2 nd Joint Workshop in Mechanical, Aerospace and Industrial and Management Engineering 5-6 April 2008, Indian Institute of Technology, Kanpur INDIA Research on Responsive Supply Chains Involving Special Economic Zones (SEZ) and Industrial Zones (IZ) in India with Singapore Transshipments NTU: Dr. Sivakumar IIT K: Dr. Kripa Shanker, Dr. Ashok Mittal, Dr. Peeyush Mehta, 5 APRIL 2008
Outline Background Project Objectives Methodology Deliverables Conclusions
Background Role of SEZs generation of economic activity promotion of exports of goods and services promotion of FDI creation of employment opportunities development of infrastructure facilities Key Strategies multi-product SEZ with varying logistics and knowledge requirements clusters oriented SEZ with similar logistics issues Design of Supply Chain very critical
Background Year Export Value (Rupees crore) Growth Rate 2003-04 13,854 39% 2004-05 18,314 32% 2005-06 22 840 25% 2006-07 34,615 52% Projected exports from all SEZs for 2007-08: Source: www.sezindia.nic.in Rs. 67088 crores
Background
Research significance and relevance of project to industry Inbound & outbound logistics analysis of import of semi finished goods to a typical India SEZ and re-export via sea or air after value adding operations is of great value to the industry primarily because an important destination for the exports is the transshipment in Singapore or other Singapore managed ports. Singapore based logistics operators & infrastructure have the potential to greatly benefit from the knowledge and understanding of the dynamics of the SEZ and IZ models. The strength of Singapore infrastructure and support, particularly PSA & CAAS, can effectively benefit from the improvement and growth of global supply chains covering India SEZs and IZs, primarily due to Singapore s strong and growing trade and investment relationship with India.
Research objectives Develop models of operation of SEZ and IZ in India that Singapore can add value. This goal will be achieved by the following objectives. Study the existing supply chain of representative of IZ and SEZs in India and its flow through Singapore ports or Singapore managed ports of PSA & CAAS. Study alternative models of Supply chain logistics operations relating to selected SEZs and IZs with improved performance including transhipment and hubbing through Singapore ports or Singapore managed ports PSA CAAS. Detailed analytical study, optimization & simulation of alternative supply chain designs covering India SEZ and IZ, PSA, PSA-owned global ports and CAAS in terms of efficiency, responsiveness, cost and time.
Project research methodology Select IZs and SEZs primarily based on (a) cover maximum logistics and transportation issues (sea port, air, rail and road) in SEZ supply chains and (b) cover sectors based on the level of economic activity covering - Multi-products including Electronics, Textile, Automobile, IT/ITES, Footwear, Metals and Food Processing Site visits and structured questionnaires: data will be gathered relating to: (1) enterprise background, (ii) level of operations & flow, (iii) logistics and supply chain related issues, (iv) direction and trend of exports and imports. Supply chain and logistics analysis using simulation mathematical modeling, optimization where applicable, analysis, supply chain design, inventory positioning & design, and logistics design.
Industry collaborator: APL Logistics & NOL Neptune Orient Lines (NOL) & APL logistics are the Industry collaborator for the purpose of validating our models. NOL is a global transportation company- core businesses in container transportation & supply chain management. Revenue for the year US$5.7 billion. APL Logistics is part of NOL Group providing full range of supply chain services. APL carries 2 million FEUs (forty-foot equivalent unit) per year. APL has major operations in India; Rail project is one of them Currently acquiring land to build ICD (inland container depot). Other big players CONCOR (government), Adani, Reliance, Gateway
Examples: Automotive Toyota, electronic: Dell Commercial areas Mumbai Commercial areas Delhi Toyota SEZ Commercial areas Chennai India Port East Asia & SE Asia Commercial areas Mumbai Commercial areas Delhi Commercial areas Chennai Dell SEZ India Port Singapore Port Transhipment East Asia & SE Asia
Rail Freight. Low cost Slow Insecure if open Poor responsive Limited connectivity Road Freight. 60% more cost Faster More secure Unreliable timing Limited routes Social concerns Logistics Optimization and tradeoff
Major port-hub-hub transport network issues related to oncoming big players of supermarket chains. State border Tax issues Domestic hubs 3PL freight management Logistics Milk rounds East- West links Other related aspects Restriction on %tage of local consumption and requirement for export from SEZ
How to optimize 3PL Logistics Manufacturing investor focus on manufacturing & technology - 3PL focus on Supply Chain & Logistics Research focus on Cost & Time optimization as the benefit and value of using 3PL operations by a manufacturing investor operating at SEZ or IZ Optimization and of Supply Chain Design and Logistics will enable 3PL to create value to a manufacturer at SEZ or IZ Key Performance measures: Responsiveness, time, delivery accuracy, cost, reliability, and security
Initial Research Scope Major Indian Ports of Chennai, Mundra, Mumbai, Nava Sheva and Vizag and Airports of Bangalore, Delhi and Chennai to link to SEZs and IZs of Chennai, Delhi, Mumbai and Bangalore for this study Scope includes current state of inbound and outbound logistics operations between special economic zones (SEZ) and IZs in India and its trading partners in East Asia and South East Asia, initially covering Automobile and Electronics sectors Limited to Containerized logistics and Airport cargo (high value goods)
Challenges Inbound logistics and Outbound logistics Current and Alternative logistics options - Cost and Time Malaysia/Singapore C 5, T 5 China Japan India Port & Bus Prcs Hub SEZ C 1, T 1 C 2, T 2 C 3, T 3 C 4, T 4 Optimize T and C T = T 1 + T 2 + T 3 + T 4 C = C 1 + C 2 + C 3 + C 4
Concluding thoughts This is a NTU-IITK collaborative project with an Industrial collaborator. Overall aim is to examine the existing supply chain of representative SEZ and IZ in India and its flow after value adding operations, & study of alternative models of Supply chain operations with improved performance in terms of efficiency, responsiveness, cost and time. We will be using detailed analytical study, optimization & simulation in this project. Designing such responsive supply chain is important for companies in the region that can benefit due to Singapore s strong and growing trade and investment relationship with India.