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Allcargo Global Logistics and Multivista- examples of good supply chain solutions! October 20, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Supply Chain.
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untitled.jpgALLCARGO GLOBAL LOGISTICS
Allcargo Global Logistics’ solution for the Indian car industry is another example of a good supply chain solution.

Allcargo Global Logistics will transport cars in specially designed wagons imported from China. The cost, they claim, will be ~10% lower than what car producers pay today. The in-transit damage to the cars will also be lower.

The timing and design of this logistics solution by Allcargo Global Logistics is seems correct. The Indian domestic car market is huge and this niche, that Allcargo Global Logistics hopes to play in, will be big. Also, with car sales heading south, any cost savings can be passed on to the consumer, thereby stimulating demand.

Allcargo Global Logistics depends on Indian Railways or a license holder for hauling the specially designed wagons. It will have to quickly capture the market because, it would not take long for a LSP [Logistics Service Provider]/3PL, who has the license to run container trains and has a container yard, to get into the car transporting business. It can provide the service cheaper than Allcargo Global Logistics as multiple margins would be avoided [ when Allcargo Global Logistics provides the service they will their margin and the margin of Indian Railways/train haulier to the cost ; with Indian Railways/ the train haulier getting into the business, the margins charged by Allcargo would be eliminated which can be passed to the car producer in terms of lower costs]

One watchout is that Indian Railways does not operate container trains to a timetable. Delivery leadtimes promised to customers would have to factor this in. A mitigating factor, however, is that for cars, customers do not mind waiting an extra week to get their favourite colour or version. This is unlike a FMCG or white-goods where any out-of-stock leads to a business loss right away as the customer buys a competitor’s product.

MULTIVISTA
What impressed me about Multivista’s supply chain solution was the fact that Multivista is a printing and shoe making company. It does have a distribution arm. But to apply supply chain solution to give a break through proposition to the customer was a ‘wow’ to me!

Multivista prints books and warehouses and ships the books to all parts of the world. This is a classic end to end solution supply chain solution for any publisher.

To offer this solution, Multivista should have very robust OSB [ Order Shipping and Billing] processes, very robust systems for tracking delivery and sharing this information real-time with publishers and a strong logistics organization.

What are the lessons from these two examples;
We see many logistics companies,3PLs/LSPs in India, investing in warehouses and trucking. However, to survive and thrive these companies should use the warehouses and trucks to provide a supply chain solution to businesses.

Warehouses and trucks are like commodities; logistics and supply chain solutions are like brands!

To make this happen, 3PLs/LSPs need to understand the customer’s business and supply chain requirements and tailor a solution for a customer. This would mean having consultants or domain experts, [ similar to what IT companies have] who understand the customer’s needs and have a good knowledge about the 3PL/LSPs strength, to tailor a solution for the customer.

There are many examples of companies, in India making the transition from warehousing and transportation to providing end-to-end supply chain solutions! That is good sign!

For the full stories click on;

For complete story on Allcargo Global Logistics click on; Allcargo Global Logistics

For complete story on Multivista click on;Multivista

Logistics and Supply Chain in the festive season! October 16, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Retailing, Supply Chain.
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untitled3.JPG Festivals and Logistics!

Festivals are trying times for transporters, warehouses and delivery teams. The supply chain is stretched and tested to the limits.Unlike Europe and America, where the festival season is Christmas, in India the festival season varies across the country- Pongal [ January] in Tamilnadu, Holi [March] in the north, Baisakhi [March] in Punjab, Onam [August] in Kerala, Durga Puja [September/October] in Bengal,Diwali [October/November], Id and year-end/New Year nearly throughout India.

The supply chain- warehouse space, warehouse staff, loading docks, picking area, warehouse equipment, trucks – are all planned for normal business volumes with a ‘peak factor’ of 25% to 33%. This is prudent given the need to (i) keep supply chain costs low and (ii) have a high capacity utilization for the warehouse.

So how does one plan for the festival peaks?

Plan in advance: As production is ramped up, to cater to the extra festival demand, transport the products to the depots/RDCs/ warehouses. The intent is to smoothen the number of workload at the plant and the warehouse [number of trucks being loaded and unloaded]. Do not bunch and postpone all despatches and deliveries to the last minute.

Use alternate supply chains: Plan to send trucks straight to the retailer from the Plant and bypass the depots/RDCs/ warehouses. The volumes, the retailer orders, during the festival seasons would justify sending a full truck load to the retailer. If, for tax reasons it is not possible to send trucks direct from the Plant to the retailers, load the trucks so that they can be cross-docked [or the same truck goes to the retailer after picking up the invoice from the depot/RDC- this is a gray area in the Indian Tax Laws].Companies could also give a small discount to the retailer for ordering a full truck straight from the Plant. This will reduce the workload at the depots/RDCs/ warehouses.

Additional warehouses: Extra warehouse space, extra warehouse teams, extra warehouse handling equipment, extra terminals for the warehouse management system [WMS] , 24 hour shifts- are all required to handle the additional volumes at the warehouse.

New overflow or extra warehouse will have to be hired. This warehouse should be physically close to the main warehouse for ease of operations.

The details and process to be followed with the extra warehouses should be clear. Will the extra warehouses hold all products or only some fast moving products? In case he warehouse holds only a few products then trucks will have to get loaded at both warehouses leading to a strain on the loading docks capacity. Or if trucks get despatched at both warehouses, then there would be minor FIFO violations. The trucks coming from the Plant have to be directed and coordinated to the correct warehouse depending on the stock levels at the warehouses.

Both warehouses should have invoice printing facilities.The WMS should be capable of accommodating an additional warehouse location.

There would be inter-warehouse movements to transfer products which are out-of-stock in any one warehouse.

Extra forklifts, pallet jacks, high reach trucks will have to be hired.

Warehouse teams will have to be hired and trained. Training on (i) products and (ii) processes are important to ensure that the warehouse operations are smooth. It would be a good idea to (i) have the warehouse team work in the regular warehouse for 1-2 weeks and (ii) have a mixed team -of experienced and new/tyro warehouse staff.

The warehouse would have to work, round-the-shift for 24 hours for a few weeks if picking area and loading/unloading docks are the bottleneck.

Based on my experience, the element that you overlook is the one that comes and haunts you! Every small detail will have to be taken care of. In my experience, in one instance, I found the number of order entry computer terminals to be a bottleneck. In most cases the picking and staging area becomes a bottleneck.

Transporters:It would be a good idea to share with the transporters, the additional requirement of trucks. This should be done 1-2 months ahead so that the transporter has time to plan and organize the additional trucks. The more detailed the information- number of trucks by destination, by date- the better.

One should also remember that all other companies too would be having a peak at the same time. So truck availability would be an issue, there would be unloading delays at the retailer as all manufacturers would be sending additional stocks, highways and checkpoints would be crowded because of the additional traffic. All this will have to be factored-in while finalizing the festival logistics.

Happy festivities!
For more details on how Indian businesses prepare for the festive season, click on the link; Business in the festive season

Gandhiji and supply chain in service organizations! October 4, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Retailing, Supply Chain.
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untitled2.JPG

 

On the occasion of Mahatma Gandhiji’s [ Father of India] birthday on 2nd Oct, I take his thoughts on customer service and look at it from a supply chain in the service industry perspective.

Gandhiji had said;

A customer is not an outsider to our business. He is a definite part of it. A customer is not an interruption of our work. He is the purpose of it.

A customer is doing us a favour by letting us serve him. We are not doing him any favour.

A customer is not a cold statistic; he is a flesh and blood human being with feelings and emotions like our own.

A customer is not someone to argue or match wits with. He deserves courteous and attentive treatment.

A customer is not dependent on us. We are dependent on him.

A customer brings us his wants. It is our job to handle them properly and profitably – both to him and us.

A customer makes it possible to pay our salary, whether we are a driver, plant or office employ

– Gandhi

Design the SERVICE CONCEPT before you setup a service organization:

The first step to setting up a service organization is to design the Service Concept.

The Service Concept is a process diagram which defines the action to be taken at each customer touchpoint, i.e. every time a customer comes into contact with your organization physically or virtually.

The service concept starts from the website or print advertisement- even before the customer enters your physical premises. Is the website easy to navigate? Is the website accurate and upto date? Does the advertisement give all the information? Is there a phone# that the customer can call for further details? Between what times is the phone# available? These are the questions and issues the service concept has to address.

At the call center is the phone picked up within 3 rings? Are most queries handled by the call center? Is you IVRS [ Interactive Voice Response System] designed well? I have experienced IVRS which cut you off if you press the wrong option or take too long!

If the customer visits your physical premises, is there adequate car parking? Is your office, shop easy to find? If no, include a map and direction in your website. I have seen this followed widely in Malaysia, where the directions would be at the back of visiting cards or on websites. Have sufficient directions and signage to help your customers find your office or shop or premises easily. In case of a big departmental store, the map showing the location or floors on which different categories are placed should be displayed at the entrance.

Once the customer enters your premises he should be attended or acknowledged within a minute. If it is a restaurant, does the captain seat you promptly? If there is a queue, is there a place to sit

It has been shown that a customer, who has been spoken to has a better impression about the customer service than a customer who has not been spoken to.

The Service Concept is a must for every service organization if it wishes to be successful. Petrol pumps, after-sales service, pest control service providers, mobile phone service providers, ISP, restaurants, taxi services, travel service providers, hotels, retail, courier companies, consultants, schools, colleges, airlines, railways, banks, AMCs { Asset Management Companies}, builders, passport offices, post offices, insurance companies, software companies, BPOs…..the list is endless.

The Service Concept has to be constantly reviewed and modified based on customer feedback, competition and evolving technologies.

The rule to keep in mind to design a good Service Concept is that ‘you cannot be detailed enough’!

Good examples

  • Taj Hotels: Impeccable service!
  • Jet Airways: Best designed service concept. It is constantly audited and improved.
  • IKEA: They have thought of everything. They provide pencils, measuring tape, a pad to write details of the furniture, give you free parking [ if you have bought something], very good trolleys…

Design service recovery processes in case the process does not work:

Since it is a service and people dependent, there will be times when the service delivery does not work as per the Service Concept. The Service Concept should have the actions to be taken if the service delivery fails.

What if the phone cannot be picked in 3 rings? Do you have a caller id phone using which you can get the number of the customer and call back the customer?

What if the car park is full? Do you have a valet? Do you have a overflow car park?

What if all the staff/team are engaged and cannot attend to a customer? Do you have the guard offer water and a seat till the shop assistant is free?

What if the credit card swiping machine does not work? What if the bill is inaccurate? What if the flight is delayed? What if the queue is too long? What if I run out of vegetarian meals?

Analytics:

Analytics is a very important part of designing and monitoring the service delivery process.

How many service counters should I have? It is a known fact that customers get dissatisfied if they have to stand in a queue for longer than 3 minutes. So, provide counters so that waiting time is never more than 3 minutes? Or provide seats, magazines, drinks, TV if waiting time is estimated to be more than 3 minutes? Give a number and approximate waiting time so that customers can go and attend to some other business instead of waiting. Analytics will help you calculate the waiting time. Analytics will help you calculate the number of seats to be provided.

How many car parking slots do I provide? How many call center operators do I staff? Which process in my service delivery is a bottleneck? How do I de-bottleneck it? How do I know how many vegetarian and non-vegetarian meals to load on a flight? How many passengers do I overbook, so that my flights are full, but probability of offloading a passenger is minimal? What is the most optimum layout for a shop? In which localities do I provide additional ATMs to reduce the queues? How do I route buses and vans so that I minimize the time spent by my employees in the bus or van [ at the same time keeping my costs minimum]?

Answers to all these questions and more, is provided by analytics. And this has to be done as the service delivery process is designed.

Good examples

  • Citibank: They tell you the minutes you have to wait before your call would be attended.
  • Air Asia: They told you the number of people ahead of you in the queue to talk to a phone attendant.

Feedback:

Get feedback after every transaction. Make it easy to give feedback. Via sms. Via internet. Via email. Via hardcopy. Acknowledge every feedback. Use feedback to reward and punish employees.

Good examples

  • Hutch: After every call to the call center you are asked for feedback via sms. Brilliant!
  • Jet: Proactively distributes the feedback forms. And it acts on them. Of all the airlines, I have flown, Jet has the best feedback process. Singapore Airlines does not even bother to acknowledge complaint forms. Indian does not even have feedback forms, at times on their flights.
  • Welcomegroup: Uses the feedback forms to reward employees- ‘Employee of the Month’

Mantra is get feedback at every opportunity. You cannot get enough feedback from your customers. Use the feedback to modify the Service Concept.

Complaint Redressal:

Have a formal process to redress complaints; have an owner, specify timelines by when complaints have to be responded, monitor action taken. Make it easy for customers to complain. Similar to feedback, get complaints via email, sms, phone or hardcopy. Use complaints to improve the service delivery process.

Good examples

  • Airtel: They give a complaint# and someone calls you up within 48 hours to understand and address the complaint.
  • Air Deccan: Irrespective of what you have heard, Air Deccan responds to every complaint.

People:

The lifeline of a service organization are it’s people. Recruiting the right people is important. There are tests [FIRO B] that can determine the people who would serve customers well. Once the right people are in, they have to be trained. Once trained, they have to be monitored, coached and given constant feedback so that service levels are maintained..

People have to be empowered. The frontline staff must be empowered to do what it takes to satisfy the customer. Great service organizations have empowered employees.

It would be a good way to celebrate the birthday of Mahatma Gandhi- who understood customers and customer service very well to review your organization’s service concept and service delivery process. Is it satisfying the customer?

Needless to say, service is the only differentiator between a business which is successful and one which struggles and fails!

 

Hutch into Vodafone – Perfect Logistics October 2, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, M&A, Mergers and Acquisition, Retailing, Supply Chain.
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untitled.JPG Hutch to Vodafone- Perfect Logistics!

Hutch, in India, changed its name and ‘avatar’ [a Sanskrit word meaning ‘physical form’] to Vodafone. The execution of that makeover across all the touchpoints and across India was perfect! Many lessons on executing promotions, new store openings and other initiatives can be learnt from studying the “Hutch to Vodafone” execution.

Over a weekend, the billboards on the streets, the advertisement on the back and sides of busses, advertisement on the bus-stops, street dividers were all changed from the pink of Hutch to the Red of Vodafone. All Hutch users got a sms informing users about the change to Vodafone. Print and TV advertisements informed users about the change from Hutch to Vodafone. “Hutch Shop” store boards were changed from Hutch to Vodafone. And this was done across India in tens of cities across India, in a 48 hour time frame over a weekend.

The Pink of Hutch is now completely replaced by the Red of Vodafone. Physically. And, more importantly, in the minds of consumers, which was the aim of the operation.

What was brilliant about this execution was that all the touchpoint and regions were executed simultaneously! This provided the big bang impact to the initiative.

How did Hutch execute this brilliant operation? Based on my experience, I give a step by step process that Hutch would have followed to achieve this flawless execution.

Step 1: Defining the objective of the project
It always starts with defining the project and its objectives. In this case it would have started with the CEO stating “Attain > 95% conversion across all consumer touch points between Sept 15th and Sept 17th [ weekend]” or something similar.

Step 2: Create the team
Once the objective was aligned, the team would have been created. This would have been a multi-functional team- Sales, Marketing, Finance, Logistics, Suppliers, Vendors, and Franchisees. In addition to the objective of the project, each function [ or sub-team] would have been given a specific task, with measurable goals and time lines.

Step 3: Create a time-table
A Gantt chart or a cps would have been created and reviewed regularly; weekly, daily. Based on the complexity of the project and the amount of linkages in the work of the sub-teams, the review could be done by the team leader or team board with each function [sub-teams] or with the full team.

Step 4: Review and Monitor
The intent of the reviews is to help the sub-teams to meet the goal of the team. It should not be a ‘fault finding’ session. The body language, tone and actions of the team leader/ team board are important, so that team members work towards achieving the team goal.

Step 4: Escalation forum
There should be an issue escalating forum. If an important ‘show stopper’ crops up, it should be escalated to the team leader. The definition of a show stopper should be defined and made clear to all members. The escalation process too should be made clear at the beginning when the team is constituted.

Step 5: War Room
About a week before the launch, a War Room should be constituted which has all the team members and does a check and double check on all the launch details. Members should be spread out at different cities and regions so that issues can be tackled on the ground. A checklist would help in the checking.

The War Room should continue till a week [ it could vary, from 2 days to a month depending on the scale of the initiative] after the initiative is launched.

Step 6: Post cutover review
Post launch, it would be good to document the learnings, what worked, what did not work and have a celebration with an award ceremony.

This process and approach can be applied to new retail store openings, launch of a new product, integrating two supply chains because of a merger or acquisition, changing the distribution network and many more.

I have seen new stores being opened by the large retail chains with staff not trained on accepting credit cards, credit card swipers not working, half empty shelves etc.

I have heard from passengers and read in the newspapers about the confusion and chaos as Air India and Indian Airlines merged.

They can all learn a lesson or two from Hutch… oops Vodafone!