Logistics and Supply Chain in India

Logistics Cost Breakdown in India

• India's logistics sector is a significant part of the economy, valued at approximately $215 billion, with a growth rate of 10.5% per year.
• The sector employs 22 million people, according to the Ministry of Commerce and Industry.
• Logistics costs in India are estimated to be 14% of the country's GDP.
• In developed countries, the logistics cost is typically 6-7% of GDP.

Supply Chain Structure

• The supply chain includes raw material supply, manufacturers, distributors, wholesalers, retailers, and end-users.

Comparison of Transportation Modes

• Truck: Cost-effective for short distances, quick delivery for short to medium distances, limited by size and weight restrictions, extensive market reach, reliable (but prone to traffic delays), lower fuel efficiency & higher impact on environment.

• Rail: One of the most cost-effective modes for large volumes and long distances, comparable speed to trucks, high capacity, reaches major markets, reliable, and environmentally friendly.

• Water: One of the least expensive modes, slow transit time, limited by navigable waterways, less visibility, reliable (but subject to weather and infrastructure delays), environmentally friendly.

• Air: Fastest mode for long distances, high carrying capacity (but with low capacity compared to other modes), expensive, easily impacted by weather, and a high environmental impact.

Logistics Terms and Definitions (Velotrade)

• A standardized way of defining responsibilities and who pays for what in a supply relationship.
• EXW (Ex Works): Seller's obligation ends at the seller's premises.
• FCA (Free Carrier): Seller delivers goods to the carrier designated by the buyer at a named place.
• FAS (Free Alongside Ship): Seller delivers goods alongside the ship at a named port.
• FOB (Free On Board): Seller delivers goods on board the ship at a named port.
• CFR (Cost and Freight): Seller delivers goods to the destination port.
• CIF (Cost, Insurance, and Freight): Seller delivers goods to the destination port with insurance.
• CPT (Carriage Paid To): Seller pays for transportation to the agreed-upon destination.
• CIP (Carriage and Insurance Paid To): Seller pays for transportation and insurance to the agreed-upon destination.
• DPU (Delivered at Place Unloaded): Seller delivers goods to a named location.
• DAP (Delivered at Place): Seller delivers goods to a named place.
• DDP (Delivered Duty Paid): Seller delivers goods to a named destination, including all duties and taxes.

Supply Chain Network Diagram

• Illustrates the flow of goods and costs through the various stages of the supply chain, from suppliers to customers.
• Shows the components and costs associated with the different stages of the supply chain (transportation, manufacturing, inventory).

Types of Supply Chain Networks

• Cross-Docking: Faster delivery of products.
• Milk Run: Delivery to groups of customers in a single or scheduled route.
• Hub and Spoke : Central hub with access points (spokes).

Geographical Spread of Logistics Network

• The network is strategically located near mines and ports for easy access and optimized delivery times.
• Focus on a customer-centric approach, placing warehouses and processing centers close to customers to reduce transit time.

Logistics Material Movement and Flows

• A detailed visual representation of how materials flow through the logistics process. This showcases a possible physical flow through the supply chain.

Strategic Supply Chain Network Design Framework

• Components for developing frameworks for supply chain:

  • Operational: Supply Chain Framework, Structure, & Operating policy, real-time information.
  • Tactical : Defined framework, Time-based facility/product process framework, & business plans.
  • Strategic : Corporate strategy, investment plans, and business plans.

Types of Supply Chains

• Lean supply chain: Eliminates waste and processes without value for the end consumer.
• Agile supply chain: Improves responsiveness and flexibility to changing market conditions.
• Green supply chain: Reduces the environmental impact of activities in the supply chain.
• Closed-loop supply chain: Includes forward and reverse supply, encompassing collection, recycling, and resource recovery.
• Sustainable supply chain: Combines social responsibility with environmental considerations to enhance value for customers and stakeholders.
• Risk supply chain: Addresses uncertainties, such as natural disasters or economic crises.

Customer Need & Supply Characteristics Matrix

• This matrix shows how to manage supply chain needs across different customer qualities.

Logistics Service Levels

• Different levels of involvement from one party to the next in the supply chain.

Company Financial Outlook/Market Size Projection

• Information on the company's projected financial performance, as reported from market research data.