efficient only since the globalisation wave of the early 1990s and hence, the businesses supported by it, worldwide, have been pushed for competitive balance-sheets, providing consumers a better product/service and yet adding value to its investors. Triggering intense competition, globalisation, coupled with liberalisation, forced both private and public firms to commit themselves to making available to their customers the right material of right condition, at the right time and place at the lowest cost be it a product or a service. The World Bank, in a recent survey Connecting to Compete: Trade Logistics in the Global Economy, has developed a Logistics Performance Index (LPI) that can serve as a benchmarking tool for measuring performance of businesses along a countrys logistics supply chain. The Bank study asserts that countries that are able to connect to the global logistics web would not only have access to vast new markets but also remain a part of the global trade growth. The report avers that it is not the income of nations but their undergoing trade expansion that determines their logistics efficiency, as the survey shows that nations with increasing trade (imports and exports) to GDP emerged as the out-performers on the LPI scale relative to their income levels. It also warns that those countries whose links with the global logistics chain are weak are bound to face large and growing costs of exclusion from international trade. India trails behind China on important indices such as customs procedures, overall infrastructure quality, international shipment, logistics competence and tracking of shipments, but is ahead of the latter on the domestic logistics efficiency front. Healthy economic growth in India is increasingly supported by robust industrial growth. One of the relatively lesser known but significant sectors that support almost all industrial activity - the logistics sector - is also witnessing this growth as a follow through. However, not withstanding its importance and size (INR 4 trillion), it has traditionally not been accorded the attention it deserves as a separate sector in itself.

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The level of inefficiency in logistics activities in the country has been very high across all modes. With the evolving business environment creating a strong demand pull for quality and efficient logistics services, core issues around enabling infrastructure, regulatory environment and the fragmented nature of the industry are being overcome gradually. The required pace of efficiency and quality improvement will demand rapid development of capabilities of logistics service providers. And with logistics being a service oriented sector, skill development will emerge as a key capability while skill issues exist in varying degrees in all segments of logistics; those segments where the gaps are not only wide but also widening at a relatively fast pace. The most severe and immediate requirement for skill development is found to be in the road freight and warehousing segments. Indias spend on logistics activities - equivalent to 13 percent of its GDP is higher than that of the developed nations. The key reason for this is the relatively higher level of inefficiencies in the system, with lower average trucking speeds, higher turnaround time at ports and high cost of administrative delays being just a few of the examples. These inefficiencies have arisen over the years from a combination of a non-conducive policy environment, extensive industry fragmentation and lack of good basic infrastructure. India's indirect tax regime discouraged large centralized warehouses and led, over time, to fragmentation in the warehousing sector. At the same time, the absence of a single logistics 'champion' (whether in form of a ministry or otherwise) in the government (or industry) led to a disintegrated approach to development of the sector.
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Extensive fragmentation meant the incapacity of industry players to develop the industry as a whole and poor support infrastructure, such as roads, ports and telecom, led to a situation where the opportunity to create value is limited. However, much of this is changing with the government now demonstrating a strong commitment towards providing an enabling infrastructure and creating conducive regulations. There is significant current and planned investment in infrastructure to the tune of (INR 15 trillion) over the next few years and an increased emphasis on public-private partnership. At the same time, regulations around rationalization of tax structures and prevention of overloading for example are creating an environment of positive change. Players now ave the opportunity to leverage economies of scale, complemented with better infrastructure, to provide integrated logistics solutions which are cost effective. In addition, the evolving business landscape and increasing competition across industries, is creating the need for more efficient and reliable logistics services than what exist today For example, rapid growth of organized retail and the need to reach out to the large untapped rural markets in India are necessitating development of strong back end and front end supply networks. Fundamentally, a fragmented industry with low average scale - and consequent limited investment and market development capability - is worst placed to serve these needs. It is not surprising therefore that there is a frantic pace of consolidation and organic growth that the industry is witnessing (refer box and figure 4). While logistics service providers are struggling to keep pace with the growth, logistics service users with limited or no outsourcing are finding it
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increasingly difficult and / or undesirable to manage this non-core activity in house. The result is a wide need gap that is seemingly widening much faster than it is being filled. It is in this context that capability development of logistics service providers assumes critical importance. While rapid development across all dimensions of organizational capability will be required to achieve and sustain demand growth, logistics being a service industry, manpower capabilities assume utmost 5 importances. The sector currently employs about 40 million people, a number that will rise rapidly with exponential growth expectations in the sector. 6 A look at the financials of a set of 80 logistics companies in India across sectors reveals that manpower spends comprise 8-10 percent of overall sales of the sector. This roughly translates to about an INR 500 billion spend on logistics manpower in the country annually. Only about 13 -14 percent of the overall manpower costs are spent on non salary, manpower development items (welfare, training etc.). This share for the unorganized companies would expectedly be much less. As against this leading global logistics companies spend around 20 percent of their employee expenditure on non-salary items. This lack of focus on developing manpower and skills for the logistics sector has resulted in a significant gap in the numbers and quality of manpower in the sector. This gap, unless addressed urgently, is likely to be a key impediment in the growth of the logistics sector in India, and in consequence, could impact growth in industry and manufacturing sectors as well. This underscores the need for identifying areas where such manpower and skill gaps are critical, and developing focused action plans to improve the situation. In the next section, we analyze each segment of the Logistics sector in India to identify the skill gaps that exist in each. These gaps are then prioritized to identify key focus areas, and the action that needs to be taken to bridge the gaps.

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Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size and is the backbone of Indian Economy. Our industry is growing at a rate of 8-10% annually and has been a crucial contributor in the growth and development of the Indian economy. In the near future, Traditional Logistics services like Transportation and Warehousing would continue to growth at a good rate. However, the big ticket growth would come from the Value Added Logistics services in the near future. At present, Outsourced Logistics accounts for only one-third of the total Logistics market in India, which is a significantly lower proportion vis--vis the developed markets. Growth in this industry is currently being driven in India by over USD 300 billion worth of infrastructure investments, the phased introduction of VAT, the development of organized Retail and Agro-processing industries, along with a strong manufacturing growth. In addition, we expect strong Foreign Direct Investment inflows in the Indian markets, which would lead to increased market opportunities for providers of Third-Party Logistics in India. Therefore, India possesses substantial opportunities for growth in the Supply Chain & Logistics industry in the coming years, notwithstanding the temporary jolt due to the economic slowdown.

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In a move to cut down costs, producers are exploring around the globe in search for the lowest cost exporters/suppliers. Lured towards developing countries in south-east Asian region for lower-wages, transportation industry is stretching its reach longer than ever before. Major players are focusing overseas markets for outsourcing cheap manufacturing as well as expanding their businesses. This result in outbound logistics. And acceleration in manufacturing capacity is driving many producers to shutter superfluous plants. The rest of the plants are gaining the developing rhythm, but must export overseas now to sustain their positions in the market. Boom in the Internet based services made overseas suppliers capable to match foot with local suppliers. Web-based sales, services and supplies are emerging vertically. The expanding reach has compelled logistic industry to spur cross-border trade. Regardless-of this outbreak of activity, it is commonplace also for expert managers of local logistics to get acquainted with the complexity of international trade logistics. Global transportation and relevant services includes much complex documentation than for domestic shipments. It almost includes longer delivery times. Evaluation of the arrival times of international shipments is just a magic than solid fact. The business players always look for just-in-time shipments, thus it aspires enhanced build to order model and lot-size-of-one shipments, which results more pressure on logistics industry. Logistics industry has usually been old-fashioned traditions. Usually, the shipping personals would decide for carriers, customs agents and so on. Normally, their search doesnt go beyond the initial service providers who cover all the minimum requirements. Once the shipment kicks-off its journey towards its destination, it is really hard to assume reaching time. For example, a ship that started its journey from Asia could meet harsh weather, which may delay its reaching on the West Coast for three days. On the other hand, the trucks at the West Coast would have to wait and sat empty and ideal for the three days, which would certainly result in big loss. These kind of unpredictable losses are usual in international logistics. Thus, even the largest multi-national companies avoided logistic services on a worldwide basis. They opt to establish their operations in each country and let them to manage logistics individually. The boom in Internet services changed international logistics rapidly. At present, vendors can cater massive numbers of global shipments. Complying with this, they create and uphold substantial databases, which cover country-specific laws and regulations. Factually, thousands of
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combinations of containers, ports, and so on are likely counted for moving a shipment. International logistics vendors also maintains cost and route information on hundreds of hundreds carriers, which are operational in dozens of regions, which offers both lower freight bills and cutting of delivery times. A biggest disadvantage in international logistics is the vagueness in arrival times. Materials managers have had modest choice, so they had get around by adding more safety stocks. Thus, the costs of inventory management in the overseas parts are naturally higher. The uncertainty of delivery time is due to not tapping of international shipments closely and step by- step. This is easier said than done. However vendors are now offering tracking system, which is necessary in continuous tracking of both international logistics network, and electronic visibility in each yard and carrier. Although there is much to be done to achieve this stage, the pieces of the puzzle are gradually coming together. Even though vendors are offering a worldwide network, significantly added and dedicated, equipment is still required. For example, tracking completed products needs a yard management system, which recognizes each container in the yard and its placement. The radio frequency Identification (RFID) tags in containers, whose place is detected by antennas located in the yard. Maintaining the clear vision also needs tracking the containers as soon as they leave the yard. This tracking is possible by Global Positioning (GPS) systems and satellites, however, use of these systems are not usual at present. As a result, the industry does not provide step-by-step tracking of container. An important trend among logistics services providers would aid the industry. Logistics industry veterans unveil that logistics service providers are extending reach worldwide and expanding their services too. Regardless of understandable limitation, global logistics should obviously improve. Web-based companies and technically ground-breaking carriers such as UPS Logistics, Ryder, and others will carry on showing the way. Global logistics in near future should be distant more faultless and reasonably priced than ever.

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Size of the global logistics industry

Currently the annual logistics cost of the world is about USD 3.5 trillion. For any country, the annual logistics cost varies between 9% and 20% of the GDP, the figure for the US being about 9%. US-based Armstrong & Associates, Inc. tracks the issues and trends in the world logistics market and in the US logistics market, in particular, in their annual surveys of top 25 global LSPs. According to the firm, the global logistics market sizes in 1992, 1996 and 2000 were USD 10 billion, USD 25 billion and USD 56 billion, respectively. In 2003 and 2004, the corresponding figures were USD270 billion and USD 333 billion, registering high growth rates. Though most of the large LSPs are headquartered in Europe, the US logistics market is the largest in the world capturing one-third of the world logistics market. In 2003, it was about USD 80 billion. In 2004, it grew to USD 89 billion, and in 2005, it registered an impressive growth rate of 16% to cross the USD 100 billion mark for the first time and reach USD 103.7 billion (Foster and Armstrong, 2004, 2005, 2006). However, considering the fact that the logistics market in the US is about 10% of its annual logistics cost (Foster and Armstrong, 2006), there is still immense potential for growth of 3PL in the US in particular, and in the world in general.

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Current status and dynamics of the industry

The extant literature on the logistics industry points to a number of issues that service providers have to address, such as pricing pressures, high costs of operations and low returns on investments, hiring and retaining talent, pressure from clients to broaden the range of service offerings and internationalize operations, demand for customized solutions and more valueadded services, besides infrastructural bottlenecks and government regulations. Service providers complain that clients expect them to have the latest software, databases and ERP (Enterprise Resource Planning) packages, and invest in new technologies such as RFID and satellite-based real-time tracking systems. Clients perceive that these investments are part of the basic service package, and often do not want to match the same with increased payments for these additional services. Pressure from clients to broaden the range of service offerings and internationalize operations, has forced service providers to look for suitable alliances, mergers and acquisitions that help fill the gaps in service offerings, and industry verticals and geographic areas served, achieve economies of scale and enhance service providers capability to support international operations. Currently, the world logistics market is going through a consolidation phase. Tibbett & Britten Group of North America was acquired by Exel Logistics in August, 2004, and Deutsche Post World Net, parent company of DHL, took over Exel in December, 2005. Bax Global was taken over by Deutsche Bahn, parent company of Schenker, in November, 2005 while A. P. Mller acquired P&O Nedlloyd in February, 2006, and TNT Logistics was sold to Apollo Management L. P. in November, 2006. However, mergers and acquisitions have their own set of problems in terms of integration of two diverse business units. Carbone and Stone (2005) tracked the evolution of 20 leading European LSPs between 1998 and 2004 in terms of btheir approach to mergers, acquisitions and alliances, and found that although growth led to more coverage, integration of two different cultures was one of the most difficult challenges faced by these firms in the consolidation process. Recent trends in the logistics industry indicate that to be successful, service providers have to differentiate themselves from their competitors in terms of offering value added services, focus on key customer accounts that have the potential to generate high
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profitability for a long term, enter into suitable alliances to complement the range of services offered and geographic areas served, and sell logistics services to clients suppliers and customers, thus leading to complete supply chain integration.

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Logistics Companies of India

The land which opens up wide array of opportunities for the logistics service providers across the world is India. The high demand for the logistics services is due to the significant growth of economy. A few years back the value of the India logistics market was is $14 billion and will grow at a rate of 7-8 per cent. The logistics companies in India cater to millions of retailers and meet the requirements of about a billion people. The list below gives

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Best logistics companies in India.

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This company is a key leader in the international market in the sector of global express services. The company ensures safe and on time delivery of your documents, freight and parcels. The company offers time and day definite delivery in about 200 nations across the world. It operates 47 jet freighter aircraft and 26,000 road vehicles and has a network of 2,300 companies.


One among the acknowledged leaders among the logistics companies in India is AFL. Through its domain of logistics services, the company has delivered world class service in India. In 1979,the company introduced the first ever courier service by forming an alliance with DHL World Wide Express. The company offers services like Logistics and warehousing, Courier Company and Custom Consultant.


This company is one among the major logistics companies in India. It is a market leader globally in overland transport, air freight and international express. The company ranks No.1 in the world in contract logistics and ocean freight. The biggest logistics and express network in the world has a network in about 220 territories and ountries,72,000 vehicles,350 Aircrafts,36 hubs and 4,700 bases.

Blue Dart:

This logistics company is South Asia's top integrated express package Distribution and Courier Company. The domestic network of the company covers about 21,340 locations and provides service to 220 countries by the company's sales alliance with DHL. It provides the best
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service like Free Pick up from Your location, Regulatory Clearances, Real Time Tracking, Free Computerized Proof of Delivery etc. Gati:

The company is a key leader in the arena of express cargo delivery and a significant one in the supply chain management solutions and distribution in India since the year 1989.The company provides services like the Ware Housing, Express Cargo etc. Logistics Solutions of the company are Warehousing, Supply chain Management. The Distribution Solutions of the company are Gati Surface Express, Gati coast to coast and Gati Air Express etc.


It is one of the largest express company in India. The company offers the best and integrated logistics solutions. In 2002 the Limca Book of Records declared the company as the Largest Logistics service Provider in India. The company has a network over 550 locations in 28 states and 7 countries. It has 3000 weather proof ISO-9002 vehicles.

Ashok Leyland:

The leading provider of logistic vehicles for the India Army is this company. It is a key leader in the tractor-tailers and multi axle trucks. The company manufactures buses, trucks, engines and special application vehicles in India. It is promoting a new company called Ashley Transport Services Ltd. for exchange of information and integrated services related to logistics in order to tackle the business of freight contractors.

Agarwal Packers and Movers:

This popular Indian logistics company provides logistic services like the home shifting, car packing etc. across India. The company believes in keeping technology and people and of course
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heart and soul in the movement of the individuals respective items. The company offers quality service in transportation and packing.


The biggest Domestic Delivery Network Company is DTDC. The company offers high class delivery service in about 3700 Indian locations and 240 international places. The company dispatches about 10 million parcels in a month. It also offers low cost for bigger parcels to US, UK, India, Nepal, Dubai and other places across the world.

First Flight: This logistics company in India specializes in courier services worldwide. The multi-tracking programs of the company are Domestic, International, First Wheels, First Wings and many others. The overseas offices of the company are in Malaysia, Singapore, UK, US, UAE, Quatar, Oman.

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Which of the following logistics services do you provide?

20 18 16 14 12 10 8 6 4 6 6

19 16 14

Ocean freight forwarding LCL 15 Ocean freight forwarding FCL AIR FRIGHTENING 10 Warehousing

Cross docking
5 5 3 2 5 5 Value adding logistics (e.g. labelling, packaging, etc.) Value adding services (e.g. order management, customer / financial services) Transportation of full loads Transportation of part loads Parcel distribution Returns management OTHER



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Do you use bar-code identification on your products?

NO 40% YES NO YES 60%


How much warehousing space do you can provide

20 18 16 14 12 10 8 6 4 2 0

Floor storage m Pallet racking Pallet locations Shelf storage m Bin Storage m Other


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Do you provide any special storage requirements

NO 40% YES NO YES 60%



20 15 10 5 0

19 6 9

18 14 6 Cross docking Freight Consolidation


Pick and pack

assembly, packing & labelling,

customization any


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Are there seasonal influences in the order pattern ?

NO 23%



Do you provide express shipments?

NO 40% YES NO YES 60%


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Which all certification you have ?

20 15 10 5 0



ISO 9000,


What all is included in your business profile?

Other 5% Transportation Management 13%

Transportation Management Finished Goods Handling

Inventory Control 22%

Finished Goods Handling 32%

Raw Material Handling Inventory Control Other

Raw Material Handling 28%


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What all are the Product Characteristics for what you provide services
20 18 16 14 12 10 8 6 4 2 0 19 15 13 15 Carton Dimensions Carton Weight


Pallet Dimensions Special Handling 2 3 3 Special Storage Stackable Lot Control / Serial Number Security / Temperature Control Considerations FIFO


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Storage Information of your firm

Other 12% Carousels 8% Bulk / Floor Stack 15% Shelving 19%

Bulk / Floor Stack

Pallet Rack Flow Rack


Secure Storage 15%

Secure Storage ASRS Carousels Other

Flow Rack 9%

Pallet Rack 18%


Order Processing / Picking

Two Days 17% >Two Days 23% One Day 27%

>Two Days 1 to 4 Hours

1 to 4 Hours 33%

One Day Two Days

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Shipment that you provide

8 8 7 6 5 4 3 2 1 1 1 1 1 3

5 4

Forwarder Rail Ocean Other: LTL Truck Full Truck Integrator Will Call Other


Shipment Information

14 12 10 8 6 4 2 0 Domestic: International: Both Domestic: International: Both


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1. The logistics performance index shows the performance of country in the global logistics industry, customs, trade-related infrastructure, inland transit, logistics services, information systems, and port efficiency are all critical to whether countries can trade goods and services on time and at low cost. Here India LPI score is 3.07 and secure 39th position in the global logistics industry. As the share of Indian Logistics Industry is more than the Mexico and less than the USA, UK and Singapore witness that Indian Logistics industry is one of the growth drivers for Indian economy.

2. In the global logistics sector India at the top position among the all the low income group countries, that show that Indian Logistics sectors perform better among all the low income countries or developing countries.

3. Logistics cost contribution of India in GDP is 13 % which shows the high logistics cost of the Indian Logistics industry and also higher than the developed countries. Due to the poor infrastructure and other logistics service is not better than the developed countries like USA and Japan.

4. 3PL service providers share is less in overall industry of India as compare to Japan, USA and Europe. The third party logistics (3PL) market in India is still in a relatively nascent stage. While multinational companies in all industries have been predominant users of these services but the Indian companies are not. Also significant cost Reduction and several other benefits provided by these companies. This is also one of Reason of high cost in India. 5. Organized sector include the cost of inventory holding, transportation, warehousing, packaging, losses and related administration which shows the high logistics cost in India due to less organized sectors. But organized sectors are well established in Japan, USA and Europe also one of the reasons to low logistics cost. 6. Major sectors investment in Indian Logistics industries are Aviation, Metal & Mining and consumer durable. Among these sectors share of Aviation sector is higher due to increasing international business in India also cost of transportation is higher, fast and safe for overseas movement of goods. 7. Now 3PL service providers are start investment in India to reduce the logistics cost which include both domestic and international companies. Shreyas Shipping and Logistics is investing high as compare to the DHL, TNT and Gati. This shows that trend of 3PL providers is increased in India. 8. Revenue generated from 3PL providers increase the Indian economy and also the percentage growth the revenue increased continuously from 2005 to 2008. According to Planning
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Commission India this is growth continuous and it reached to $3556 million till 2012 is estimated. 9. Logistics industry also improves the performance of other industries in India as these are auto, IT and pharmaceutical industries that shows high growth rate. Logistics grow with 810 % rate between 2002- 2007 implies that improvement in the supply chain of the other industries in India 10.Logistics cost play an important role for the growth of industry. Logistics cost contribute to sale indicate importance of logistics in different industries. As logistics cost share in sale of cement industry higher than other industries shows it play an important role in sale. 11.Different transportation modes in India also improved with the increase in the international market. Among the different modes of transportation maximum road is used most preferred mode of transportation due maximum area cover by the roads as compare to other modes of transportation. But maximum growth is shown by the rail and sea as compare to the road and air. 12. Road is use maximum for the movements of goods in India due better area coverage of road as compare to the other modes of transportation and also the economic and faster some time due to that road is preferred first and maximum for the movement of goods in India, this shows the continuously improvement in roads freight in India. 13. Rail freight also increase with the improvement of logistics industry in India due to less cost as compare to the other modes of transportation and also growth of the infrastructure of the railways. 14.Sea freight also shows the improvement due to better movement for the overseas movement of goods and also least cost incur when shipping of goods by sea but it takes more time and less safe than the air modes. 15.Air mode of transportation is help in both the domestic and international movement of goods as it incur high cost but this is safe and fastest modes of transportation than the others modes. Air mode of transportation is used maximum for the overseas movement as compare to the domestic therefore growth in air mode of transportation higher in international level as compare to the domestic. 16.Cargo movement also witnesses the choice of the transportation mode in India movement of cargo by road is maximum than other modes. But sea and air mode shows the least percentage for the cargo movement due to less share of India in the International market as compare to the domestic.

17.Growth of container volume represents the increasing share of the Indian logistics industry in International market as it is grow continuously from year to years. Road transportation is currently the most dominant form of transportation with more than half of the goods in the country being moved by road. Almost every mode of transportation in India is fraught with
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inefficiencies. For instance, ports that are vital for foreign tradehave very high turnaround times when compared with statistics for other countries. Similarly, the railways, which were a popular mode for freight transportation (especially the movement of bulk goods), have lost ground to road transportation due to limited access to smaller towns. Air, on the other hand, is a costly mode and its use is restricted to courier shipments. It is rarely used for bulk transportation 18.Industrial cluster in India can be dividing into four economic zones based on the concentration of the key industries like pharmaceutical, auto, textiles, machinery and electronic goods. West zone is show high attractiveness due most prominent destination for the Logistics industry. Also upsurge in the retail sector along with the fact that has several industrial clusters of industries.

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Indian Logistics industry is continuously improving its performance in the global logistics industry by improvement of customs, trade-related infrastructure, inland transit, logistics services, information systems, and port efficiency help to provide trade goods and ervices on time and at low cost. The World Bank's 2007th Global Logistics Report ranks India 39 amongst 150 countries in terms of logistics performance during the year as well as its future potential. Indian Logistics industry has low performance than developed countries like USA, UK and Singapore in global logistics sectors due inefficiency in logistics services and highest among the low-income group countries. India spend in Logistics activities equivalent to 13 % of its GDP is higher than that of developed countries. The key reason is the relatively high level of inefficiency in the system with lower average trucking speeds, higher turnaround time at ports and high cost of administrative delays. 3PL service provider share is less in logistics sector in India as compare to developed countries and still at the nascent stage. Multinational companies in all industries have been predominant users of this service as one of reason for lesser share 3PL in India. Also in India organised sector not well established as compare to developed nation this contain cost of inventory holding, transportation, warehousing, packaging, loss and related to administration is higher. In Indian logistics sector major sector investors are Aviation, Metal & Mining and Consumer Durable.

Also logistics industry in India improves the performance of other industries year to year and share of logistics cost in sale also important which is maximum in cement sector. Transportation modes grow with of domestic and international market and in India road better mode of transportation because of well infrastructure of roads in India as compare to other mode like water, rail and sea. Road freight in India grows with increase of domestic and international trade also large area coverage. Railway freight also increases due low freight as compare to road but cover some of area and better for long distance movement of goods. Sea freight also increase better for overseas movement of goods at low cost as compare to air but consume more time as compare to air. Air mode of transportation is also helps in both domestic and international movement of goods but for international movement is more as compare to the domestic due to the higher cost, safe and faster way as compare to others modes.

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Scheduling of service time point of arrival and departure of rails, ships and plane has great scope for improvement. They never run on time and require national discipline. Legal system is not in keeping with the modern outlook of life and business. The laws are out mode and require comprehensive amendments. The laws are infect remnant of British Rule and provision contained therein do not meet the requirements of modern and complex international trade. It augurs well observing development of national and selected state highways for faster movement of traffic. It is response to free trade regime being speedily established under the compulsive auspicious of WTO in the interest of humanity. It is hoped that the implementation of the gargantuan project would be on schedule or at least without much time cost overrun. The system and procedure obtaining in government department are incontinent, time consuming and not at all business centric. The official are trained as ever in manage development. There should be time to bound programme of simplify procedure and format. Logistics development is absolutely necessary. In the absence of flow less and latest logistics, the MNCs shy away from doing business in India. There is need to increase FDI in logistics sphere and relaxing of norms relating to entry, taxation, import of material handling and movement of equipment etc. At present agriculture contribute nearly 25 % to Indian economy (GDP) and also require development of warehouse sector. This service sector has good prospects of equipping top place in services of diverse types.

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A level-wise look at skill development required

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Taking a level-wise view of skill issues, these can be broadly classified as follows: 1. Skills required at the Operational level: As the industry matures, the level of specialization and sophistication will inevitably increase. For instance, truck drivers for trucks carrying liquids / bulk would need to have specialized knowledge different from the current stock of drivers; technological advancement will require that the operational manpower interfacing with systems is adequately trained to operate the systems. Skill development at this level would hence be defined by the need to a. build deeper skills in specific areas b. address increasing requirement of the numbers of specialize workers in the shortest possible time c. have defined standards for skill levels across workers

2. Skills required at the Middle and senior levels:

As the industry consolidates horizontally and integrates vertically, the breadth of skills required at the middle and senior levels will increase. For instance, middle and senior management in a courier company moving into the full fledged 3PL logistics business would need to be able to develop skills for managing a different type of business. In addition, increasing levels of competition will require sharper business acumen in developing strategies for sustainable differentiation at the senior most management levels. Skill development at this level would hence be defined by the need to a. develop new skills for managing a new business line b. enhance strategic / conceptual skills c. ensure continuous updation of knowledge of industry developments
3. Skills required for transitioning from one level to another:

Given the manpower crunch not just in the logistics industry but across most industries as a manifestation of the healthy growth in them, the first step in plugging gaps ought to come from training / up skilling existing manpower well-versed with industry practices before external resource generation is considered. This means that effective transition from operations / front line skills to middle management and from middle management to senior management is indispensable. Skill development at this level would hence be defined by the need to: a. develop entrepreneurial and managerial skills b. leverage existing core logistics skills in transitioning from operational to management and from management to entrepreneurial levels Thus this were the Suggestions and Recommendations from our side.
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LIMITATION OF STUDY The study is based on the survey that are limited upto only 9 respondent and secondary data published in newspapers, books and journals of the researchers. Sometimes data which is published by the researchers cannot analyse fresh situation means old data and wrong data is collected by inherent error.

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1. Vinod

V. Sople (2007) Logistics Management Pearson Publication; pp

2 to 13. 2. Donald J. Bowersox & David J. Closs (2007) Logistics Management Tata McGraw-Hill Publication; pp 3 to 20 3. Skill Gap in Indian Logistics Sector (2007) published by CII and KPMG 4. Trade Logistics In Global Economy (2007) report by World Bank. 5. Indian Logistics Industry (2008) published by Cushman & Wakefield Mckinseys Report

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We the student of IIPM, conducting the research on EMERGENCE OF LOGISTICS BUSINESS IN THE RECENT PAST AND ITS POTENTIAL. All the information taken here by is only for academic purpose and is not going to be disclosed. Thank you for your co-operation.

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1. Which of the following logistics services do you provide? o o o o o o o o o o o o o Ocean freight forwarding; Consolidation services (LCL) Ocean freight forwarding; Full container loads (FCL) Air freight forwarding Warehousing Cross docking Value adding logistics (e.g. labelling, packaging, etc.) Value adding services (e.g. order management, customer / financial services) Transportation of full loads Transportation of part loads Parcel distribution Returns management Other, (Please describe).....................................

2. Do you use bar-code identification on your products? o o Yes no

3. How much warehousing space do you can provide (Total warehousing space required m) o Floor storage m o Pallet racking Pallet locations o Shelf storage m o Bin Storage m o Other

4. Do you provide any special storage requirements o o Yes No

5. V.A.S o o o o o o Cross docking Freight Consolidation Pick and pack assembly, packing & labelling, customization any

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6. Are there seasonal influences in the order pattern o o Yes No

7. Do you provide express shipments o o Yes No

8. Which all certification you have ? o o o ISO 9000, TAPA, Hazardous goods

9. What all is included in your business profile o o o o o Transportation Management Finished Goods Handling Raw Material Handling Inventory Control Other

10. What all are the Product Characteristics for what you provide services o o o o o o o o o o Carton Dimensions Carton Weight Pallet Dimensions Special Handling Special Storage Stackable Lot Control / Serial Number Security / Temperature Control Considerations FIFO

11. Storage Information of your firm o o o o Shelving Bulk / Floor Stack Pallet Rack Flow Rack

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o o o o

Secure Storage ASRS Carousels Other

12. Order Processing / Picking o >Two Days o 1 to 4 Hours o One Day o Two Days 13. Shipment that you provide o o o o o o o o o Forwarder Rail Ocean Other: LTL Truck Full Truck Integrator Will Call Other

14. Shipment Information o o o Domestic: International: Both

15. Rank the below mention areas in scale of 1 to 7 where 1 is are most important to Improve? o o o o o o o Reliability Availability Transit On-time Expense Customer service Supply Chain Visibility

16. Please identify area(s) in which you have experienced in? o o o o o Analysis of routing and mode of transportation Space booking with carriers Preparation, elaboration and submission of trade documents in compliance with customs Clearing of goods through customs Import/export insurance arrangement

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Payment arrangement with bank

17. What industry type(s) of goods do you generally handle? o Automotive o Chemical o Computer hardware and software o Construction o Drugs/pharmaceutical o Electronic related products o Energy and utilities o Food stuff o Other 18. How often each importing shipment is inspected? o o o o Routinely On a random basis Selectively based on a risk analysis Other

19. On a selective inspection please indicate? o o The percentage in which a shipment is electronically scanned The percentage in which a shipment is physically inspected

20. What all specialized services you provide o o o o Bulk Tank Hazardous material Refrigerated Goods o Other 21. Time constrained Services in your firm. o o o o o JIT Overtime Same day Shipment Tracing

22. Warehousing and distribution o Public warehouse o Regional Warehouse o Contract warehouse
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23. Technology you use in operation o o o o Bar-coding Radio Frequency VMI Other

24. IT support used by your Firm o Yes / no o Logistics information system and other software o Web based solution

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