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The Rediff Business Interview/L Ganesh

'Industry has no choice but to accept techniques like logistics'

Perhaps there could not have been a better time than October 1999 to hold Logistics 99, an exhibition of logistics services and solutions, organised by the Confederation of Indian Industry in Madras. As the truckers' strike disrupted the movement of essential commodities and other goods across the country, aspects such as supply chain management, one of the issues being discussed at the event, came into sharp focus. The way the government pressed into service alternative means of transport to keep the supply chain from going off-track, amply proves the importance of logistics in these times. Late last year, the onion shortage cost the Bharatiya Janata Party its provincial government led by Sushma Swaraj in Delhi.

Logistics was originally a term used in the art of war, for the movement and quartering of troops, material, etc. But the management pundits have now 'hijacked' the word to indicate the whole set of actions and management of moving goods, storing them, etc. Good logistics would mean that things would be available where they are needed at the right time, can be moved where they are required at the right time, at a minimum cost.

It was in 1997 that the CII (southern region) organised an exhibition on logistics for the first time. Nearly 10,000 visitors and 500 delegates had participated then, making it a 'huge success'.

Logistics '99 began this morning in Madras. The four-day international exhibition will seek to ''re-engineer supply chain and logistics activities of companies in order to achieve the competitive edge in the global business field".

India is considered a market with the maximum potential for logistics and transportation solutions and services. The event will feature more than 75 exhibitors including global majors like PSA, CWT, Panaipina World Transport and Teklogix; it will showcase the latest advancements and technologies in supply chain and logistic activities like warehousing, purchasing and sourcing, distribution, inventory control, supply chain and logistic automation, storage and the latest in e-commerce and enterprise resource planning.

Chairman of the CII (SR), L Ganesh, (also chairman of the Rs 10 billion Rane group), spoke to Shobha Warrier, hours before the event's inauguration. Excerpts from the interview.

In this globalised, highly competitive business environment, where does India stand as far as logistics management is concerned?

One unique aspect about logistics is that it has to be localised while the technology and investments can come from anywhere in the world -- but the service is not something that is exportable. So, that way logistics has to play a part in our environment.

Ultimately, the efficiency of logistics has to become world class. There is no point in producing something that is not good enough for the world. Unless you are able to reach your products on time, unless you are able to get things done on time, our competitiveness in the global market is going to get eroded. Yes, we have a long way to go. May be it will take a decade or so before we can reach reasonable international standard.

Quite a few international players are participating in this exhibition and conference. In what way will the Indian industry benefit from them?

Industry can benefit in several ways. Lots of linkages are possible and are made at such exhibitions and conferences. For instance, after Logistics 97, a couple of joint ventures were signed, one of the major ones was Sical with PSA (the two corporates are this year's sponsors). This is well-known. There are small instances too.

Big companies would engage agents here, they would arrange for some distribution arrangement here, they would look at local agents to promote business here and a lot of such linkages take place during such exhibitions and conferences. That is how our industry benefits.

How long do you think we will have to depend on others for logistics technology and service? How far have we progressed in developing this technology?

Certainly technology inputs are required here because mechanisation and automation have progressed so much abroad that we need to bring in that kind of technology from there. We have been so closed in this area that our port handling equipment, for example, is way behind international standards. So, there is an urgent need for technology to come in and there is no doubt about it.

Even in the management of logistics, we are yet to learn the concepts of how to move most efficiently, how fast you move the maximum volume, etc. There are a lot of such soft and hard issues. There is a need for technology in these areas.

Is Indian industry open to the concept?

Certainly. I will put it this way. There is no choice. If you take the automotive industry with which I am familiar, we are now getting into the concept of EDI (electronic data interchange, a method of sharing corporate information.). You may have problems in the telephone lines but EDI is becoming a reality now. Five years from now, most of our customers like Maruti or Telco or Ford would be communicating with us only through the electronic medium. I see no purchase orders or papers coming. It may not be there today but five years from now, it will be a reality.

The second area is bar-coding. We have introduced bar-coding mainly to avoid spurious parts. Okay, it is not hundred per cent successful. We have recently found that somebody has imitated the bar-code idea too! But I would say, it is a good beginning.

Bar-coding, for example, is a technology that is essential. Again, I would say, there is no choice because if you want to export today, you have to have bar-coding as our customers in Europe do not want to count. So, if you are sending a container with thousand pieces, there is a sticker with a bar-code on it and they just scan it and then credit you for thousand pieces. Because labour is so costly in Europe, they don't sit and count the thousand pieces. So, we have no choice but accept new techniques.

Why is our industry lagging in logistics?

We lag because we were a closed economy until the nineties. Customer expectations were much less because ours was a closed economy. When customer expectations increases with exposure to international standards, you are also automatically forced to adapt to this. So, the closed economy and protection were responsible for the position that we are in now.

In logistics management, infrastructure is a major component and that is one area where India has not progressed at all. Do you look at infrastructure development as the duty of the government alone or, are you for private involvement in this field?

There is a role for both. But basically, I think, the government should play a lead role because infrastructure development is not a short-term project. Infrastructure cannot produce comforts in a shorter period and private companies cannot be given the entire responsibility. I think there are areas like telecom, small highways, and parts of ports that truly be taken over by the private sector. I still believe that government has a major role to play in the fundamental areas like roads, rail network and airports.

In this conference, service providers, technology innovators, management consultants who study supply chain management, end-users are participating. Users like Ford will present case studies and explain what they expect from logistics and how they would apply the technology.

Is industry aware of what is happening in this field?

We are learning and learning quite fast. See, the expectations of a Ford today are far different from a Telco of the past in terms of what the suppliers should do. So, the expectations or demands of some of the new entrants and the expectations of our export customers are making us learn fast.

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