GREEN Supply Chain in India March 23, 2008Posted by Ramnath Rangaswamy in Blogroll, Business, Emerging Markets, India, Indian Economy, Logistics, Railways, Supply Chain.
There has been a lot of talk and discussions on GREEN supply chains, in the US and Europe. What does GREEN Supply chain mean in the Indian context? What can we in India do, to start the journey towards a GREEN supply chain?
GREEN supply chains are LEAN supply chains with minimal or ZERO waste. Minimizing waste within the supply chain will make the supply chain GREEN.
How can we reduce waste in the supply chain?
Supply Chain Network:
Getting the supply chain network right would reduce transportation. The supply chain network implies, location of plants, distribution centers, warehouses and customization centers. As a thumb rule about 70% of the cost of a supply chain is fixed at the network design stage itself.
Network design and optimization should be done whenever there is a change in the supply chain – acquisition of a company, setting up a new plant, changes in distribution structure.
For example, a lot of companies have recently moved to Baddi and Uttarnchal to take advantage of the tax holidays that companies got by setting up factories there. This change in the location of factories should have prompted companies to relook the complete supply chain- relocating Distribution Centers, direct dispatch to some depots and eliminating depots.
Similarly when the company I worked for took over another company. So, we had to setup new distribution centers and truck lanes because most of the production of the company we took over was in North India, while our company’s manufacturing location was Central, West and South.
With VAT coming in and CST being reduced/ eliminated companies will have to redesign their supply chains. Companies may decide not to have depots in every state and consolidate depots into big mega Distribution Centres.
Companies should improve truck utilization. What this means is that the complete weight and volume of the truck should be utilized.
I am absolutely against overloading. It wrecks the roads and the underpowered Ashok Leylands and Tata trucks have a tough time negotiating even minor slopes and uphill gradients. NO OVERLOADING!
i.e.the container is filled completely, yet the maximum permissible weight is not reached. To maximize the utilization of the truck, products that cube-out and weigh-out should be loaded together in a truck. Some products weigh-out, i.e. the truck reaches it’s maximum permissible weight while the maximum volume is not filled. Some components cube-out softwares available that help to maximize the capacity of the truck. One of the cost saving ideas I implemented involved loading shampoos and diapers together in a truck rather than loading only diapers or only shampoos. We also designed our truck’s bodies to maximize the volume and weight.
Multi-modal transportation. Use railways instead of road. Rail is the most efficient means of transportation. The coefficient of friction between metal and metal is lower than rubber and road. The Railways has started becoming more customer friendly. Customers can own their wagons. Wagons can be designed to meet the specific and special requirements of customers. Goods can be loaded on parcel vans which travel at the same speed as mail and express trains. In my old company, we used to send a parcel van attached to the nightly express from Bhopal to New Delhi, which reached Delhi overnight.This was faster than a truck and at the same (if not lower cost). We sent stocks to Assam by rail because road transport was long and unreliable.
Coastal shipping should be encouraged. Unfortunately for India, coastal shipping has not caught on. This is because coastal shipping is discriminated against as compared to foreign shipping.
Eliminate damage and wastage. This means have good warehousing practices so that damages are minimized. Follow FIFO (First In First Out) or FEFO (First Expiry First Out) so that obsolescence is reduced. Have good pest control, fire prevention and fire control systems.
Keep inventory low. This reduces warehouse space required and consequently the electricity bill and other expenditure related to maintaining a warehouse.
Net net, an efficient supply chain is a GREEN supply chain.