S L Ganapathi Managing Director Shelka Marketing Services Pvt. Ltd and Chairman Symatec Associates Pvt. Ltd New Delhi

Transcription

1 LOGISTICS Management S L Ganapathi Managing Director Shelka Marketing Services Pvt. Ltd and Chairman Symatec Associates Pvt. Ltd New Delhi S K Nandi Faculty ICFAI Business School (IBS) Pune OXFORD UNIVERSITY PRESS

2 DETAILED CONTENTS Foreword v Preface vi Acknowledgements x Features of the Book xii Brief Contents xiv List ofexhibits and Case Studies xxii PART I: LOGISTICS INTRODUCTION AND INTEGRATION 1 n to Logistics 3 Globalization and International Introduction 3 Business 32 Logistics and Supply Chain Management 4 Economic Globalization 33 Logistics Management Boundaries and Relationships 5 Financial Globalization 34 Cultural Globalization 34 Factors Impacting Logistics 8 Globalization and Growth in Transportation Elements in Logistics 11 International Trade 37 Ocean Transport 11 Logistics and Supply Chain Air Transport 12 Management in a Globalized World 39 Road Transport 13 Key Issues in Supply Chain Management 40 Rail Transport 16 Network Configuration 41 Inland Waterways 16 Supply Chain Integration and Strategie Pipeline Transportation 16 Partnerships 42 Other Elements of Logistics 18 Information Technology 42 Packaging and Materials Handling 19 Interface with Other Functions 19 Innovations in Logistics and Importance of Logistics in Supply Chains 42 Information Flow 19 Design for Logistics Optimization Integrative Nature of Logistics 20 fapanese Hybrid Cubical Melons and Logistics Growth Drivers 21 Knocked-down Furniture 42 Logistics in India Current Context 22 Manufacturing Postponement to Capture Larger Markets through 2. Logistics in Supply Chain Context 27 Smart Logistics 43 Supply Chain Management 31 International Raw Material Linkage Enabled by Logistics Strategy 44 PART II: LOGISTICS DELIVERY AND FULFILMENT 3. Unitization, Palletization, and Containerization 53 Unitization 54 Pre-slinging 55 Advantages of Unitization 57 Palletization 58 Classification of Pallets 58 Green Pallets Standards in Palletization 59 Stackability of Pallets 61 Bracing of Goods on Pallets 63 Phytosanitary Compliance and International Plant Protection Convention (IPCC) 64 Palletization and India Supply Chain 64 Unitization of Free-flowing Bulk Cargoes Jumbo Bags 65

3 xvi DETAILED CONTENTS Bulk Liquid Unitization 66 Packing for Various Modes of Transport 68 Containerization 69 Sizes of Containers and Standardization 70 Advantages of Containers 71 Materials of Construction and Design of Containers 73 Identifying a Container Container Unique Number 73 Container Safety Convention Plating 75 Types of Containers and Cargo Profiles 76 Ownership of Containers 81 Securing of Containers 82 Container Lashing 86 Container Flaws 86 Empty Generation and Innovative Practices Arising Out of Repositioning Opportunities 87 Last Voyage Containers 88 Benefits of Containerization 90 Container Terminology 91 Twenty-foot Equivalent Unit 91 Füll Container Load 91 Less than Container Load 91 Container Freight Station 91 Container Yard 92 Container Movements-designations Marine Transportation 99 International Maritime History 100 India's Maritime History 101 Terms Associated with Ships 104 Classification Societies and Registries of Shipping 107 Vessel Ownership 108 Types of Ships 110 Categorization Based on the Nature of Cargo 110 Classification of Ships by Sizes 113 Types of Shipping Services 114 Voyage Charters 115 Factors that must be kept in Mind white Chartering Ships 115 Time Charter 116 Trip-time Charter 117 Bareboat Charter 117 Contract of Affreightment 117 Chartering Brokers Important Channel Partnership 118 Broad Categories of Broker 118 Balde Exchange 119 Liner and Container Shipping 120 Consortia Operations 121 Six Generations of Container ships 121 Service Routes 124 Hub and Spoke Approach 125 Consolidators and Less than Container Load Services 125 Impact of IT and ITES on Container Shipping 126 Ship Owner Strategy Vertical Integration 126 Container Logistics, Cabotage, and Leasing 127 Container and Liner Shipping Tariff 127 Freight Structure for Less than Container Load and Break-bulk Cargoes 129 Füll Container Load Freight Rates 130 Terminal Handling Charges 130 Freight Rates for Special Containers 130 Surcharges 131 Role of Various Entities in Shipping Business 132 Role of the Agent 133 Modern-day Shipping Organizations 133 Stevedores 134 Role of Surveyors 134 Duties and Responsibilities of a Surveyor 135 Changing Landscape of Shipping Air Transportation 160 Choice of Air Transportation 161 Classification of Aircraft 163 Moving Shipments by Air 168 Labelling and Marking 169 Unit-load Devices 170 Dangerous Goods and Regulation of Carriage 170 Primary Cost Comparison with Other Modes 177 Indian Air Cargo Industry 178

4 DETAILED CONTENTS XVÜ International Air Transport Association and its Role 179 Air Cargo Distribution Channels 180 General Sales Agents 180 IATA Accredited Agents 181 Subagents 181 Air Cargo Integrators and their Penetration into India 182 Air Cargo Freight Rates and Structure 183 Unit of Freight 183 Currency of Airfreight 184 Structure of Airfreight 184 Rate Structure with Respect to Commodities 185 The Air Cargo Tariff 186 Sure karges 186 Consolidation and House Air Waybills 188 Market Conditions for Air Cargo in India 188 Regulatory Needs of Road Transport 216 Economics of Road Transport 218 Cost of Vehicle Financing 219 Employee Costs 219 Capital Depletion or Replacement Recapture 219 Standing Charges 220 Price vs Costs 220 Pricing Strategy 220 Cost-plus Pricing 220 Value of Service Strategy 222 Combination Strategy 222 Goods Consignment Notes 222 Carriage of Goods across International Border CMR Convention 224 CMR Convention 224 TIR Convention 224 Road Transport Industry in India and its Problems Surface Transport Road Introduction Types of Road Transport Vehicles Three-wheeled Delivery Vans Loadability Below 500Kgs 191 One Tonners/Sub-one Tonners 198 Light Commercial Vehicles Heavy Commercial Vehicles Rigid Multi-axle Vehicles 202 Semi-articulated Tractor Trailers 202 Full-tow Tracks 204 Specialty Vehicles 204 High-cube Vehicles Built-on Bus Chassis for White and Light Goods 205 Bulk-cement Carrier 206 Heavy-lift Transport by Hydraulic Axles and Air-cushioned Trailers 206 Transportation Services and Structure of the Industry Transport Contracts Attached Trucks 211 Types of Services on Offer Parcel Service 211 Surface Express 211 Füll truckload Services 212 Project and Heavy Lift Transport 213 Advantages of Road Transport Over Other Modes Surface Transport Rail 235 Introduction 235 Indian Railways Freight Infrastructure 237 Important Elements of Indian Railways 237 Gauge in Indian Railways 239 Locomotion 239 Freight Cars 240 Types of Services Offered by Indian Railways 245 Containerization in Indian Railways 247 Containerized Cargo Commodities 248 Privatization Efforts in Railways 249 Privatuation for Port Linkages 249 Containerization and Effect on Indian Railways 250 Automobile Freight Train Operator Scheme 250 Railway Freight Tariff and Comparison with Containers and Road 251 Dedicated Freight Corridors 251 Multimodal Transport Some Unique Models in US 256 Container on Freight Car 256 Trailer on Freight Car 256 Road-railer Wagons 257 Suggestions for Optimal Use of Railway Mode Logistics Managers 258

5 XVÜi DETAILED CONTENTS 8. Ports, Harbours, Docks, and Terminals 265 Introduction 265 General Description of Harbour, Port, and Docks 267 Harbour 267 fw 267 Dock 268 Dry Docks 269 Important Features of a Port 269 Drafi 269 Dredging 270 Channel 271 Towage 271 Hinterland 271 Lighthouse 272 Facilities Inside Docks 272 Marine Terminals 272 Bulk Terminals 273 Bulk Terminal Storage 273 Bulk Yards 275 General Cargo or Multi-purpose Terminals 276 OilBerths 277 Terminal Warehouse and Storage Areas 278 Bulk Material Handling Systems in Port Terminals 278 Bulk Cargo Ship Loading 279 Bulk Cargo Ship Unloading Systems 279 Container Terminals 279 RO-RO Terminals 280 Single-buoy Moorings 281 Container Handling and Transportation Equipments 282 Equipment Required for Effkient Container Terminal Operations 284 Ship Loading Cranes 284 Yard Cranes and Shifting and Lifting Equipment 285 Yard Gantries Rubber-tyred/Railmounted 285 Lifting and Moving 285 Importance of Software For Yard and Terminal Operations 288 Indian Ports and Development 288 Indian Ports 289 Container Terminals Build-Own Operate-Transfer or Build-Operate- Transfer System of Operations 290 Indian Port Traffic 292 Benchmarking Global Ports vs Indian Ports 295 Issues of Drafts in Indian Ports 296 Tariff in Indian Ports and Tariff Authority for Major Ports 297 Role of Inland Container Depots and Container Freight Stations 298 PART III: LOGISTICS DOCUMENTATION AND PROCESSES ALIGNING TO NATIONAL AND INTERNATIONAL TRADE 9. Role of Customs in Regulating International Trade Role of Customs in India's International Trade Role of Carriers in Customs Process 311 Import General Manifests 311 Manifest and Security 313 Inland Container Depots and Sub-manifests 314 Consolidation Manifests 314 Flight Check 315 Export General Manifests 315 Role of Custodians 315 Customs House Agents Declarations and Averments by Merchants Indian Customs Automation 318 Harmonized System of Commodity Classification or HS Codes 320 Construction of HS Codes 322 Principles of Classification 323 Customs Process through Indian Customs and Excise Gateway 324 Export Clearance 324 Clearance Process for Imports 32 7 Import Clearance Process at Customs through Electronic Data Interchange

6 DETAILED CONTENTS XIX Some Critical Factors in Customs Clearance 330 Methods of Valuation 331 Customs Clearance and Foreign Exchange 333 Accredited Clients Programme 333 Authorized Economic Operator Programme 334 Customs Tariff and Structure 334 Import Duty 334 Export Tariff 339 Miscellaneous Acts and Rules Affecting Customs Clearance 339 Appeal Procedures International Trade Documentation and International Finance 350 Importance of Documentation in Logistics 350 Indian Foreign Trade Policy and Procedures 351 Foreign Trade Policy 352 Duty Remissions and Exemption Schemes 353 Duty Remission Scheme 354 Duty Exemption Scheme 354 Standard Input-Output Norms 355 Export Promotion Capital Goods Scheme 355 Tax Free or Concession Enclaves 355 Logistics Process and Export Promotion 356 Status Holders 357 International Commercial Terms 358 Decision Alternatives Regarding Incoterms 360 Precautions while Choosing INCOTERMS and Agreeing with Seilers about the Choice 361 Variations 361 Transport Documentation 362 Issuer of Transport Document 363 Functions of Transport Document 363 Bill of Lading and Sea Waybills 364 Format and Construction of the Bill of Lading 364 Said to Contain 364 On-board Bill of Lading 365 Clean or Claused Bill of Lading 365 Types of Bills of Lading Commercial Applications 366 Variation of Sea Carriage Documents 367 Forwarders Cargo Receipt 369 Minimizing Transaction Costs through Simple Forms of Ocean Transport Documents 370 Number of Bills of Lading 371 BIMCO Paramount Clause General 371 Terms and Conditions of Carriage 371 Contours of the Conventions or Acts 373 Carriers' Legal Liability and Limits 3 73 Need for Limitation of Liability 373 SpecialDrawing Rights and its need 373 Freight Payment 374 Delivery 374 Lien 374 Claims 375 Definition ofpackage 375 Charter Party Bill of Lading 375 House Bill of Ladings and Master Bills ofladings 375 Air Waybills 376 Consignee or Notify Party 377 Limitation of Liability for Air Shipment 377 House and Master Airwaybills 3 78 CMR Document Covering International Transport by Road 379 International Transport of Goods by Rail 381 Payment Methods in International Transportation and UCP Documentary Payments 383 Letter of Credits and UCP SWIFT 386 Types of Letters of Credits 386 Irreuocable Letter of Credit 386 Confirmed Letter of Credit 386 Transferable Letter of Credits 387 Revolving Letter of Credit or Standby Letter of Credit 387 Back-to-Back Letter of Credit 38 7 Export Financing in India 388 Factoring and Forfeiting 388

7 XX DETAILED CONTENTS 11. Documentation for Domestic Transport and Compliance 400 Principle of Value-added Tax and Logistics 401 Documents Accompanying Trucks for Border Clearances 405 Entry Taxes in States and Impact on Logistics 405 Road Permits 405 Mumbai or Maharashtra Octroi 406 Octroi Issues and Mumbai as an Entry Port or Airport for the Nation 407 Value-added Tax and Inter state Procedures 408 Central Excise and Logistics 408 Service Tax on Transporters 408 Goods and Services Tax 409 Goods and Services Tax and Logistics 409 Goods Consignment Note and Carriage of Goods by Road Act Insurance and Risk Management in Logistics 421 Introduction 421 History of Insurance 422 Lloyd's of London 423 Lloyd's Agency 423 London Market 423 Insurance 424 Need for Insurance 424 Insurance Process 425 Perils at Sea 426 Functions of Insurance 427 Types of Insurance 427 Seif Insurance 428 Underlying Principles of Insurance 428 Claim and Claim Notice 433 Open Policy and Open Cover 433 Claim Settlement 434 Warehouse or Storage Insurance 434 Insurance Companies and Regulation in India 435 Insurance Regulatory and Development Authority 436 Reinsurance 436 Carriers' Legal Liability Insurance 437 General Ave rage 437 Example of General Average 438 Adjustment and Claim Settlement 438 PART IV: LOGISTICS STRATEGYAND SUPPLY CHAIN MANAGEMENT Logistics Strategy, Systems Flanning, and Implementation 465 Significance of Logistics in Strategie Decisions 466 Logistics as Backbone of Business Proposition 468 IT Reselling 468 Maintenance, Repair, and Overhaul Supplies 469 Lean Manufacturing Strategy and Logistics Services 469 Logistics Strategy in a Globalized World 470 Uniqueness of Global Operations 472 Integration of Operations 474 Elements of Supply Chain Design 475 Procurement 475 Logistics Network Design 477 Logistics Strategy and Planning 478 Achieving Excellence in Global Logistics Operations 479 Measuring Supply Chain Performance Warehousing 484 Introduction 484 Evolution of Warehousing 485 Role and Functions of Warehousing 486 Storage 488 Product Mixing 491 Cross Docking 491 Assembly and Product Postponement 492 Transit Storage and Duty Deferment 493 Types of Warehouses 493 Classification of Warehouses Based on Ownership 493 Classification of Warehouses Based on Material Stored 497

8 DETAILED CONTENTS XXI Food Grain Warehouses 497 Consumer Products Warehouses 497 Refrigerated Warehouses 498 Chemical or Hazardous Material Warehouses 499 Tankage 499 Warehouse Operations 500 Receiving 500 Put-away and Storage 501 Order Picking 501 Checking and Packing 502 Shipping 502 Warehouse Location Decisions 502 Design and Layout Decisions 504 Information Technology in Modern Warehousing 506 Trends in Modern Warehousing 507 Modern Warehouse Construction 507 Automation in Material Handling 508 Contract Logistics and Warehouses Inventory Management 515 Need for Inventory 515 Types of Inventory 516 Functions of Inventory 517 Decisions Involved in Inventory Management 518 Functional Classification of Inventory 519 Classification Based on Usage 520 Cost Considerations in Inventory Management 520 Unit Cost or Price of Items 520 Ordering Costs 521 Inventory Holding or Carrying Costs 521 Stock-out Costs 522 Inventory Data System Costs 522 Other Important Considerations 522 Demand Patterns 522 Replenishment Lead time 523 Inventory Management Under Different Conditions 523 Lot Sizing Models When Demand is Constant 524 Lot Sizing Models for Time Varying Demand 528 Index 5 75 About the Authors 583 Lot Sizing Models for Probabilistic Demand 529 Some Modern Techniques of Inventory Management Technology in Logistics 535 Role of Information Technology in Logistics 536 Logistics Information System 537 Enterprise Resource Planning 538 Electronic Data Interchange 538 Barcoding 541 Radio Frequency Identification 543 Global Positioning System 545 Warehouse Management System and Automated Storage and Retrieval System Logistics Services and Intermediaries, Service Providers, and Outsourcing in Logistics 550 Logistics Services 550 Road Transport 552 Rail Transport 552 Warehousing and Contract Logistics 553 International and Cross-border Logistics Services Providers 554 Listing of Logistics Players and Characteristics 554 Logistics Services and Third-party Logistics 554 Profile of Outsourced Services under Third-party Logistics 557 Third-party logistics in India 557 Some Disadvantages of Third-party Logistics System 559 Fourth-party Logistics 559 Lead Logistics Service Providers 563 Integrators 563 Fourth-party Logistics and India 563 Logistics Service Quality Indices, Service Level Agreements, and Deliverables 565 Logistics Service Contracts 567