Logistics and Its Problems in India

Logistics And Its
Problems In India
Submitted By: Group L
Difference between supply chain

management and logistics
Supply chain management(SCM) is themanagementof
the flow of goods and services. It includes the movement
and storage of raw materials, work-in-process inventory,
and finished goods from point of origin to point of
consumption
Logisticsis the management of the flow of things
between the point of origin and the point of consumption
in order to meet requirements of customers or
corporations
Principles of supply chain management
Segment customers based on service needs

Customize the Supply Chain Management network
Listen to signals of market demand and plan accordingly
Differentiate product closer to the customer
Strategically manage the sources of supply
Develop a supply-chain-wide technology strategy
Adopt channel-spanning performance measures
Trends in Logistics Sector

The logistics market in India was esteemed at 5.6 trillion in 2010 and is
gauge to develop at CAGR of more than eight for each penny
throughout the following five years.
World Bank has positioned India 47th among 150 nations, as far as
logistics execution in 2010 and its potential later on.
It is figure to become every year at a rate of 15 to 20% to reach 17
trillion by 2015.
Then again, logistics costs in India constitute around 13 to 14% of its
GDP against seven to eight for each penny being spent by created
nations, for example, the US, Japan and other European nations
Reverse logistics
Reverse logistics is the process of receiving returned
merchandise with the purpose of proper disposal or
recapturing value
While many retail organizations run best-in-class
transportation and logistics systems and processes, many
of them have neglected reverse logistics as a primary
focal area
Challenges to reverse
logistics
Lack of
awarenes
s about
reverse
logistics
Financial
Constrain
ts
Personal
Resource
s
Problems
with
product
quality
Lack of
appropria
te
performa
nce
managem
ent
system
Inadequa
te
informati
on and
technolog
ical
systems
Legal
Issues
Limited
forecasti
ng and
planning.
Warehousing
The Indian logistics market has evolved from traditional transport
companies to a full-fledged logistics service provider, which offers
various supply chain services such as transportation, warehousing
and other value additions.
The concept of third-party logistics (3PL), where companies provide
outsourced or third-party logistics services to companies for part, or
sometimes all of their supply chain management functions.
Third-party logistics providers are typically specialized in integrated
operation, warehousing and transportation services that can be
scaled and customized based on market conditions and the demands
Makers are working towards leaner supply chains with lesser lead times
keeping in mind the end goal to pick up intensity in the business sector
With assembling action expanding in the most recent couple of years,
logistics has increased equivalent significance keeping in mind the end
goal to give better merchandise at lesser expense
Warehousing, which frames 20% of the aggregate logistics business
sector
The warehousing business sector in India is relied upon to develop at a
rate of 35 to 40% every year, showing high potential for development
throughout the following couple of years
Types of warehouses in India

Public
warehous
es
Cooperative
warehous
es
Bonded
warehous
es
Private
warehous
es
Governme
nt
warehous
es
Cold
storage
Problems associated with

Warehousing
Inadequate skilled labor

Inefficient material handling with outdated handling equipment
Limited technology penetration and innovation
Lack of world-class standards and specifications
Almost 92% of the market is dominated by unorganized players,
while 70 to 75% of the organized market is being controlled by
PSUs such as Central Warehousing Corporation (CWC), the Food
Corporation of India (FCI) and State Warehousing Corporations
(SWCs)
Strategic challenges in
warehousing
Infrastructure: An efficient warehousing operation hinges critically
on high-quality supporting infrastructure that includes a good national
highway network, interstate roads and congestion-free city roads
Land availability: The lack of existing clear land classifications in
Indian cities and the reclassification of land are major concerns as far
as the development of warehouse zones are concerned
Lack of standardization: The lack of warehousing standards and
accreditation poses a significant challenge to the industry where
quality and flexibility of available warehousing space is a major
concern
High cost of credit: Access to adequate and timely credit at a

reasonable cost is one of the most critical problems faced by this sector
Fragmented market with unorganized players: Economies of scale
cannot be explored as the warehousing sector in India is dominated by
small players with small capacities spread across India
Power outages: Power outages are a major problem currently
plaguing cold chains leading to a huge wastages of agri-products every
year in India. The increasing cost of power adds further to the
warehousing cost for agri-products
High costs due to long transit time: Longer transit

time and inadequate infrastructure also increase
transportation costs
Complex tax regime: The delay in the implementation of
GST and the existing complex sales and transport tax
system tends to discourage the establishment of a
national-level centralized distribution centre or hubs, the
likes of which are often seen in developed countries
Operational challenges
Lack of integration with complete supply chain

Lack of trained manpower
Lack of IT penetration
Lack of expertise in warehousing technologies
Process inefficiencies
Route Optimization
Challenges
Roads constitute the most important mode of transport in the country,
carrying 60% of the countrys total freight traffic and 85% of its total
passenger traffic.
While road freight volumes and the number of road vehicles are growing
at a CAGR of 9.1% and 10.8%, respectively, the growth rate of the length
of roads lags behind at 4%.
This indicates that growth of road infrastructure is not keeping up with
the growth in demand.
The last few years have been difficult for development of highways in the
country and physical achievement has fallen short of its intended target.
Last Mile Delivery

The last mile problem in logistics refers to the last leg in the delivery of a product
from supplier to customer
Last mile has also been used to describe the difficulty in getting people from a
transportation hub, especially railway stations, bus depots, and ferry slips, to their
final destination
When users have difficulty getting from their starting location to a transportation
network, the scenario may alternatively be known as the first mile problem
For perishable goods the last mile delivery problem is more complex for as compared
to other products last mile delivery problem, the reason of which is the fact that the
perishable goods have a time constraint as well as well as most of the time they are
very fragile and can get spoiled even due to slight change in the temperature
Problems related to Last Mile

Delivery
Lack of Real Time tracking: Lack of real time tracking of the supplied
goods are one of the biggest problems. The internet penetration is not very
much in the far distant corners of India and also a lot of suppliers and
consumers do not use internet and smartphones , tracking of their goods
cannot be done so efficiently
Temperature variation: Temperature variation is also a very hazardous
effect for the perishable goods
Route Deviation: Route deviation is also one of the major problem in last
mile delivery, because of the high traffic jam or weather or road condition in
India sometimes suppliers have to take a different route which can result in
extra time and cost
Other Problems
Cold chain infrastructure: The absence of cold chain infrastructure leads to wastage
levels of around 40% of agricultural produce and perishables. It is estimated that the
current cold storage infrastructure can only cater to 11% of its total produce
Check posts: Check posts are not directly a serious hindrance to the movement of
goods, the associated regulations, lack of automation (with the exception of a few states),
inadequate staffing, unexplained and in-ordinate delays in clearance of consignments
Compliance management cost: Eligible input VAT is creditable with VAT payable, the
credit of CST and ET paid is not available as an eligible input tax credit, posing as an
additional cost in the supply chain
Lack of procedural clarity: Another impediment in the free flow of goods in India is
the lack of clarity in procedures with regard to VAT/CST/ET regulations
Thank You

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Logistics And Its

Difference between supply chain

Principles of supply chain management

Segment customers based on service needs

Trends in Logistics Sector

Types of warehouses in India

Problems associated with

Inadequate skilled labor

High cost of credit: Access to adequate and timely credit at a

High costs due to long transit time: Longer transit

Lack of integration with complete supply chain

Last Mile Delivery

Problems related to Last Mile

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