Logistics plays a vital role in the supply chain of any industry. The Logistics industry is moving from the typical brick and mortar model to a highly technological driven model. This need stems out because of the need of complete visibility across the supply chain. Today, the companies want to be agile, lean and be able to move their products across the global markets at a quick pace at the lowest cost possible.
With the market focusing on providing various delivery and pickup options, it has become essential for the Logistics service providers to ensure maximum utilization of their assets with tight control on wastage. This has led to emergence of the IoT based Logistics platforms and Cloud based products over and above the existing systems like GPS and Track & Trace. IoT will be able to provide highly integrated ‘Transportation and Warehouse Management Solutions’ connecting in-vehicle sensors and other integrated devices over the network. Embedded sensors in transport vehicles and containers will continuously capture, share and act on real-time data. The back end IT systems of the Logistics service provider has to be integrated with the ERP of the customers. Taking into consideration the importance of IT, large MNC’s have allocated huge budgets towards IT spends.
The Logistics pyramid ranges from basic logistics solutions to integrated logistics and advanced logistics. At the basic logistics solutions level, all activities are operational in nature including air & ocean freight, customs clearance, warehousing and overland transport. Typically, the operational activities are carried out by multiple service providers. The top two levels in the pyramid which are tactical and strategic aim at end-to-end customer fulfilment in the most efficient manner by appointing a Lead Logistics Service Provider (LLSP). This further stresses the need for a seamless IT Integration between the LLSP and the customer ERP.
The Logistics Industry is the second largest employer in India after agriculture. According to a study by NSDC, the sector currently employs over 16.74 million employees and is slated to employ more than 28.4 million employees by 2022. Due to this demand supply gap, the cost of manpower comprising of both blue collared and white collared employees is increasing over the last few years. Thus, the need of automation and mechanization gets higher, and automation requires investment.
Collaborative and integrated logistics is the key to efficient supply chain. It will take a lot from both sides – the service users and service providers – to collaborate and establish world class logistics back bone for any business. Most of the engagement today take place at an operational level. There is an immediate need to evolve from vendor based relationships to partnerships with Logistics Service Providers (LSP) to invest and create efficient solutions by investing into the logistics needs. From our experience we can say that we need to ‘spend more to save more’. The industry requires investments from a long term perspective. There is a need to invest in specific types of trucks, warehouses and material handling equipment, IT Systems, training, and other essential resources. This can be achieved only with a long term view. Efficiencies have to be created in the system to lower the ‘per unit cost’ on a continuous basis. IT integration of the systems at both ends leads achieving maximum efficiencies.
At Rhenus, we have invested heavily into infrastructure and fleet keeping in mind the customers’ requirements. Rhenus India believes in partnering with their customers, getting involved at the strategic level, and making prudent investments. There has to be zero tolerance when it comes to EHS norms and there is a need of collaborative approach while building a world class supply chain. Technology will be one of the key differentiators in the logistics space.
Implementation of the Goods and Services Tax (GST), hopefully this year, could very well boost growth in this sector. The whole logistics model would have to be reworked. Goods can then be transported inter- and intra-state with much more ease. Today, the scenario is more of country within a country. With the introduction of GST, we will move towards unified taxation laws across the country which will lower the cost of logistics. It will lead to consolidation of warehouses, more movements through multi-axle vehicles, unitization, and palletization, thus bringing in economies of scale. There is a need to integrate the IT with this changing scenario.
The government has made its intention clear to overhaul regulatory framework to improve the ease of doing business. It has been speaking about creating logistics hubs, dedicated freight corridors, Sagarmala project, and many others. But we have to wait and watch how things are implemented.