Study on inbound logistics of transystem logistics international ltd.

Abstract

In recent years, with the boom in manufacturing and industrialization in many part of the country there has been increasing demand of transportation services. Automobile sector in India is no exception and has seen significant growth in past decade. With automobile companies setting up their manufacturing base in different parts of the country, the need to link hundreds of suppliers to their plant efficiently is becoming more crucial. At the same time outbound logistics of transferring finished products to hundreds of dealers across the country became a formidable task. In automobile industry, the share of cost of logistics as compared to total cost of goods is relatively lower. Hence it’s probably not the most significant component from cost point of view, but it becomes significant factor from operational point of view. Offloading the task of the logistics operations to other party has helped automobile companies to concentrate on the task of production and meeting the market demand and it has allowed them to reduce their cost as well. This led to growth of 2PL and 3PL services in automobile industry. Today almost all the auto manufacturers avail services of 2PL service providers and majority of them are moving to 3PL service providers. Overall 3PL market in India is still captured by unorganised players. However in automotive 3PL logistics industry, the share of organised player is more as compared to other 3PL logistics industries in India. There are leading players like TVS logistics (for ford), Adani logistics (Maruti-Suzuki), TLI (Toyota) providing extensive services to big automobile manufacturers in India. Also there are many small firms providing basic logistics services. Logistics companies are also trying to expand as it is a type of industry where economy of scale and extensive reach in the different part of country provides competitive edge. Most of the automotive logistics still relies on trucks and roadways as railways are not used significantly as compared to western countries. As a result cost of logistics is high. Hence logistics companies are continuously trying to bring down the cost and remain competitive. As a result some logistics companies have started using rail transport (mainly for transfer of manufactured cars). Automobile logistics involves two types of logistics operations: Inbound logistics for transfer of row material (auto parts and components) from vendor to the manufacturing plant of OEM and outbound logistics which involves transferring the finished goods i.e. vehicles from manufacturing plants to different auto dealers present in the various part of country. As far as automobile and auto parts manufacturing is concerned, there are 3-4 prominent clusters (regions) in India where automobile industries have grown significantly. They are situated in north, west and south zone of the county at a fairly large distance from each other. As a result almost 65% of total fright involves long distance travel. Also, most of the car makers are increasingly exporting their vehicles via sea port hence volume of transportation from inland factory to sea ports is becoming significant. With long distances to cover and emphasis on timely delivery the logistics operations is becoming more and more critical in order to keep the inventory at the level minimum. OEMs (automobile manufacturers) are demanding tighter schedule and added services (cross-docking, warehousing) from logistics service provider. The third party logistics provider has basic function of transporting the material to the consignee from consigner. However based on the involvement of the logistics providers in the consigner’s or consignee’s operations, the logistics provider can be roughly classified in the following four basic types. ? Standard third party logistics provider: these firms provide standardize operations such as pick and pack, warehousing and distribution to all the clients they operate with. ? Service developer: in addition to standard operations, these firms provide special services such as cross-docking, packaging etc. they arrange their modular service offerings to provide customised solution to the customer ? Customer adapter: these 3PL firms partially take over customer’s activity such as handling customer warehouse to provide efficient service for one particular customer. ? Customer developer: These types of firms, with the knowhow they have, provide in-depth solution to the customer’s problem and handle various services for customer. Most of the logistics service provider in India come under the category of ‘standard third party logistics provider’ or ‘service developer’ with very few firms can be recognized as ‘customer adopters’. However there are increasing efforts taken by logistics companies to achieve the status of ‘customer adapter’ and ultimately move to becoming ‘customer developer’ Transystem logistics (India) ltd. is one such organization striving to achieve the status of customer developer from being customer adaptor in their current status and it is backed by one of the early pioneer and trend setters in the field of operation excellence, Toyota.