Collaborative Logistics…the future…

Nov. 20, 2010 - PRLog -- The demand pressures of future and companies’ commitment to improve quality of services would probably usher in a new avenue of supply chain and logistics operations in the future. Its something we call collaborative logistics wherein even rivals in the same line of business join hands and create a common supply chain platform. This is a process which is increasingly getting into a robust shape in developed markets. And sooner rather than later, it will be adopted in India as well.

Recently, six auto manufacturers in the country took to this route on a pilot basis. We collaborated with ten transporters and six OEMCs co-ordinated with each other and the result was encouraging for everyone.

Tell me tomorrow if you do a pilot and you realize that you are able to save 20 percent on cost and better deliveries to customers, then will it not result in such an alliance taking a formidable shape in the future?  

Drawing a parallel to this automobile pilot project, think for a moment that all FMCGs have a common warehouse, goods come from various companies to that common warehouse and from there they get transported together. So instead of waiting for the full truck load being sent to the next stage by one company, you have a full truck load going after every half an hour. It is not a rocket science and it is beneficial for all participants.  



Coming back to the supply chain complexities in the automobile sector, one of the big concerns today  is: a dealer has to order full truck load or he can’t dispatch. If a carrier has the capacity of ten vehicles and the dealer has ordered for five, what should he do? Hold on to those vehicles for some days. It is simply impractical and unfair with the customers. Now imagine a scenario (which is very common abroad), there is a common warehouse which is being shared by four companies and there is a trailer which is leaving location A for location B. If it picks two-three cars each of the participating companies, it means a trailer every day can be sent from that unit every day. Such a mechanism would become imperative in not so distant future as now companies are looking to get into the rural and tier-II and tier-III markets by appointing dealers. But the demand generated by them would not be nto the multiple of tens or truckloads.

The collaborative route would be very effective to cater to the requirements of such markets.  

Our pilot results have been an eye opener in many respects and the modalities were very simple. Nobody is going to hold the trailer beyond the prescribed time limit. It means when it comes to my warehouse or plant for loading, instructions were there that this trailer must leave in four hours. Usually in India, the trailers are off the road for nearly 35 percent of the time during the course of a month.

It means either it is waiting for unloading of the vehicles or it is waiting for load to be given to it.

Now, under-utilization of the asset by 35 percent is a huge cost. Its not only the cost to the transporter but rather it adds to the cost burden for the entire system. Imagine if we are able to eliminate this cost, even half. It would be a huge gain for everyone which is quite possible if we collaborate.

This collaborative mode, as I mentioned,  is very popular in matured economies. In developed markets, the stockyards are not exclusive entities. There is an LSP which takes care of three-four brands and it  manages everything. I firmly believe that in India too collaborative logistics is the future. You simply don’t have much choice as volume game intensifies. Cost and customers would drive you and you can ignore these two Cs at your own peril. Quite naturally, this model can be adopted in other sectors as well.

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