Allcargo Global Logistics and Multivista- examples of good supply chain solutions! October 20, 2007Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Supply Chain.
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.
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!
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For complete story on Allcargo Global Logistics click on; Allcargo Global Logistics
For complete story on Multivista click on;Multivista