Frost & Sullivan successfully hosted its third annual strategy workshop for the logistics sector titled 'Supply Chain Transformations 2012'. This year, the workshop focused on three critical areas of challenges faced by the the Indian logistics sector, namely, lack of collaborative logistics, multi-modal transportation, skill gaps, and human resource shortage.
On this occasion, Frost & Sullivan's Transportation & Logistics Practice released a strategic insight (whitepaper) on Collaborative Logistics. The paper reveals that there is significantly higher level of collaboration in the transportation function, as compared to other logistics functions; and the automotive industry is using collaborative logistics partnerships for cost optimization. Significant collaborative efforts are noticed in retail, pharma, and auto components industries, predominantly owing to domestic long-haul transportation requirements here. Industries unable to realize this function are unable to attain cost advantage, and face impediments in adopting systems and services that operate in peer supply chains.
The whitepaper further revealed that the three major areas that present immense opportunity for collaboration are: process improvement and efficiencies, infrastructure development, and initiatives to ensure long-term supply of skilled resources. The discussions that ensued at Frost & Sullivan's workshop concurred that collaborative efforts should be explored for logistics practices beyond regular transportation and warehousing functions, not just between peers, but also across industries, and even between the Government and logistics service providers (LSPs). It was also highlighted that when the economy is sluggish, end users are more open to experimenting with collaborative initiatives, as time required to deliver products to customers is longer, compared to when the market is at its peak.
On the occasion, V.G. Ramakrishnan, Managing Director, Frost & Sullivan - South Asia noted, "Key challenges faced by users such as safety of goods or lack of skilled resources indicate need for collaboration among LSPs and users across industries. However, less than 20 percent users across industries are willing to join hands with either LSPs or the Government in related efforts. It is vital that all stakeholders consistently dedicate time in order to ensure that progress is made in collaborative logistics. Stakeholders need to discard concerns of competitive advantage loss and realize the true potential gains of collaboration, as witnessed in the automotive industry."
The Frost & Sullivan workshop also covered skill gaps and other human resource issues in logistics and highlighted the need to create public awareness about this domain, so as to encourage youngsters toward fulfilling careers in this field. Simultaneously, industry players and logistics institutes need to address this situation and take up the challenge to find trained personnel and skill sets required to sustain the industry.
Frost & Sullivan's research on the subject found that contract employees and fresh talent hired from educational institutes have high attrition rate and jump jobs frequently. Given the interdependency and high rates of role rotation in the logistics and supply chain management domain, relationship building and adaptability skills are vital to ensure seamless logistics and supply chain integration.
Srinath Manda, Program Manager, Transportation & Logistics Practice, Frost & Sullivan, pointed out that "The immediate need of the hour for the logistics sector with regard to skill gaps and other human resource issues is to create well-defined job roles and career paths for the existing and prospective workforce and then take up promotional efforts in association with professional institutes to build a sustainable pool of appropriately-qualified workforce to meet the industry's manpower needs."
Some solutions brought forth from the workshop included a proposal to form a knowledge consortium comprising LSPs, consultants, end users and educational institutes to help develop standards for logistics education, as also a suitable curriculum to address industry needs. It was also suggested that gaining work experience should be encouraged in order to expose fresh talent to on-ground work environment.
A discussion on multimodal logistics, covered on day two of the workshop, highlighted that less than one-third of companies across most industries were currently using multimodal transportation. Engineering goods industry had highest share of users at 64 percent. Any initiative in this segment, though viable, is constrained by various disadvantages, such as non-availability of combined road, rail, and air transportation facilities. The first and last mile interchange costs defuse the cost advantages of using multiple modes; and hence, severely impact profit margins. It was opined that combination of rail and road transportation offers a more competitive first and last mile cost, when compared to combination of rail and sea transportation. Nearly half of end-user companies across most industries expressed desire that LSPs should take onus on promoting multimodal transportation services in the country.
The workshop concluded with a discussion on recommendations to help improve the current state of multimodal logistics. Recommendations included privatization of freight business in Indian Railways, formulation of a common regulatory body for all transportation modes, reduction in port-related costs, obtaining permission for foreign flag vessels to participate in coastal shipping, and removal of bottlenecks for clearance procedures in order to allow seamless inland cargo movement.
Frost & Sullivan believes that collaborative efforts are vital to drive successful multimodal logistics initiatives in the country. This collaboration has to start from infrastructure development and move to resource sharing for boosting asset utilization that will pave the way for cost and process efficiencies. Furthermore, LSPs and end users, and any other collaborating parties need to develop transparent and trust-based working relationships.
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Ravinder Kaur, Corporate Communications - South Asia, Frost & Sullivan, +91 9940141714, [email protected]
Priya George, Corporate Communications - South Asia, Frost & Sullivan, +91 9840355432 / +91 (44) 66814456, [email protected]