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Zubin Poonawalla
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3PL Driven Transportation Desk Mgmt - Convergence of 3C's

Logistics cost is typically considered to be in the range of 2% - 5% of Sales Value depending upon the nature of the industry & its sourcing & distribution strategy. The majority of this cost is related to inbound + outbound transportation along with the warehousing cost associated with material movement. Inbound transportation caters to movement of raw material & essential components that are required to manufacture the product & Outbound Transportation provides distribution of finished goods to its channel partners & end users. Very often the subject of transportation is relegated to the lower mgmt & main focus of top mgmt remains around bringing down the logistics cost y-o-y. This expectation in itself is not misplaced but emphasis has to be around reducing the ratio of Logistics cost to the Sales value & not merely the freight rates alone. In short it needs to be understood that ‘Total Cost of Logistics’ should be the area of prime focus rather than cutting down the rates of individual transactions. This holistic perspective requires every stakeholder to play their role effectively so that it no longer remain the mandate of logistics function alone. In emerging industries like e commerce, the logistics do not remain the subject of cost alone but it is seen as a critical activity that creates competitive advantage. Whenever activity of logistics is not handled holistically, it has led to suboptimal performance of supply chain & has created end user dissatisfaction.

If focus remains just on the freight reduction it creates unhealthy backlash & triggers the chain of negative reaction which is not easily noticed but it definitely damages the supply chain efficiency in the long run. For example, fuel constitutes 50% - 60% of surface transportation cost & rate of change in the fuel needs to be applied immediately on freight rates for the overall feasibility. However it is seen that whenever fuel rates are changed upwards, the tendency by the manufacturer is to wait & watch. Manufacturers simply float the tender & the lowest bidder gets the transportation contract. Instead manufacturer should calculate what the right freight is by considering all legitimate components & then ensure that the best quote around the right figure is given the contract. It is also important to establish the service provider background. The freight cost is largely dependent on number of kilometres the vehicle get chance to run but many manufacturers do not work on reducing the loading & unloading delays that are so commonplace in the supply chain process today. There has been systematic degradation in packaging standards in the name of cost optimization & then it is expected from the logistics provider that goods should be delivered damage free. Indian roads are not built like airport tarmacs & suboptimal packaging just cannot withstand the shocks. In order to reduce transportation cost per unit, many manufacturers tend to approve overloading & they favour changes in carrier dimensions which is so detrimental to the road safety. This tendency again leads to road accidents & breakdowns. In order to reduce the inventory cost, the manufacturers have started applying ‘JIT’ concept for even long haul distances. The Indian road conditions & regulatory structure is not even remotely close to countries like USA or Europe. The unnecessary pressure on drivers & transport service providers result in accidents & low upkeep of vehicle as there is no time left to do the preventive maintenance. In the quest for supply chain efficiency, no one takes the notice of driver’s life who is expected to be on the wheels round the clock with no time left to meet family & care for his health. With prolonged disregard for driver, who bears constant abuse right fm the company’s security guard to traffic police to boarder authorities, the population of drivers is dwindling as new generation do not want to take such miseries any more. The driver is often treated as a machine & not the human being & the one who actually carries goods worth million dollars is meted out such an indecent treatment by one & all. Impact of such myopic focus on cost & band aid solutions lead to erosion of standards in the industry & eventually it harms the future of overall supply chain.

Therefore it a high time that manufacturers start talking about sustainable supply chain efficiency where there is a win –win situation for all the stakeholders. The first step towards that is to develop a strategic partnership with a well deserving 3 PL Logistic Service Provider & change the conventional norms of doing the business & work on an agenda that is enduring & mutually beneficial. Service provider should not be treated as the one who is meant to be the scapegoat & the one who should carry entire risk of operation. Instead he should be treated as consultant who is entrusted to articulate the competitive strategy which is based on sound principles with a focus on logistics operation. But it should encompass aspects of sourcing strategy, distribution strategy, planning, education of channel partners ,mgmt of end user expectations ,mgmt of govt machinery & targeting mutual growth of all stakeholders. Therefore the new concept of Transport Desk Mgmt is finding a traction with many manufacturers today & CXOs themselves are driving it with the view to achieve long term benefits in the function of logistics. The model is still in the making & yet to address the needs of all stakeholders. However the good sense is prevailing & manufacturers are showing interest in outsourcing their Logistics function & Transport Desk Management which is the right way to go for sustainable & holistic transformation. Leading 3PL service providers are building their back end infrastructure, technology & processes capability around this concept & model is likely to mature over period of time. At the outset, the Transport Desk Mgmt brings convergence of 3 Cs- Capability, Creativity + Cost advantage. In this model, the 3PL service provider becomes a strategic partner who is given voice in the board meetings when it comes to designing / changing supply chain strategies. This partner binds together the ecosystem of numerous second tier suppliers who provide array of services. This partner leverages its vast geographic presence to offer flexibility & customised services. This partner leverages its transportation network to bring synergies across multi customer movements. This partner invest into advance technologies to enable process automation & real time control. This partner set up special mechanisms to handle exceptions & deviations to cater to wide range of variables that are so inherent in the supply chain. All individual service providers who are under the eco system are given just & transparent contracts so as to earn their loyalty & reliability. The partner brings a comprehensive performance monitoring mechanism to ensure accountability across all the service providers. The risk to the partner is minimised through sound process & policy support by the manufacturer & both risk + rewards are mutually shared across the spectrum. Such partner also brings slew of welfare schemes for its needy stakeholders like drivers, contract labours & the same is consciously budgeted for.

With such type of understanding with the 3PL logistics partner & with a respect for all stakeholders, the manufacturers are guaranteed to create competitive advantage for themselves which is not easy to imitate. However such model architecture requires long vision, courage & mind-set shift on the part of manufacturers & there are positive & early signs of movement in that direction.

Bull Shit might get U to the top, but it won’t keep U there for long!!!

A turkey was chatting with a bull.
‘I would love to be able to get to the top of that tree’ sighed the turkey, ‘but I haven’t got the energy.’
‘Well, why don’t U nibble on some of my droppings?’ replied the bull. ‘They’re packed with nutrients.’
The turkey pecked at a lump of dung, & found it actually gave him enough strength to reach the lowest branch of the tree.
The next day, after eating some more dung, he reached the second branch.
Finally after a fourth night, the turkey was proudly perched at the top of the tree.
He was promptly spotted by a farmer, who shot him out of the tree.
Moral of the story:
Bull Shit might get U to the top, but it won’t keep U there for long!!!

The big myth on tax payers in India Data!!!

Mr Arun Jetley said during his budget speech that we are largely a tax non compliant society & presented that only 3.7 crores are filling ITRs in this poor country with 125 crore population.

Sir,

We have 82 crore voters

- 75% are agriculturists, 61.5 crores (U exempted them directly but, they can also buy cars, bunglows etc as you quoted.. Ur political counterparts are also enjoying this)

Balance..........
20.5 crores

Less: 24% BPL class (Below poverty line)

15 crore population (which is non agriculturist & non BPL) ..

Less : Senior Citizens, Non working wives, unemployed youths, below taxable income earners...political class..(say 75%) ... in a typical indian family only 1 earning member & 5/6 are dependent on him....

Balance (15 -11.25)=3.75 crores is the earning class ... which can file ITRs & ... they are already filling it....

.... so almost no gap as Mr Jetley is stressing unnecessarily without knowing his country

if Looser Arun Jetley wants more people to come into tax net ...then... instead foolishly resorting to only rampant raids, surveys...notices... scrutiny ..... demonetisations etc etc terrorism ... he should defy his negative bureaucrats &

1. Introduce simple Income Tax on Agricultural Income on large landlords (Say 10 Acres plus ) - you can add 26% of Agriculturists as tax payers (Politicians are also enjoying this )

2. Instead of introducing 5000/10000 penalties on late filers of IT return ...
Come out with positive approach & introduce incentives to IT return filers (learn fm Pakistan, IT assessee gets discount in purchase of Car )

3. Introduce Privilege card to those paying taxes above certain limit.. privilege card to entitle assessee with benefits like Priority quota in railway tickets, Use of airport lounges, subsidised medical facilities, etc etc... let Tax payers feel proud

4. Introduce medical insurance / life insurance on basis of average ITR filled... like coverage upto twice of Gross Income in ITR filled for mediclaim & ten times risk cover in case of life insurance

5. Introduce Pension after 65 yrs of age on the basis of tax paid by tax payer during his working life..

Let honest taxpayers get certain direct benefits....

As on today, 3.3% of Indian population is filling ITRs as compared to 8% of China...adding large agriculturists to Income Tax may shoot the figure to more than 10% .... it may help you to cool your tax terrorism mindset & a tax compliant nation ...

Smaller the Better!!!

Most of us provide input or have decision-making rights for selecting which vendors our organisation will deal with. Often a large vendor is selected over a smaller vendor.

The accepted wisdom is that it is safer to select a big, experienced vendor; the peace of mind is worth the price premium.

There are advantages & disadvantages that flow from selecting smaller vendors:

There are usually significant benefits that can be gained by considering the smaller, more specialised provider. The benefits may be specific to that vendor's solution & relate to functions, features or service capability. They can also relate to the difference in nature of a large vendor compared to a small vendor.

This isn’t to say there aren’t risks that will need to be managed. Smaller vendors can be challenged by the typical large organisation. Its processes, multiple stakeholders, timetables & bureaucracy can be daunting.

Decision makers that do not give serious consideration to smaller vendors & remove barriers that can lock out smaller competitors are doing their organisations & themselves a disservice.

Removing barriers for small business

It is important to be aware of the challenges small businesses face when supplying or tendering for work with large businesses. Some barriers are the unintended consequence of accumulated procurement practices. Others have less benign origins if included at the behest of incumbent providers seeking to influence the selection criteria or requirements.

Small business disadvantageous terms can include requiring extensive industry or global accreditations, the extent or nature of insurances required, over the top security requirements or audits, requirements to disclose the company's finances, etc.

Sometimes large vendors will play the FUD card (Fear, Uncertainty + Doubt). Perhaps the smaller vendor solution isn’t as widely used, perhaps it lacks the same calibre of reference customers, perhaps they won't be around for the long term, etc. FUD was coined in the FY70 in relation to sales tactics of large vendors in the computer industry (originally by IBM in hardware & then by Microsoft against IBM in the desktop software market) but has now become a commonly used term. FUD is particularly powerful when used by incumbent vendors against new entrants to a market or account.

Supply chain simplification is popular with some large companies. This is often code for reducing the number of (small) suppliers. The underlying assumption seems to be that fewer suppliers translates to less cost & greater economies of scale.

The administrative simplicity argument is often a fallacy. It ignores the important contribution of smaller vendors to innovation & keeping large vendors on their toes. It also often ignores the needs & requirements of specific users in the organisation. If administrative overhead is significant software platforms can streamline processes & replace people to automate routine interactions.

More significant & more immediate improvements can be made by testing to market all current vendors (both large & small). If any vendor no longer offers value for money compared to alternatives it can be replaced. Large organisations can become captive to existing vendors & it is easy to ignore the opportunity cost of the status quo. Large vendors often seek & achieve long contract periods with few opportunities to benchmark or reset prices.

Economic Benefits

The innovation ecosystem is key to the economy. Larger companies are willing to experiment & use the solutions of start-ups in their operations. Companies like Google, Apple & major banks are the early adopters & first customers. This is not just altruism. They enjoy early exposure to some of the most innovative technology. This can give them an advantage over their competitors. They can also influence the development of the technology to suit their particular needs.

In fact, many large vendors make acquisitions to access innovation. They acquire successful fast-growing companies that address a need that they can’t meet.

This innovation cycle is less developed. As a consequence, the growth of smaller companies is constrained & allows competitors to grow faster. Industry productivity is also slower as innovation is not adopted as quickly as possible. This in turn impacts large companies & Govt. Both need to be more nimble & innovative. Both benefit fm the success & viability of local industry which primarily consists of small businesses.

Personal Benefits

It may have once been true that nobody ever got fired for choosing the safe solution. Today nobody should expect to be promoted for ignoring the most innovative solution. In a faster-moving business world, the effects of decisions today are more obvious in a shorter timeframe. A decision that doesn't anticipate foreseeable needs or retards responsiveness to market change is likely to be revealed as wrong more quickly.

Bringing innovative capability to organisation has its benefits. As a leader of such an initiative, you are much more likely to be noticed. Small vendors love promoting successful initiatives inside organisation & with other potential customers. This will improve personal brand & the reputation of company as a leading innovator.

Looking Forward

When you are next selecting a vendor make sure that small vendor solutions are not disadvantaged by the process. Function & cost are important to analyse & compare. Consider also the benefits of dealing with a smaller organisation as well as broader economic & benefits!!!

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The journey of creating anything great!!!
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How GST will impact !!!

The passage of the Constitutional Amendment Bill on GST has paved the way for introduction of GST in India, likely in H1FY18. The need for GST has been felt because under the current indirect tax structure
1) tax barriers have fragmented the Indian market, 2) cascading effects of taxes on cost have made indigenous manufacture less attractive,
3) complex multiple taxes have raised cost of compliance.

The GST Council has finalised a four-tier GST tax structure of 5%, 12%, 18% & 28%, with lower rates for essential items & the highest for luxury & de-merits goods, including luxury cars, SUVs & tobacco products, that would also attract an additional cess. Moreover, with a view to keeping inflation under check, essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate. The cess is expected to provide additional resources to the govt to compensate states for losses incurred. This will be based on the compensation formula.

GST is expected to have a favourable outcome on the economy

1. Removal of tax barriers with seamless credit will make India a common market leading to economies of scale in production & efficiency in supply chain.

2. Removal of cascading effect of taxes embedded in cost of production of goods & services, significantly reducing cost of indigenous goods & indirectly promoting ‘Make in India’.

3. Facilitating ease of doing business - Integration of existing multiple taxes into single GST will significantly reduce cost of tax compliance & transaction cost.

4. Stable, transparent & predictable tax regime to encourage local & foreign investment in India creating significant job opportunities.

Sectoral impact
The exact rates applicable to particular goods & services have not been finalized & this will likely happen over the next few weeks. Hence, it is difficult to measure the exact impact across sectors. Based on the current tax rates (central excise & VAT) for key product segments across sectors & the proposed GST rates, we expect most sectors to gain or otherwise in a limited way.

As part of GST implementation, service tax is expected to go up from the current levels of 14.5% which will be negative for service companies in airlines, telecom, insurance, etc., in terms of demand impact.

1. An important fallout of GST could be shift fm unorganised to organised segment. The unorganised sector will come into the tax net & will lose the benefits arising from non-payment of taxes & levies. Thus, companies which are operating in sectors will high unorganised component will benefit in terms of increased demand. Companies in sectors like plywood, ceramic tiles, batteries, etc. will stand to benefit.

2. The sectors which have long value chain fm basic goods to final consumption stage with operation spread in multiple states such as FMCG, pharma, consumer durables, etc should benefit. FMCG companies could generate substantial savings in logistics & distribution costs as the need for multiple sales depots will be eliminated. FMCG companies pay nearly 24%-25% including excise duty, VAT & entry tax & a lower rate of 18% could yield significant reduction in taxes. But a higher GST rate of 28% for consumer durables & some FMCG products may disappoint the market. Warehouse rationalisation & reduction of overall tax rates, is expected to generate saving.

3. Some automobile companies could gain fm GST implementation if the GST rate on their products is 18% & they are able to retain the benefits of lower rates. However, the higher rate of 28% would be negative versus expectations.

4. Services sector, like telecom could face marginally negative impact fm the higher service tax rate of 18% (likely) versus 15% currently.

However macro benefits emanating fm implementing GST far outreach the negatives, it is also a significant change communicating to the world at large that we are focused on one path for economic progress!!!

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Want to become a good leader? Stay humble, be accessible to Ur team!!!


"A leader is a dealer in hope - Napoleon Bonaparte”.

This very quote has driven my actions, my positions, my behavior & my habit to be able to rise to a position of a proficient leader. Whether U run a multinational company, multiple teams or just an individual employee, Ur leadership skill showcases how U bring along Ur unit & encourage them to perform at their optimum all the time.

No one can just mould themselves & their lifestyle based on powerful leaders that came before them, one has to take inspiration from the following traits to achieve the status of a leader among their peers.

• Optimism
A good leader will invariably try to create a fine balance between productivity & playfulness at work. Keeping the team motivated not only establishes trust & fondness, it also helps in eliciting a high-level of energy that keeps the success rate high. Even though it is difficult to always be the person discovering the silver lining, positivity has its own way of turning things around magically. Optimism not just inspires, it enables one to consider the bigger picture lurking in the background & back U to build a better future with it.

• Flexibility
The ever-dynamic economy is forever changing. Good leaders are perceptive enough in being able to spot different possibilities that are vital to one's business at any given situation. They are not hindered by uncertainty & ambiguity. They adapt to the realities of change rather than sticking to an idea rigidly. This doesn’t mean compromising when U meet resistance to Ur idea, instead being willing to find an alternative way around a given obstacle.

• Be Accessible & Communicative
The only way to propel & inspire a team is by undeterred accessibility & crystal clear communication. When a leader takes out time to listen & respond to U, take care of a problem & is easily available to share concerns, people start from being fans to followers which is g8t for encouraging people to trust U. Seeming both, accessible & available to talk to those around, is a huge plus for leadership. A good leader opens the door for U, invites U to be a part of things.

• Ability to Delegate
Trusting Ur team with Ur ideas showcases strength, not weakness. Having conviction in Ur team to achieve a vision will only empower U towards progress. Delegating tasks to appropriate departments, & furnishing the right resources for those undertaking it, is a sign of a good leader. They not only give the team a chance to prove how talented, capable, and committed they are at a given task but also allow them to sort out the best way to accomplish it.

• Practice Humility
Being humble is perceived as an indispensable & powerful leadership factor to possess. Humble leaders are more engaging, free of hidden agendas, office politics, & power struggles. They inspire people to succeed regardless of the difficult surroundings, they may find themselves in. They not only give due recognition to the person responsible for achieving it, U will never find them speaking abt themselves in a superior manner. They share accomplishments in the most humble, positive way only when necessary.

At the end of the day, leadership is more often than not about exhibiting soft skills rather than hard skills that one possesses. A leader understands what drives the bottom line & can get others to perform at their best that ultimately creates winning organisations. Everyone desires to function with such leaders as it makes the people happy, motivated & ambitions at work. Organisations become more receptive towards risk taking, recognising opportunities & reaching success. This symbiotic relation, in turn, helps the leader to grow & develop!!!



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