MMR July 2013

Materials Management Review 1 July 2013
From the Desk of The National President From the Desk of The National President From the Desk of The National President From the Desk of The National President From the Desk of The National President
My dear readers,
Greetings from National President.
Morse Code is given a decent burial by BSNL which has been handling since 1990s.
Physical proof of communication is definitely missed out. In rural areas it is still hard to
reach by other means in emergency. But now Large majority of villages are covered by phones. In the domain
of IIMM also we were heavily depending upon Telegram. Thanks to IT and Communication, there is unbelievable
development in day to days communication. Skype , social networking , tele conferencing , video conferencing
etc are the order of the day. I wish all our IIMM fraternity adopt the latest tools and techniques to improve
efficiency of SCM .
There is a common notion that people over 50 years are averse to computers and electronic media of
communication. It is a question of attitude only. I personally feel this is only a matter of small attention to be
given. In fact it is much more comfortable to adopt the latest technology.
It is here IIMM think of introducing more youngsters in helm of affairs so that tomorrowsIIMM is managed by
contemporary leaders. Even at the cost of repetition i would like to remind that India is the youngest country in
the world with an average age of 26 years. Young India will rule for the next one century. I encourage and
appeal to all our young leaders to take more interest and active part in the IIMM programs and feel the
ownership. The future of IIMM will be in the hands of young leaders. All the seniors are always available in the
advisory roles.
It is a matter of great concern that our flagship educational courses are not being preferred with the lethal
competition around. We have to totally change and adopt to the state of the art publicity, improve visibility,
besides revisiting the course content with an young mind and strategies. This reminds me the return of Mr.
Narayan Murthy to Infossys to the top place when faced with new challenges.
Although with a minor hiccups and fluctuation factors, India has taken its place as one of the world s great
economies having overtaken Japan as the world s third largest economy in purchasing power parity terms. This
is a remarkable transformation by any standard. it is good for India and good for the world.
Innovation in SCM, adoption of futuristic technology and obsession to Quality will drive the growth of the economy
and Govt policies to combat the slowing economies of USA and UK who are our major overseas business partners
will matters much. All our IIMMites are fully equipped and developed to face any challenges.
Regards,
C. Subbakrishna
National President
np.iimm@yahoo.com
From the Desk of Editor-in-Chief From the Desk of Editor-in-Chief From the Desk of Editor-in-Chief From the Desk of Editor-in-Chief From the Desk of Editor-in-Chief
Indian Exports are finding it difficult to lower trade deficit on account of ambiguous global
economy driven by Western Economies, particularly because of debt-ridden Europe & slow
growth of US & other economies. Fiscal Year 2012-13, has seen the decline of 1.76% of Indian
Exports to USD 300.6 billion while imports grew by 0.44% to USD 491.48 billion pushing up
Current Account Deficit to USD 190.91 billion. This deficit is a matter of serious concern and
keeping this in view, Govt. has announced Annual Supplement to Foreign Trade Policy intended
to increase Indian Exports from current level.
The Annual Supplement announced by Mr. Anand Sharma, Commerce, Industry & textile Minister, has emphasized
the need to aid exporters and make them competitive and effective in the global markets. Measures have been taken
to achieve the export target of USD 500 billion by 2013-14.
Zero duty EPCG scheme extended beyond March 2013 and now all sectors to get benefit, specific export obligation
reduced by 10% to promote domestic manufacturing of capital goods, Incremental Exports Incentivisation Scheme,
widening of Interest subvention scheme to 134 sub sectors of engineering sectors, exports of High Tech product
would be incentivized. Served from Indian Scheme (SFIS), service providers are entitled to Duty Credit Scrips at the
rate of 10% of free foreign Exchange earned during a Financial Year.
Labour intensive sectors like Textiles have been the thrust area of the foreign trade policy. Incentives to textile
sector include 2% interest Subvention, 2% Market Linked Focus Product Scheme to US & Europe. The positive move
of allowing duty free scrips under export promotion scheme for payment of excise duty is welcomed by the Industry.
The focus on giving low-cost credit to key export industries and extending the benefit of incentive schemes to
greater number of sectors is a very welcome move as it would provide some stability to our exporters in an
uncertain global environment. The focus on rewarding value-addition is also very welcome as it creates greater
incentives for the integration of our entrepreneurs into global value-chains. Logistics sector is especially heartened
by trade facilitation reforms included in the FTP such as the decision to dispense with the requirement to submit
hard copy of EP copy of shipping bills as they have a direct positive impact on our operation costs.
Export bans are still on the policy agenda. Exports for basic farm produce are banned, but products derived from
this are exempt. Castor Oil, Coconut Oil are also permitted from the prohibition on export of edible oils. This
should be a positive move for the food processing industry.
A no. of measures are announced to revive Investors interest in SEZs like reduction of Minimum Land Area
Requirement. Status holder Incentive scheme (SHIS) was extended for the year 2012-13. Second task force on
Transaction cost in International Trade has been constituted, who will submit their report in 6 months on recognizing
scope for further reduction in Transaction Costs which are the main hurdles to our exports. Clearances for Land
Acquisition to shipping goods overseas are constrained by expensive regulations, inadequate infrastructures etc.
increases the cost of doing Business & Export.
Further, Micro, Small and Medium Enterprise (MSME) exporters are in intense need of comprehensive interventions
to survive global competition. The industry expects the government to lessen taxes, improve infrastructure, and
enhance marketing and manufacturing support. Industry participant believe that rising costs of raw materials, a
weak global competitive environment, diminishing demand from the international markets, increasing oil prices
and inadequate infrastructure are the primary causes of decline in exports.
Supply Chain Managers can avail the opportunities extended by Govt. through recent change in Foreign Trade
Policy to make the Industries most competitive, enhancing domestic production and increasing the export target
thereby reducing the fiscal deficit to boost the GDP growth of the economy.
(M. K. BHARDWAJ)
IIMM is a charter member of
International Federation of
Purchasing & Supply Management
Editor in Chief & Publisher:
Mr. M. K. Bhardwaj
Past President, IIMM &
Former Director Ministry of Defence
Core Committee :
Mr. Ashok Sharma, President 5M India
Mr. V. K. Jain, Former ED, Air India
Mr. Tej K Magazine, Management Advisor
Editors :
Mr. L.P.Patel, Sr. Vice President
Mr. T.G.Nandakumar, VP (North)
Mr. N.K.Kabra, VP (East)
Mr. Anant Kembhavi, VP (West)
Mr. N. Udaya Bhanu, VP (South)
Mr. Madhu Sudan Pathak, VP (Central)
Mr. O.P.Longia, NS&T
Mr. Suresh Kumar Sharma, IPP
Prof.(Dr.) V. K. Gupta - IMT, Ghaziabad
Correspondence :
MATERIALS MANAGEMENT REVIEW
Indian Institute of Materials
Management
Veer Sadan, 4239-A/2,
1, Ansari Road, Darya Ganj,
New Delhi - 110002.
Tel : (011) 23266089, 23242124
Fax : (011) 23277207
E-mail : iimmmmr@vsnl.net
Printed at :
Power Printers,
4249/82, 2 Ansari Road, Daryaganj,
New Delhi - 110002
Edited, Printed & Published by :
INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Veer Sadan, 4239-A/2, 1, Ansari Road, Darya Ganj, New Delhi - 110 002.
Phones : (011) 23266089, 23242124 Fax : 011-23277207
E-mail : iimmmmr@vsnl.net, Website : iimm.org
(Published material has been compiled from several sources, IIMM disowns any responsibility
for the use of any information from the Magazine if published anywhere by anyone.)
MATERIALS MANAGEMENT
REVIEW
Volume 9 - Issue 9 (July 2013)
C O N T E N T S
AN INTERVIEW WITH SHRI B.K.SINHA, ADDL. MEMBER,
RAILWAY (STORES) 4
INDIA - NEXT WAVE OF INCLUSIVE GROWTH 5
GOVERNMENT CONTRACTS : FAIRNESS OBLIGATIONS FOR
GOVERNMENT CONTRACTS IN INDIA 7
THE GSTS EXEMPTION COMPLICATIONS 9
BIS NEWS : PALLETS - AN EFFICIENT AND SAFE WAY OF
MATERIAL HANDLING 10
CORPORATE CHALLENGES - OUTSOURCING IN
VALUE CHAIN 13
INLAND WATER TRANSPORTATION - A TOTAL APPROACH
FOR MULTIMODAL TRANSPORT SOLUTION 17
EXCISE DUTY EXEMPTED FOR LOCAL GOODS AT AIRPORT
STORES 18
GREEN IMPROVEMENT PROCESS 19
BENEFITS OF COMPETITION POLICY IN PUBLIC
PROCUREMENT WITH SPECIAL REFERENCE TO INDIA 20
EXPORT PROMOTION BONANZA - CAPITAL GOODS
IMPORTS @ 0% DUTY 26
SUPPLY CHAINS OF THE FUTURE - LEAN AND AGILE 27
WTO UPDATE : HONBLE PRESIDENT OF INDIA
SHRI PRANAB MUKHERJEES SPEECH AT THE
GOLDEN JUBILEE CELEBRATIONS OF
INDIAN INSTITUTE OF FOREIGN TRADE 30
INNOVATION - VALUE CHAIN 32
LOGISTICS AND SUPPLY CHAINS MANAGEMENT
A CASE STUDY WAL-MART 36
MANAGING RISKS IN SUPPLY CHAINS 38
CURRENCY EXCHANGE RATES 40
MATERIAL MANAGEMENT FOR HEALTHCARE SECTOR 41
NEGOTIATION SKILLS 45
FACILITATOR OF CROSS-BORDER TRADE 46
E-BUSINESS AND SUPPLY CHAIN MANAGEMENT 47
COMMODITY INDEX 49
BRANCH NEWS 50
EXECUTIVE HEALTH 55
LIST OF IIMM BRANCHES 56
PAGE NO.
Q1. How do you perceive Supply Chain Management in
Railways?
Indian Railways supply chain management (SCM)
encompasses the management from conceptualization
to condemnation of roughly 1.5 lakh discrete items. It
translates into an annual procurement of about Rs
30,000 crore worth of materials. Railways stock these
items at around 250 warehouses spread throughout
the country and uses a complex mix of rail and road
networks for ensuring the material availability at the
end users. It normally uses the annual consumption
method for forecasting of requirement and Bill of
Materials for assessment of quantities in different
production units of Railways which manufacture
locomotives, coaches and wagons. Procurement
practices in Indian Railways are based on General
Financial Rules(GFR), guidelines issued by Central
Vigilance Commission (CVC) and follow the established
principles of public procurement. For its specific
guidance, it uses Indian Railways Stores Code (first
published in 1938) and a more recent Rules for entering
into supply contracts as the basic policy documents
for material procurement. This book and also its
updates thereafter are available on the internet
(www.indianrailways.gov.in) for wider dissemination
and transparency.
Q2. Transport plays an important role in overall
development of a Nations Economy. How Indian
Railways is contributing towards this cause?
Indian Railways play a very important role in the
economic development and social welfare of the
country. It stimulates development of the nations
economy by transporting goods and passengers and
therefore is rightly called as the lifeline of the country.
It transports about 2.33 crore passengers and 3 million
tonnes of freight traffic per day and has recently joined
the select group of one bi llion clubof nations
transporting more than one billion tonnes of freight
traffic per year . The number of passengers being
transported per day is more than the population of
many countries. Our earnings from passenger and
goods services are about Rs 32000 cr and Rs 86000 cr
respectively.
Q3. In the current economic scenario, what are the
significant challenges to enhance the efficiency of
Materials Management deptt. of Indian Railways and
steps have been taken to overcome?
The challenge remains to retain the service level
notwithstanding economic constraints as any out of
stock situation has serious implication on train
operations. How the SCM strategy followed by Indian
Railways has resulted in meeting the twin challenge of
reduction in total system wise cost and yet maintaining
the system wise service levels can be seen from the
Table below:
Parameter 2008-09 2009-10
Value of purchase (other than
civil engg items) 27495Cr (a1) 27876Cr(a2)
AN INTERVIEW WITH SHRI B. K. SINHA,
ADDITIONAL MEMBER, RAILWAY (STORES)
MR. M.K. BHARDWAJ
CHIEF EDITOR MMR, IIMM
Iron & Steel index 288.4 (c1) 300.6 (c2)
Value of Purchase at constant
price of 2008-09 (other than 27495Cr 26750 Cr
civil engg items) (c1/c2)*a2
Ratio of total purchase values/
(freight tonne KM + Passenger Km
of train services) 0.0197 0.0185
Q4. What are your views regarding e-procurement and
what steps have been taken by railways in this direction?
The Electronic Procurement System (EPS) implemented
by Indian Railways is a shining example of use of
Information Technology (IT) for achieving the twin
objectives of efficiency and transparency in supply
chain management. The system (EPS) was started in
August 2008 and was rolled over in entire Indian
Railways. I am happy to share that so far more than
3.80 Lakh tenders have been uploaded on the Centralized
Website www.ireps. gov.in and more than 16800
vendors are registered with this website. The EPS has
been a success story for vendors too. Vendors have
gained in terms of increased transparency, increased
and easy access to tender and purchase based
information across all Zonal Railways and Production
Units and reduced transaction costs for participation
in tenders. The bid submission and opening being online,
not only can the vendors participate in tenders but they
can also access other informations like comparative
statement of rates as soon as the tender is opened
electronically.
Q5. IIMM being a professional body of Supply Chain
Management, what are your expectations from our
Institute towards railways & Profession?
Effectively managed procurement properly planned
and executed are essential to achieve value for money
(VFM) for the taxpayer. This requires a great deal of
expertise and knowledge in managing and monitoring
public procurement. Thus, there is a need to understand
that public procurement has emerged as a specialized
discipline in itself. Its importance is increasing day-by-
day due to present day economic scenario. However,
barring a few departments (Railways and DGS&D), there
is a lack of trained man power in the area of public
procurement in the government. There is, therefore a
need to actively encourage capacity building in the
area of public procurement. Capacity building need to
be tackled at three levels:-
(a) Competence building of public procurement
managers
(b) Knowledge management in government on public
procurement
(c) Dissemination of best practices
Indian Institute of Materials Management(IIMM) has
been playing a very important role in Capacity building
referred to above for last so many years. It is expected
that it would not only continue its praise worthy role in
this area but also expand its activities in the years to
come.

INDIA - NEXT WAVE OF INCLUSIVE GROWTH
P. CHIDAMBARAM
UNION FINANCE MINISTER OF INDIA
1. My confidence stems from
the fact that while India may
not be insulated from the
difficulties plaguing the
world, Indias economic
fundamentals are strong.
With the economic and fiscal
reforms already put in place
including those on the anvil,
I expect India s growth to be
robust and sustainable. I am
confident that it will gather
further momentum in the
coming years. India has
become an attractive
destination for foreign
investors. We have opened
up the economy further to
foreign direct investments.
2. The Indian growth story is
fascinating. Let s look at it
in the global context:
The global economy is yet to
recover from the economic
meltdown of 2008 which has impacted on both
growth and employment opportunities across
countries. Compounding the problems further is the
European debt crisis.
Recent signs of economic recovery have been weak
and is uncertain. Global economic growth has
slowed down from 3.9 percent in 2011 to 3.2
percent in 2012. According to IMF projects, it is
expected to recover only to 3.5% in 2013. The growth
rate in the advanced economies, which are our
major markets, declined from 1.6 per cent in 2011
to 1.3 per cent in 2012. The US fiscal difficulties
continue, with sequestration and the prospect of
yet another fight over debt still holding back growth.
The crisis in the Euro-zone also continues to pose
serious risks for the global economy,
notwithstanding the OMT announced by the ECB.
Actions in even a tiny economy like Cyprus, have
ripple effects across the world.
3. While, the Indian economy grew at 6.7%, 8.6%, 9.3%
and 6.2% in the four years from 2008-09 to 2011-
12, respectively, GDP growth is expected to decline
to 5.0 to 5.5 per cent in fiscal 2012-13. Clearly, the
persistence of the global slowdown has finally
impacted us significantly. I must, however, candidly
admit that some of the reasons for our slowdown
are home-grown. The boost to demand given by the
monetary and fiscal stimulus following the global
crisis of 2008 was significant. This helped in strong
recovery with final consumption growing at an
average of over 8 per cent annually between 2009-
10 and 2011-12. An unfortunate consequence of
this, however, was somewhat
high and stubborn inflation. It is
this that led to a strong
contractionary monetary
response that slowed
consumption demand. Starting
2011-12, corporate investments
have been adversely affected. As
the growth slowed down and
Government revenues failed to
keep pace with welfare spending,
the fiscal deficit emerged as a
matter of concern. With
Government savings falling and
private savings also shrinking,
the current account deficit (CAD)
widened to 4.6 per cent in H1 of
2012-13 from 4.0 per cent in H1
of the previous year.
4. We are addressing this
problem proactively. However, we
must remember that even in face
of worst possible confluence of
adverse global and domestic
factors, we remained, even in
2012-13, one of the fastest growing large economies
in the world. Nevertheless, I am not satisfied with
the 5%+ growth rate. India s potential growth rate
is 8%+ and we cannot afford to become complacent
and sit back. We are a mature and vibrant
democracy. We have taken effective steps to rein in
economic slowdown and fiscal stress in the past
few months. These measures have begun taking
effect.
5. India s Inherent Strengths: At the forefront of all
this is the focus on inclusive growth. What is
inclusive growth? It is growth that is broad-based,
shared and one that focuses on the poor. A recent
estimate was that for every one percent of GDP
invested in infrastructure, India creates almost
three and a half million direct and indirect jobs.
With our focus on investments in the infrastructure
sector, I want you to consider the reasons why I
think India s growth is likely to be high and
sustained for decades:
First, India s population is young. According to a
recent IMF study, India s demographic dividend
could add about 2% to per capita GDP growth over
the next two decades.
Second, India is focusing on building world class
infrastructure. This policy thrust has spin-offs in
terms of job creation and enhanced investments in
the manufacturing. For instance, the Delhi Mumbai
Industrial Corridor, entailing over $ 90 billion in
investment, will link Delhi to Mumbai s ports,
covering an overall length of 1483 km passing
through six States. This project will have nine mega
industrial zones of about 200-250 sq. km. each,
high speed freight lines, three ports, six airports, a
six-lane intersection-free expressway connecting
the country s political and financial capitals, and
a 4000 MW power plant, and provide a plug and
play environment for manufacturing investment.
Third, India has a large portion of its population
engaged in agriculture. We intend drawing this large
workforce into the high value addition jobs created
by investments in manufacturing. An ambitious skill
development programme is underway to equip our
populace with requisite skills and integrate into
the emerging job market.
Fourth, India s household final consumption is a
healthy 57 percent of GDP. As incomes grow, a
significant portion of it will be spent. In recent years,
growing rural demand has added to healthy urban
middle class consumption demand growth,
buffering India somewhat, though not entirely, from
paucity of aggregate demand that plagues the world.
6. These factors underlying India s growth prospects
are supported by many other drivers like the energy
and vibrancy of our entrepreneurs, a strong
services sector, emerging knowledge spheres and
sunrise sectors, and a large and growing number
of engineers and scientists.
Our fiscal deficit in 2012-13 is estimated at 5.2%.
We may better this target. The Budget 2013-14
estimates a fiscal deficit of 4.8% at the end of the
financial year. I am confident that this will steadily
reduce to 3% or even less by 2016-17.
For fiscal consolidation, we have focused on
controlling outgo on subsidies through better
targeting. These include rationalisation of fertilizer
subsidies, capping of the number of subsidized LPG
cylinders, decontrol of petrol prices, gradual
rationalisation of diesel prices and introduction
of direct benefit transfer system to substantially
eliminate leakages and to help better targeting of
subsidies in various programs. Measures to pass
through fuel prices will also help reduce demand
for oil imports, and thus the CAD. However, let me
stress that our fiscal consolidation has a human
face and the Government will continue to provide
support for the poor and the needy.
We have set up a Cabinet Committee on Investment
to address and resolve bottlenecks impacting
implementation of large projects. It has already
cleared investments to the tune of USD 27 billion.
FDI regime in areas like multi / single brand retail,
airlines etc. have been further liberalized and I am
confident there will be forward movement in areas
like insurance and pensions.
A 15% investment allowance for capital investment
exceeding Rs. 100 Crore or about USD 20 million
within a specified timeframe has been announced.
This is in addition to the normal depreciation
available for new plant and machinery.
Tax incentives for first-time home buyers have been
provided. This is expected to give impetus to
construction industry.
Public Sector Units have been advised to accelerate
their capex investments.
Concerted steps have been taken to provide impetus
to P&NG exploration and coal production (with
likely medium term benefits for the CAD).
An independent regulatory authority will be
announced shortly for the road sector and coal
sector, and for tariff setting in the Railways.
Alleviation of coal shortages affecting power
generation is being addressed by importing coal
and assuring supply of definite quantities of
domestic coal.
The Bengaluru-Chennai Industrial Corridor and
Begaluru-Mumbai Industrial corridor have been
conceived to provide robust infrastructure support
for industrial growth in these high potential areas.
MSME sector is being given special attention.
Two new major ports have been identified for
development.
Fillip is being given to green, sustainable energy
projects.
Steps have been taken to address CAD by moderating
gold demand through higher import duties and
efforts to monetize idle gold stocks lying with
citizens and Gold ETF AMCs.
Steps are also being taken to address food price
inflation through efforts targeting higher
production of protein foods, and improved supply
chain logistics to enable comprehensive
procurement, processing and distribution of agri
produce that would potentially reduce wastage and
control food price inflation.
7. Simultaneously, steps are being taken to cover the
most remote, least developed areas and populations
in the widening infrastructure and financial scope.
Integrated action is being taken in primary health,
education, low-cost housing and food distribution.
Pilot schemes are being launched through
innovative public private partnership models.
8. For financial inclusion, the central bank, the RBI,
has asked rural banks to set up 25% branches in
un-banked regions. As on March 31, 2012, regional
rural banks had a network of 16,914 branches in
the country. Roll-out plans have been drawn up for
opening upwards of 1700 more per year. Private
banks have also started rural branches. A private
bank opened 101 rural branches in December last,
across six states as part of its financial inclusion
plan to provide banking services in unbanked
villages.
9. The government is, separately, aiming at skilling
500 million youth by 2022 through the ambitious
Skill Development Program. About USD 2.5 billion
is spent on training rural below-the-poverty-line
youth.
10. I am sure that today s discussions will lay out the
contours of the half a trillion dollar opportunity
available to the private sector to invest in our
infrastructure during the next four years as well as
demonstrate how this is going to be a
transformational change that will benefit the
lowest rungs of society.
Excerpt from Union Finance Ministers Speech at
India Day at ADB Meeting at IEML

GOVERNMENT CONTRACTS :
FAIRNESS OBLIGATIONS FOR GOVERNMENT
CONTRACTS IN INDIA
SANDEEP VERMA, IAS & DIR. PLANNING & COORDINATION,
DEPT. OF DEFENCE PRODUCTION, MIN. OF DEFENCE
sverma.ias@gmail.com
I
n a recent public tender
2
that was open only to Indian
entities for bidding
3
, the accompanying technical
specifications
4
contained a rather unique and
interesting stipulation. Other than mentioning
performance parameters for the product in question,
the technical specs also required (Indian) bidders to
supply only those products that were fully imported. In
effect, the eligibility criteria and technical
specifications, when read together, transformed this
open to Indian entities only tender into one that was
open neither to Indian manufacturers nor to foreign
manufacturers, but appeared to limit the zone of
participation only to Indian representatives of foreign
manufacturers, making it perhaps the first and only one
of its kind ever witnessed worldwide in procurement
history.
Without commenting upon the merits of that case,
continuing glitches of this nature in the acquisition
process highlight the critical importance of
understanding certain basic principles governing
eligibility and technical requirements for participation
in Indian public tenders. Procurement practitioners are
always cognisant of the fact that these two key
dimensions, if used injudiciously, can sway the outcome
of a proposed contract away or towards a particular
supplier or group of suppliers. Adequate understanding
of these aspects is therefore vital both from a procuring
entity standpoint, who should be fully aware of the
discipline that it is expected to observe while
progressing its procurement actions; as well as from
the bidders perspective, who may need to know the
circumstances and the fora where such mistakes and
errors, whether intentional or unintentional, can be
challenged.
Keeping this backdrop in mind, this brief note outlines
some of the typical sources to look for executive
guidance on the principles underlying a fair
procurement process, as well as the different fora where
procurement actions of government entities can be
questioned by dissatisfied bidders. It also contains
some pointers to key relevant aspects of the Public
Procurement Bill 2012 (No. 58/2012) that was recently
placed before the Lok Sabha
5
for deliberations by Indias
lawmakers.
Locating Fairness Requirements
Within the regulatory domain, fairness requirements
are to be found in General Financial Rules 2005 (GFR-
2005) in respect of procurement by government
departments
6
, whereas individual procurement
manuals govern actions by PSUs and other state-owned
enterprises (SoEs) in India. These requirements usually
relate to both the design of eligibility/ pre-qualification
criteria for participation
7
, as well as the principles
governing formulation and/ or approval of technical or
performance specifications
8
.
The foremost fundamental principle underlying public
procurement in India is that the eligibility conditions
and technical criteria must reasonably relate to user
requirements, without causing adverse impacts on
competition. Insofar as PSUs/ SoEs are concerned, the
specific details, however, tend to vary from one entity
to another. As a basic starting point, it is therefore
extremely important for all stakeholders to familiarise
themselves with specific principles under applicable
procurement rules of the particular procuring entity
9
.
An important source of procurement guidance that
applies uniformly to government departments and to
PSUs are office memoranda issued by the Chief Vigilance
Commission (CVC)
10
, although this guidance tends to be
dispersed across multiple circulars
11
, and is generally
not available as a single, unified code of practices. In
addition, even some reports and compendia
12
of the
CVC are regarded (both by the CVC itself and by Chief
Vigilance Officers (CVOs) exercising oversight on behalf
of the CVC in various government Ministries/
Departments/ SoEs) as inviolable guiding principles for
public procurement. It is therefore vital that procuring
entities and bidders also fully understand their rights
and obligations under this set of documents, even
though these may not be directly related to a particular
contract or to a particular department/ PSU.
Finally, mandatory technical aspects for participation
in public contracts can also be found in independent
government policies, where for instance, the National
Manufacturing Policy (NMP) contains important
requirements on specifying minimum domestic content
in certain specific sectors
13
a requirement largely
unknown to procuring officers as well as potential
bidders participating in such tenders for high-tech
equipment.
With the introduction of a Public Procurement Bill (the
Bill), the regulatory landscape shows some promise
of consolidation of guidance. Part A, Chapter II of the
Bill contains preliminary guidance on general principles
of procurement, including qualification and eligibility
of bidders (sections 11, 12 and 13) and the design of
technical specifications (section 9). An informed
assessment of the Bills potential in bringing clarity to
the existing regulatory landscape may however have to
await the promulgation of detailed rules and guidelines/
instructions under sections 56 and 57 of the Act once it
is passed, that may perhaps allow for deeper insights
into the actual nuances of the eligibility and other
technical requirements.
Challenging Unfair Actions
While the GFR-2005 entrusts all procuring officials with
responsibility of ensuring due process in their respective
roles, the Manual on Policies and Procedures specifies a
designated appropriate administrative authority of
the concerned procuring Department with an oversight
function in case a tenderer feels that the proper
procurement process is not being followed and/or if its
tender has been rejected wrongly
14
. In addition, the CVC
and CVOs also discharge an important oversight
function under the prevailing regulatory scheme.
Almost all departments/ ministries are yet to designate
such authorities as required by the Manual, with the
result that dissatisfied bidders tend to file complaints
at all possible administrative venuesincluding
various higher levels of the political executive, related
departments of the Government as well as the
Department of Expenditureas well as before
practically all possible oversight institutions. In
addition, a violation of a sector-specific policy such as
the NMP could also potentially be challenged before
the issuing Ministry or the National Manufacturing
Competitiveness Council, further adding to the list of
potential fora for bid-challenge.
While overlapping jurisdictions has the benefits of
permitting unending forum-shopping to a dissatisfied
bidder, the flip side is that disposal of procurement
complaints tends to be haphazard and ad-hoc, with no
certainty of disposal within guaranteed timeframes or
guarantee of final authority for reforming a procurement
process gone wrong.
With effect from last year, the Central Government
requires all departments
15
and PSUs
16
to include an
integrity pact (IP) in their bidding documentsa
requirement that is typically mandatory for high-value
procurements. While the IP mechanism is generally
regarded merely as an anti-corruption tool, a relatively
unknown fact is that the pact includes a promise on
part of the (government/ PSU) buyer to treat all bidders
alike at the pre-contract stage
17
, thus providing an
additional, formal venue for challenging unfair
deviations or actions without attributing criminal
motives.
In practice, however, the disposal of complaints by
Independent External Monitors (IEMs) has not been
institutionalised, and little or no exchange of ideas and
information takes place between IEMs appointed for
various procuring entities, or those appointed for
different contracts under the same procuring entity/
Ministry. While the IP mechanism may therefore be an
extra forum available to dissatisfied bidders, it has not
been a generally effective or an efficient one
18
, also on
account of the fact that the recommendations made by
the monitors need not be mandatorily disclosed to the
complainant, or to other potential bidders, who are
therefore deprived of the benefits of information-sharing
and the development of common principles in
procurement.
This fundamental problem experienced with IPs may
recur to some extent with the Procurement Redressal
Committees (PRCs)
19
to be constituted under proposed
Public Procurement Bill, as the recommendations of
these PRCs are not mandated to be disclosed to the
complainant or to the general procurement community,
with the result that development of common-law
principles may not take place as expected during the
redressal process. In contrast, most advanced
jurisdictions in other countries ensure (i) that the forum
is an institutionalised one, rather than being constituted
on an ad-hoc, case-by-case basis; and (ii) that the
recommendations/ orders of such foranot merely the
final decision of the administrative procuring entity
are made publicly available, with obvious advantages
for enhancing the knowledge base and expectations
from future buying actions amongst all procurement
stakeholders.
However, PRCs are certainly expected to bring in some
discipline in the complaint handling process in the
government contracting landscape in India. Of course,
the final outcomes may largely depend upon the
restraint shown within procuring entities themselves,
as they remain the first forum of appeal even under the
proposed Bill, and they will have the final say on
accepting, rejecting, or party accepting
recommendations made by the PRCs. One remaining
important area of concern with the proposed Bill is
that there is some potential for endlessly spiraling
complaint-making, since a decision of a procuring entity
to reject the recommendation of a PRC is not debarred
from being appealed against before the PRC all over
again
20
.
Conclusions
The regulatory and legal landscape for meaningful
participation in government contracts in India can be a
fairly challenging one; and procuring entities as well
as bidders need to keep themselves updated on
important aspects such as eligibility to participate and
design of technical specifications, as both these
dimensions have potentially strong impacts on
competition and best economic value for goods and
services sought or supplied. It is equally important for
dissatisfied bidders to be aware of various permissible
avenues for bid-challenge outlined in this short paper,
in order to protect their interests and for maximising
their returns on efforts made for bid-preparation and
filing.
(Footnotes)
1
2013, Sandeep Verma.
The author holds an LLM with highest honours, having
specialised in Government Procurement Law from The
George Washington University Law School, Washington
DC. In 2009, he established www.BuyLawsIndia.com, a
website dedicated to the advancement of public
procurement law in India. Views expressed are personal
and academic; and do not reflect the official position or
policy of the government of India or any of her
departments or agencies.
2
AAIs Notice Inviting Tender (NIT) No. 05/11, available
online http://www.aai.aero/corrigendum/Hindi.pdf.
3
See para 3.1 of NIT No. 05/11, supra n.2.
4
See para 1 of Technical Specifications accompanying
NIT No. 05/11, ibid.
5
The Public Procurement Bill, 2012 is available online
at http://164.100.24.219/Bi llsTexts/LSBi llTexts/
asintroduced/58_2012_LS_EN.pdf.
6
GFR-2005 are available online at
finmin.nic.in/the_ministry/dept_expenditure/gfrs/
GFR2005.pdf.
7
See, e.g., Rule 137 read with Rule 167, GFR-2005,
supran.6. See also para 6.4 read para 8.5 and Appendix
6-A of AAIsANS Procurement Manual, available online
at http://www.aai.aero/aai_employees/
ANS_Procurement_Manual2012.pdf, as an example of
PSU procurement requirements.
8
See, e.g., paras 5.2-5.3, 8.6 of AAIs ANS Procurement
Manual, supra n.7.
9
In the case of purchases by government departments,
the GFR 2005 are required to be read in conjunction
with (separate) manuals for procurement of goods,
works and services/ consultants (available online at
http://finmin.nic.in/the_ministry/dept_expenditure/
acts_codes/index.asp). Certain ministries, such as the
Ministry of Environment and Forests, have issued
further subsidiary instructions on procurement of
goods, works and outsourcing of services, available
online at http://www.cpcb.nic.in/
Instruc_eng_consultant_firm.pdf.
10
The various circulars and compendia issued by the
CVC are available online at http://cvc.nic.in/
proc_works.htm.
11
For instance, http://cvc.nic.in/six.pdf and http://
cvc.nic.in/seven.pdf issued by the CVC contain some
preliminary principles underlying pre-qualification of
bidders.
12
See, e.g., http://cvc.nic.in/cte_man_2002.pdf, a Report
on Common Irregularities and Lapses that contains
important guidance on designing technical
specifications, qualification criteria and ensuring
transparency in government tenders. Similarly, various
CVC reports, both generic (http://cvc.vigeyegpms.org/
skins/default/pdf/CompcirculCTE.pdf), as well as sector-
specific (http://cvc.nic.in/Preface.pdf), contain equally
important guidance on these design aspects. Separate
Ministries, government entities and PSUs also have their
own vigilance manuals, such as Indian Railways (
Vigilance Manual available online at http://
www. i ndi a nr ai l way s . g ov. i n/ r ai l way boa r d/
view_section.jsp?lang=0&id=0,1,304,366,546,842), Air
India (Vigilance Manual available online at http://
vigilance.airindia.in/images/Vigilance_manual.pdf),
and KIOCL Ltd. (Vigilance Manual available online at
h t t p : / / k i o c l l t d . i n / d o w n l o a d s /
VIGILANCE_DEPT._MANUAL_VOLUME-II.pdf). All these
documents typically contain importance guidance to
be observed by procuring officers in deciding eligibility
conditions and/ or technical specifications.
13
See para 8, NMP, available online http://india.gov.in/
allimpfrms/alldocs/16395.pdf.
14
In respect of PSUs (SoEs), this oversight is discharged
by Chairmen/ Managing Directors and/ or the respective
Company Boards.
15
See http://finmin.nic.in/the_ministry/
dept_expenditure/gfrs/Integrity_Pact_ARC.pdf.
16
See http://dpe.nic.in/sites/upload_files/dpe/files/
glch03477.pdf.
17
See clause 1.2 of the Pre-Contract Integrity Pact ,
annexed to the above MOF/ DPE circulars, supra n.14
and n.15 respectively.
18
Verma, S. (2009), Integrity Pacts and Public Procurement
Reform in India: From Incremental Steps to a Rigorous
Bid-Protest System, available online at http://
p a p e r s . s s r n . c o m / s o l 3 /
papers.cfm?abstract_id=1656722.
19
Part B, Chapter III of Draft Public Procurement Bill
2012, supra n.5.
20
Verma, S. (2012), http://www.financialexpress.com/
news/no-buy-india-clauses-for-us-thank-you/945606/0.
THE GSTS EXEMPTION

COMPLICATIONS
RAJ KUMAR RAY
A
s the empowered committee (EC) on goods and
service tax (GST) gets down to handling the specific
issues, difference in the composition and handling
of exemptions at the State and the Central level has
thrown up a major challenge requiring deft handling.
While there are only 96 items exempted under VAT,
handled by the States, more than 300 items are in the
exempted category under CENVAT, which comes under
Centres purview. This means that if the exempted list of
items under VAT is adopted in GST, then more than 200
items, which are not subject to CENVAT currently, will be
subjected to Central GST in addition to the State GST in
the new tax regime. This would lead to increase in prices
of these commodities, which also include foodgrains.
The EC committee on dual control threshold and
exemptions in the GST regime, has suggested a common
list of exempted goods, both for SGST and CGST.
The panel has favoured VAT exempted list to be taken as
base for both SGST and CGST and then removal of
exemptions in case of the other items exempt under
CENVAT in phases. In case of services also, the committee
has recommended common exempted list for SGST and
CGST.

BIS NEWS
PALLETS - AN EFFICIENT AND SAFE WAY OF
MATERIAL HANDLING
SHRI R R SINGH, TRANSPORT ENGINEERING, BIS
S
tacking, Storage and movement of goods and
materials are essential elements of almost all the
businesses. Unfortunately many serious as well
as fatal accidents are also witnessed while goods are
being stacked or destacked and put into or taken out of
storage.
Various methods of storage and stacking systems are
used in the industry now a days. Material handling
equipment are also extremely diverse, ranging from
hand trolleys to various types of forklifts, trucks to
sophisticated warehouse robots. It makes material
handling all the more interesting and challenging.
It is the responsibility of the employer to take all
reasonable steps to ensure that all goods, materials,
substances and equipment in the workplaces are
stacked, stored, secured and kept that they do not
constitute a danger to persons in their vicinity during
the course of daily operations and in the event of an
earthquake. Such steps should ensure that these items
cannot, whether of their own accord, or by virtue of any
external force (intentionally applied or otherwise), flow,
move, roll or collapse, as to constitute a danger to
persons in their vicinity. All workers who are or may be
responsible for stacking, storing, securing, or keeping
any goods, materials, substances, or equipments
should be fully trained in safe methods of doing so.
Keeping in view the great diversity of goods and
materials to be stored and the wide range of storage
methods and handling equipment in use now, it has
become imperative that a safe system of work is
developed that will integrate the three main
components of material handling that is people,
materials and machinery within a safe and healthy
working environment.
Pallets are an integral part of any basic materials
handling and storage system common to a wide range
of stores and warehouses. A pallet (sometimes called a
skid) is a flat transport structure that supports goods
in a stable fashion while being lifted by a forklift, pallet
jack, or other jacking device. A pallet is the foundation
of a unit load design, which can be as simple as placing
the goods on a pallet, and securing them with straps or
stretch-wrapped plastic film, or as exotic as a ULD mini
container.
Containerization for transport has spurred the use of
pallets because the containers have the clean, level
surfaces needed for easy pallet movement. Most pallets
can easily carry a load of 1,000 kg.
DEVELOPMENT OF THE PALLET
The pallet was developed in stages. Spacers were used
between loads to allow fork entry, progressing to the
placement of boards atop stringers to make skids.
Eventually boards were fastened to the bottom to create
the pallet. The addition of bottom boards on the skid,
which appeared by 1925, resulted in the modern form
of the pallet. With the bottom deck, several problems
common to the single faced skid were addressed. For
example, the bottom boards provided better weight
distribution and reduced product damage, they also
provided better stacking strength and rigidity. Lift truck
manufacturers promoted the idea of using more vertical
area of a plant for stock storage.
In size, skids started narrow in order to pass through
ordinary doors. As facilities were rebuilt, many
organizations optimized their buildings for larger
pallets in order to reduce labor costs. The earliest
referenced U.S. patent on a skid is Hallowells 1924 Lift
Truck Platform. In 1939, Carl Clark patented a
recognizably modern pallet, although with steel
stringers. In World War II, palleted material handling
was rapidly perfected in order to transfer Allied war
materials. The patent activity picked up again after the
war, as inventors claimed items they improvised for the
war effort. The first four direction pallet was claimed in
1945 by Robert Braun. At the end of 1948, Sullivan
Stemple claimed the basic idea of a pallet designed to
be used with a fork lift the pallet was to be stamped
from steel. During World War II, to reduce the resupply
time of warships, the first modern disposable four-way
block pallet was developed, and patented in early 1949
by Norman Cahners, a U.S. Navy Supply Officer in the
ordnance depot at Hingham, Massachusetts. The first
completely modern 2-direction stringer pallet was
described in 1949 by Darling Graeme.
TYPES OF PALLETS
Although pallets come in all manner of sizes and
configurations, all pallets fall into two very broad
categories: stringer pallets and block pallets.
STRINGER PALLET :
Stringer pallets use a frame of three parallel pieces of
timber (called stringers). The top deckboards are then
affixed to the stringers to create the pallet structure.
Stringer pallets are also known as two-way pallets,
since a pallet-jack may only lift it from two directions
instead of four. Forklifts can lift a stringer pallet from
all four directions, though lifting by the stringers is
more secure.
BLOCK PALLET :
Block pallets are typically stronger than stringer pallets.
Block pallets utilize both parallel and perpendicular
stringers to better facilitate efficient handling. A block
pallet is also known as a four-way pallet, since a
pallet-jack may be used from any side to move it.
MATERIALS USED :
The cheapest pallets are made of softwood and are often
considered expendable, to be discarded as trash along
with other wrapping elements, at the end of the trip.
These pallets are simple stringer pallets, and can be
lifted from two sides.
Slightly more complex hardwood block pallets, plastic
pallets and metal pallets can be lifted from all four
sides. These costlier pallets usually require a deposit
and are returned to the sender or resold as used. Many
four way pallets are color coded according to the loads
they can bear, and other attributes.
Wooden pallet construction specifications can depend
on the pallets intended use: general, PDA, storage,
chemical, export; the expected load weight; type of wood
desired: recycled, hard, soft, kiln dried or combo (new
and recycle); and even the type of fasteners desired to
hold the pallet together: staples or nails.
Paper pallets are often used for light loads, but
engineered paper pallets are increasingly used for loads
that compare with wood. Paper pallets are also used
where recycling and easy disposal is important.
Plastic pallets are often made of new HOPE or recycled
PET (drink bottles). They are usually extremely durable,
lasting for a hundred trips or more, and resist
weathering, rot, chemicals and corrosion. They often
stack. Plastic pallets are exempt by inspection for
biosafety concerns, and easily sanitize for international
shipping. HOPE is impervious to most acids and toxic
chemicals clean from them more easily. Some
plastic pallets can collapse from plastic creep if used
to store heavy loads for long periods. Plastic pallets
cannot easily be repaired, and can be ten times as
expensive as hardwood, so they are often used by
logistics service providers who can profit from their
durability and stackability.
Steel pallets are strong and resist plastic creep. They
are used for heavy loads, high-stacking loads, long term
dry storage, and loads moved by abusive logistic
systems. They are often used for military ammunition.
Aluminum pallets are stronger than wood or plastic,
lighter than steel, and resist weather, rotting, plastic
creep and corrosion. They are sometimes used for air-
freight, long-term outdoor or at-sea storage, or military
transport.
STANDARDIZATION OF PALLETS :
A lot of efforts have been made in the field of
standardization of pallets, but a lot still remains to be
done. Since pallets may be subjected to a variety of
uses depending upon the industry in which they are
used a single standard on pallets is difficult to be
established and enforced. However, the dimensions and
strength requirements have been standardized by many
national standardization bodies.
DIMENSIONS OF PALLETS :
In a pallet measurement, the first number is the stringer
length, the second is the deckboard length. Square or
nearly-square pallets help a load resist tipping.
Two-way pallets are designed to be lifted by the
deckboards. So, in a warehouse, the deckboard side
faces the corridor. So, for optimal cubage in a
warehouse, the deckboard dimension should be the
shorter. This also helps the deckboards be more rigid.
Four-way pallets, or pallets for heavy loads, or general-
purpose systems that might have heavy loads, are best
lifted by their more rigid stringers. So, a warehouse has
the stringer side facing the corridor. So, for optimal
cubage in a warehouse, the stringer dimension should
be the shorter. Pallet users want pallets to easily pass
through buildings, stack and fit in racks, forklifts, pallet
jacks and automated warehouses. To avoid shipping
air, pallets should also pack tightly inside containers
and vans. The most commonly used pallet sizes are
1000 mm x 1000 mm, 1200 mm x 1000 mm etc.
ISO TECHNICAL COMMITTEE 51: PALLETS FOR UNIT LOAD
METHOD OF MATERIALS HANDLING :
At international standardization level, ISO TC 51 of
International Organization for Standardization is
actively engaged in the work of standardization of
pallets in general use in the form of platforms or trays
on which goods may be packed to form unit loads for
handling by mechanical devices. This Technical
Committee works in conjunction with other Technical
Committees focused on transportation infrastructure
to develop interrelated standards. The ISO Standards
formulated on pallets are as follows:
ISO No. Title
445 : 2008 Pallets for materials handling -
Vocabulary
6780 : 2003 Flat pallets for intercontinental
materials handling - Principal
dimensions and tolerances
8611-1 : 2011 Pallets for materials handling - Flat
pallets Part 1 : Test methods
pallets Part 2 : Performance
requirements and selection of tests
pallets Part 3 : Maximum working
l oads
DTS 8611-4 Pallets for materials handling - Flat
pallets Part 4 : Procedure for
predicting creep responses in
stiffness tests for plastic pallets
using regression analyses
12776 : 2008 Pallets - Slip sheets
12777-1 : 1994 Methods of test for pallet joints Part
1 : Determination of bending
resistance of pallet nails, other
dowel-type fasteners and staples
2 : Determination of withdrawal and
head pull- through resistance of
pallet nails and staples
3 : Determination of strength of pallet
joints 13194 : 2011 Box
pallets - Principal requirements and
test methods
Quality of fasteners for assembly of
new and repair of used, flat, wooden
pallets
Quality of new wooden components
for flat pallets
Quality of assembly of new wooden
pallets
AWI 18597 Dolly pallets - Principal requirements
and test methods
18613 : 2003 Repair of flat wooden pallets
INDIAN STANDARDS ON PALLETS : Transport Engineering
Department of Bureau of Indian Standards, the national
standards body of India is also actively involved in
formulation of Indian Standards on Pallets. Following
Standards on pallets have been formulated so far by
Freight Containers and Pallets Sectional Committee, TED
12 of BIS:
IS No. Title
Vocabulary (Second Revision)
4300 : 1989 Box pallets for through transit of
goods - Specification (First Revision)
5325 : 1989 Box pallets for through transit of
goods - Methods of test (First
Revision)
6219 : 1989 Methods of test for general purpose
flat pallets for through transit of
goods (Second Revision)
6865 : 1973 Specification for pallets for use in ISO
series 1 Freight containers
7276 : 1989 Non-expendable general purpose, flat
pallets for through transit of goods -
Specification (Second Revision)
7804 : 1983 Guide for palletization of tea chests
(First Revision)
8005 : 1976 Classification of unit loads
8006 : 1988 Recommendations fo handling of
timber pallets (First Revision)
9208 : 1979 Guide for palletization of mica for
export
9340 : 1993 Expendable pallets - Specification
(First Revision)
11076 : 1984 Guide for palletization of cashew
kernels for export
11982 : 1987 Design rating and safe working load
for general purpose flat pallet for
through transit of goods
11983 : 1987 Guidelines for marking of general
purpose flat pallets for through transit
of goods
13546 : 1992 General purpose flat pallets for
through transit of goods - Performance
requirements
13608 : 1993 Sheet pallets - Specification
13609 : 1992 Pallets - Quality of timber - Guidelines
13664 : 1993 Polly pallets for bag storage godowns
- Specification
13714 : 1993 Dunnage pallets - Ware housing -
Specification
13823 : 1993 Guidelines for palletization - General
cargo
BENEFITS OF USING PALLETS :
Pallets are crucial part of any supply chain. They ensure
the shipping of products efficiently with minimal
damage to goods. Pallets make it easy to move heavy
stacks. Loads with pallets under them can be hauled by
forklift trucks of different sizes, or even by hand-pumped
and hand-drawn pallet jacks. Movement is easy on a
wide, strong, flat floor.
Organizations using standard pallets for loading and
unloading can have much lower costs for handling and
storage, with faster material movement than businesses
that do not. The exceptions are establishments that move
small items such as jewellry or large items such as
cars. But even they can be improved. For instance, the
distributors of costume jewellry normally use pallets
in their warehouses and car manufacturers use pallets
to move components and spare parts. The current trend
in any supply chain management is use of returnable
pallets system in which a company using pallets does
not need to own and maintain an inventory of pallets.
UNIT LOAD AND RETURNABLE PALLET SYSTEM :
A unit load combines individual items or items in
shipping containers into single units that can be moved
easily with a pallet jack or forklift truck. A unit load
packs tightly ,nto warehouse racks, intermodal
containers, trucks, and boxcars, yet can be easily broken
apart at a distribution point, usually a distribution
center.
Returnable pallet system is a system operated by pallet
rental companies where the pallet users need not own
the pallets and have merely to pay the rent for using
pallets. In this way pallets are used by multiple users
which permit the economical and efficient utilization
of resources. EPal system in Europe is being successfully
implemented in various countries of Europe.
The advantages accruing from a returnable pallet
system are:
Reduction in costs by focusing on the cost per use
of the returnable pallet.
Disposal of the pallets is the responsibility of the
pallet rental company; not the customer and thus a
savings in disposal
The system ensures that the pallets are properly
maintained which reduces the possibility of
damage or injury caused by low quality and inferior
pallets.
The system allows managers and executives to focus
on their core business and let the pallet rental
company take care of its logistics, tracking and
collection.
For the pallets to be of best possible use, it is important
that pallets are of sound construction, and be of
adequate strength for the loads and conditions under
which they are used. Where pallet loads are stacked
tier on tier, the lower pallets should be of suitable
strength and in good condition and the unit loads must
be able to support the weight above.
The stability of stacked pallets or unit loads should be
maintained by suitable bonding, avoiding excessive
stack heights to ensure that the contents of any pallet
or unit load can not collapse.
The stability and structural strength of each pallet or
unit load should be assured by bonding, taping, shrink
wrapping or other means. When pallet or unit loads of
cartons or sacks are stacked, care should be taken that
they are not damaged by equipment. Pallets or other
supports used for forming unit loads should be regularly
inspected for damage and wear. Items which could cause
damage to material should be taken out of use until
repaired, or be destroyed. An approach of care and
caution can put pallets to the place it deserves in the
material handling and logistics area.
Source : Standard India, Vol. 26, No.12, March 2013

CORPORATE CHALLENGES OUTSOURCING IN VALUE CHAIN
RABI NARAYAN PADHI
Life Member, IIMM VIZAG
rabinarayanpadhi@rediffmail.com, rabin.padhi@gmail.com
Abstract:
O
utsourcing is the contracting out of an internal
business process to a third-party organization. The
term outsourcing became popular in the United
States near the turn of the 21st century. Outsourcing
sometimes involves transferring employees and assets
from one firm to another, but not always.
[1]
The definition of outsourcing includes both foreign and
domestic contracting,
[2]
and sometimes includes
offshoring, which means relocating a business function
to another country.
[3]
Financial savings from lower
international labor rates is a big motivation for
outsourcing/offshoring.
The opposite of outsourcing is called insourcing, which
entails bringing processes handled by third-party firms
in-house, and is sometimes accomplished via vertical
integration. However, a business can provide a contract
service to another business without necessarily
insourcing that business process.
Two organizations may enter into a contractual
agreement involving an exchange of services and
payments.
Outsourcing is said to help firms to perform well in
their core competencies and mitigate shortage of skill
or expertise in the areas where they want to outsource.
[4]
In the early 21st century, businesses increasingly
outsourced to suppliers outside their own country,
sometimes referred to as offshoring or offshore
outsourcing. Several related terms have emerged to refer
to various aspects of the complex relationship between
economic organizations or networks, such as
nearshoring, crowdsourcing, multisourcing
[5][6]
and
strategic outsourcing.
[7]
Outsourcing can offer greater budget flexibility and
control. Outsourcing lets organizations pay for only the
services they need, when they need them. It also reduces
the need to hire and train specialized staff, brings in
fresh engineering expertise, and reduces capital and
operating expenses.
[8]
One of the biggest changes in the early 21st century
came from the growth of groups of people using online
technologies to use outsourcing as a way to build a
viable service delivery business that can be run from
virtually anywhere in the world. The preferential
contract rates that can be obtained by temporarily
employing experts in specific areas to deliver elements
of a project purely online means that there is a growing
number of small businesses that operate entirely online
using offshore contractors to deliver the work before
repackaging it to deliver to the end user.
One common area where this business model thrives is
in providing website creation, analysis and marketing
services. All elements can be done remotely and delivered
digitally, and service providers can leverage the scale
and economy of outsourcing to deliver high-value
services at reduced end-customer prices.

The Benefits of Outsourcing
Do what you do best and outsource the rest! Tom
Peters, Management guru
Outsourcing as an idea is not novice; it has been for
over a thousand years now, the only difference being
that its gaining lot more popularity since a decade for
whatever reasons. Outsourcing basically means asking
a third-party vendor to work for you on a contractual
basis. Companies outsource primarily to cut costs. But
today, it is not only about cutting cost but also about
reaping the benefits of strategic outsourcing such as
accessing skilled expertise, reducing overhead, flexible
staffing, and increasing efficiency, reducing turnaround
time and eventually generating more profit.
Like any other business venture proper planning and
research is necessary before choosing an outsourcing
partner whether it is on shore or offshore. But by
outsourcing to a third party, your business can focus
on what it does best and gain a competitive edge in the
marketplace.
Here are the top ten benefits of outsourcing:
1. Get access to skilled expertise :
One of the primary reasons why a business may
want to outsource a task is when it requires skilled
expertise. This skill set may not be a core
competency of its business. To allow you to focus
on your core mission in providing a high quality
product and service to your customer what makes
sense is offshoring the task to people can perform
it better. Moreover, as a double whammy, you not
only spend less on employee trainings and save
precious man-hours but cut costs as well.
Outsource to india has dedicated teams to provide
wide range of outsourcing services, which help us
offer specialized business process outsourcing
solutions to clients globally. We leverage on our
multi-domain expertise and skills across
variegated industry verticals and technologies to
achieve superior quality and unmatched
proficiency in the outsourced process.
2. Focus on Core Activities
Workload increases with additional non-core
functions and the quality of your core activities
suffers as your business grows. Outsourcing in
such scenario to a third party plays an important
role by allowing your key resources to focus on
primary business tasks.
3. Better Risk Management
Outsourcing will allow you to share any
associated risks with your outsourcing partners
there by reducing your burden. For example - by
outsourcing to a competent outsourcing partner
you reduce the risk involved in having the same
task done in-house by staff that may not be as
competent in that field.
4. Increasing in-House Efficiency
After you allocate tasks to your outsourcing
partner, they share the workload of your
employees. This allows you to develop your
internal task force and use them more efficiently.
5. Run Your Business 24X7
Offshore Moutsourcing to a country like India,
which is on a different time zone, gives you the
added advantage of making full use of your 24
hour day. Since your night is their day, your
outsourcing partner can take over and continue
your work even after your employees go home and
to bed. They can complete critical tasks and send
it back for your review the next day. So the benefit
of outsourcing here is that you get more work done
in a day, increasing your overall productivity. A
24X7 customer support is a dream come true for
your customers and this can be fully realized
through offshore outsourcing.
6. Staffing Flexibility
Outsourcing certain independent tasks, allows
your business to maintain a financial flexibility
when there is an uncertainty in demand. You can
scale up or down comfortably. At a much lower
cost, offshore outsourcing provides additional
benefit of running your business in full throttle
even during off season and holiday months.
7. Improve service and delight the customer
Your outsourcing partner, with their ski lled
expertise will produce quality deliverables faster,
increasing your turn around time to the customer.
With on-time deliveries and high-quality services
your customers will be delighted! Outsourcing can
help you benefit from increased customer
satisfaction and thus creating a stream of loyal
customers.
8. Cut costs and save BIG!
All the benefits listed above come with the bonus
benefit of lower cost and big savings! When you
outsource services like medical billing, call center
and teleradiology, etc. to a low-cost country like
India or Philippines, you are getting access to
quality services that are offered at a much lower
cost (You can save up to 60% costs)!
Maintaining an infrastructure can be an extra
burden for some businesses, which outsourcing
can remove. Outsourcing your business
requirements to a trusted vendor can help you
save on the capital expenditure, time, and extra
efforts of your personnel. Additionally, you are no
longer committed to invest on employee training,
or purchasing expensive software, or investing in
latest technologies. All this add up to higher
returns in the longer run.
9. Give your business a competitive edge
The ultimate benefit of outsourcing is that it helps
your organization gain a competitive edge in the
market. Through strategic outsourcing to an
outsourcing partner, you are not only providing
your customers with best-of breed services, but
increasing your productivity while managing your
in-house resources intelligently. Outsourcing can
help you surpass competitors who have not yet
realized the benefits of outsourcing.
10. See an overall increase in your business
Outsourcing shows an increase in your
productivity, customer loyalty. level of quality,
business value, profits, and much more.
Advantages and Disadvantages of Outsourcing
Outsourcing brings in a lot of flexibility and financial
freedom but it also has its pitfalls. Any company looking
to outsource must keep in mind the pros and cons of
outsourcing before deciding to take the plunge. Take a
look at this list of advantages and disadvantages of
outsourcing.
Advantages of Offshore Outsourcing
Core activities of the business take center stage.
Outsourcing non-core activities such as administration
and back-office operations helps to put the focus back
on the core functions of the business, such as sales and
marketing.
One of the biggest advantages of outsourcing
to India (or any other location) is cost savings.
The lower cost of operation and labor makes it
attractive to outsource.
Outsourcing reduces overhead costs that
usually come with running back-end
operations.
When certain functions of an organization
become operationally uncontrollable,
outsourcing helps to overcome such
difficulties.
A companys cash-flow can be streamlined.
By increasing productivity and efficiency, a
business can be more successful and better-
prepared for market challenges.
Outsourcing frees an organization from
investments in technology, infrastructure and people
that make up the bulk of a back-end process capital
expenditure.
Outsourcing gives businesses flexibility in
staffing and manpower management. Since the
service provider is responsible for managing
the workforce, you save costs and can also
pick the best people to run your core functions.
Offshore outsourcing gives businesses the
ability to develop new competencies and skill-sets that
can be used as a competitive advantage.
Disadvantages of Offshore Outsourcing
One of the biggest disadvantages of
outsourcing is the risk of losing sensitive data
and the loss of confidentiality. It is important,
therefore, to have checks in place to avoid data
loss.
Losing management control of business
functions mean that you may no longer be able
to control operations and deliverables of
activities that you outsource.
Problems with quality can arise if the
outsourcing provider doesnt have proper processes
and/ or is inexperienced in working in an outsourcing
relationship.
Since the outsourcing provider may work with
other customers, they might not give 100% time
and attention to a single company. This may
result in delays and inaccuracies in the work
output.
Hidden costs and legal problems may arise if
the outsourcing terms and conditions are not
clearly defined.
If important functions are being outsourced,
an organization is mightily dependent on the
outsourcing provider. Risks such as bankruptcy
and financial loss cannot be controlled.
Not understanding the culture of the
outsourcing provider and the location where you
outsource to may lead to poorcommunication and lower
productivity.
Though outsourcing has its share of
advantages and disadvantages, the many
benefits that outsourcing brings far outweigh
its disadvantages.
Many of the pitfalls of outsourcing can be
avoided by choosing the right company to work
with. Before taking the decision to outsource it
is important that you align the goals of your
company and employee considerations with
the objectives of outsourcing.
Why Outsource Work?
Industry trends show that companies that have been
asking the question why outsource have become vocal
advocates of the offshore model. Outsourcing work has
come to be a tried-and-tested model and is recognized
as a long term competitive strategy for success. The
question going around now is not why outsource? but
why not outsource?
Reasons for Outsourcing
The economist, Adam Smith, says in his treatise The
Wealth of Nations, If a foreign country can supply us
with a commodity cheaper than we ourselves can make
it, it is better to buy it of them. Outsourcing as we know
it today is merely a progression of an idea that has
existed since early days of trade.
As companies grow in size and operations, it becomes
increasingly clear that their focus has to be redirected
to their core activities while the non-core functions can
be sent out or outsourced to vendors specialized in
that particular function.
Why Outsource Work !
Have you found yourself faced with any of the following
doubts in recent times?
Are my resources being utilized effectively?
Are my current resources capable of supporting
new technology?
Is there a quicker, more effective method to handle
processes?
Does my team have the operational expertise to
do the task assigned?
Are we working at optimum costs?
If you are asking yourself the question why should I
outsource, consider the following top reasons for
outsourcing cited by companies that have successfully
made offshore outsourcing work for them.
Strategic Reasons for Outsourcing
Focus on core functions: Companies that outsource
certain routine functions to offshore experts are capable
of focusing on their core competency. Before outsourcing
caught on in such a big way, healthcare practices had
to deal with functions liketranscription, medical
billing and claims processing which consumed a lot of
their time and resources. However, now by outsourcing
these processes to external locations these practice are
able to focus on their primary concern - patient care.
Redirect strategic internal resources for core activities:
Outsourcing processes to external third party ensures
that an organizations internal resources are freed up
for more mission-critical activities.
Accelerate migration to new technology:
Migrating to newer technologies allows companies to
make better use of their investments and enjoy enhanced
productivity and quality. Companies with outsourced
IT processes are better enabled to migrate to new
technologies with minimum downtime and productivity
disruption.
Enhance risk management: In any outsourcing model
the offshore partner supplements the operations of the
outsourcing company with redundancies and back-up
mechanisms. In the event of any natural calamities,
accidents, market fluctuations or technical crises the
rigorous disaster recovery mechanisms and detailed
back up plans at the offshore vendors end can help
companies to rapidly respond to the situation and get
operations back on track within remarkable turnaround
time.
Lower infrastructure investments:
Companies that decide to outsource find that
expensive infrastructure requirements are cut back
drastically as some of the functions move to external
locations. Cutting edge IT systems, state-of-the-art
customer servicecall centers and technical helpdesks
entail heavy investments to companies. By outsourcing
these functions to external vendors, companies can keep
their investments in these areas very low.
Access to world-class capabilities: Apart from the
financial benefits associated, another reason why
companies outsource work is to have processes
delivered by teams that have operational expertise in
the outsourced process. Outsourcing gives companies
access to world-class capabilities and infrastructure
in the outsourced function.
Tactical Reasons for Outsourcing
Control operating costs: One of the most talked
about advantages of outsourcing to locations like India
is the cheap labor costs in these countries. Processes
outsourced to these locations are done at much cheaper
rates and same quality levels as in the donor location.
This translates into major cost savings for companies.
They also save on operational costs such as payroll,
administrative costs, HR, power, rentals and utilities
as processes move to other locations.
Improve operational performance:
Companies outsource to vendors who have domain
expertise in the outsourced process. Their experience
in the field translates into greater operational
efficiencies for the outsourcing company.
Overcome seasonal workflows:
Industries in the U.S. and UK are subject to seasonal
fluctuations in work and lack of workers during holidays
and off-seasons. One of the advantages of outsourcing
such processes to countries like India and Philippines
is that companies can deal with peak workloads and
poor staff strength during vacations and holidays.
One time applications:
Companies often need to build one time applications.
Such ad hoc or one time applications will require which
require high manpower resources and companies find
that they are faced with the need to ramp up in relatively
short time spans. Outsourcing such needs is the best
solution for companies that want to avoid expensive
outlays for the short term.
Outsource to india is a provider of world-class
outsourced services to a global clientele. Headquartered
in Bangalore, we have multiple delivery centers across
India and offices functioning in the U.S., South East Asia
and South America. We have proven competencies in a
range of services such as Data Entry Services,
Engineering Services, Healthcare Services, Financial
Services, Software Development, Web-analytics Services
and more. Read about the range of services offered by
Outsource to india.

INLAND WATER TRANSPORTATIONA TOTAL APPROACH
FOR MULTIMODAL TRANSPORT SOLUTION
D N Chakravarti,
Best Faculty Awardee & Distinguished Member-IIMM
Retd.-HOD- Kolkata Port Trust
Visiting Prof. IISWBM ,St. Xavier s College, Paper setter&examiner, Cal. University
dn_chak@yahoo.com
F
rom the time immemorial, transportationhas taken
the shape mainly on shifting , transferring
,migrating by utilizing the land based and water
based flows,that too using a countrys own land and
inland river navigational system . Movement of the
human resources had taken place because of mainly
the following reasons
** scarcityof food or other essentials
** Feeling insecurity because of the powerful group
taking over
** Natural calamitydisaster.
** Fear of cannibals /Animals etc. etc
All these left no options but a migration of the
inhabitants,aboriginals from one place to other place
and obviously when they shifted they took their own
belongings in the form of the freight/loadIf we see the
transport scenario chronologically, we find ,human
resources moved their freights/loads with their head/
shoulder/spinal chord muscles through plains/hilly
region as the case may benext, they took the help of
living attachments by taming the animals or the
attachments like trolley, wheel burrow but this forward
flow logistics was restricted only on the horizontal
direction till the concept of pulley with help of skin and
grooved stone was put to use, this helped to vertical
movement as lifting device from below ground level
but all these movements were also restricted in their
own land front and waterfront only till the ocean/air
transportation took place. At one side country boat,sail
ships were replaced after the invention of steam engine,
disel engine. Transport and logistics got a new
dimension of speed & for which, till date weowe to the
great scientists like James watt, Stevension, Carnot,
Rankine, Right Brothers and others or inbound and out
bound logistics from one country of origin to the otherin
the form of Import/Export through ocean transport, air
& pipeline transport.
Now the logistics metrics became very much important
with the variables like L/M/F/R or simply the load/
Mode/Flow/Route and their combined resultant
approaches for a cost effective and time effective
logistics solution. To take the further advantage for a
cost-effective and time-effective solution from the
different types of single modal transport i.e.Road, Rail,
Aviation, Inland water transport, ocean transport,
coastal transport, traditional transport etc, the concept
of multimodal transport took placewhich combines
more than one mode of transportation. The traditional
and the authentic riverine inland water transport mixed
up with road/rail to give the present days MMT or the
multimodal transportation systemcoming to the global
scenario on inland water transportation. Around
3,00,000 kms of waterways carry the freights of different
nature including live stock and the 30% of the freight
are transported by river or the canal waterstraditional
movement of rafts of timber logs , bamboos through
rivers li ke Brahmaputra(NWW-2), Ganga-
Bhagirathi(NWW2)still exists
A comparative analysis shows that a floating barge can
take 1500 Tons, Rail can take 100 Tons, Truck/Tractor
trailer 30Tons at one time where a truck can go 59miles,
rail202 miles, floating barge 514 miles per gallon
consumption of fuel, more over through riverine
transportation there is less congestion on water front,
air pollution/noise pollution is less. As the fuel
consumption is less the green planet is on the safer
side in the context of fossil fuel reservethe controversy
related land use & acquisition impact for infrastructural
growth in the road front is also on the lower side and
the system is totally environment friendly.
Like other countries our nation has also given
tremendous stress on the growth and development of
countrys own water front in the form of IWT. Out of
14500 kms of Navigational waterways, 4552 Kilometers
of Waterways have been declared as National Water
ways under government of India with our navigational
river and canal flows The governance is on the proper
adequate measures for improvement of river
transportation by IWAI for identification, demarcation,
feasible study for utilization, sustainability, proper river
training \, continuous dredging for maintaining river /
canal draft as to make the IWT system absolutely
navigable. Adequate measures are also taken for
provision of buoy lights for utilization of night shift
operations and to make the floating barges container
friendly
The Nationalized rivers of our country are
1/Ganga-Bhagi rathi -Hoogl y-Hal di NWW1
1620Kms
2/BrahmaputraNWW2
891Kms
3/West Coast canal-Champakara-
Udyogamaddalcanal205kms
4/Kalluvelly tankRiver GodavariRiver Krishna
1095Kms
5/Brahmani River620Km
6/Barak River121Kms**(to be operative shortly)
More the IWT becomes viable,more is the
interconnectivity with Major/Minor Ports for easing out
both for inbound/outbound/reverse logisticsin terms
of environment friendly and economized transportation
system.
Now I have come to Sydney for two months and observing
how they are utilizing their lifeline river Parrammatta
from the source of Toonga Bay to the mouth of Port
JacksonIt is helping the eco-friendly riverine
transportby ferry service. The river is having creeks
and canals ,estuaryrivers falling from both left and right
sides.Mooring and jetties are the responsibilities of
road and maritime group under Australian Ministry.
Along with the rivers, back water and canal water are
also the water resources for any country.26
th
world canal
conference would take place in September this year
where the agenda points for discussion are to be on the
points of
*Canals and heritage
*Canals as eco-system
*Canals and the economy in transport.
*Waterways networkcurrent situation
*Governance of IWT towards new models
*Country wise strategies etc.
River and the canal transportation requires the top
priority attention to give a combined effect for the
successful achievement of multimodal transportation
and awareness requires to be embedded at all the levels,
to keep our rivers free from pollution, waste disposal
and routine active measures for de-siltation such that
we do not lose our old heritage riverine ports like
Korkai(Near tuticorin port) or port of tamralipta,
Saptagram ,legendary ports in west Bengal
Supports*Wikipedia
*website of IWI/IWAI/Parramattariver, Sydney
G
ovt seems to be getting a hang of all the
international trends in order to make inroads into
the hearts and wallets of the people across the
world.
The Indian government, in a very progressive move, has
exempted all indigenously manufactured goods
from excise duty when being sold at duty free shops, so
as to encourage sales and maintain margins for the
sellers even in troubled times.
The Indian government seems to be getting a hang of all
the international trends in order to make inroads into
the hearts and wallets of the people across the world.
In a recent move targeted at the redemption of the
popularity levels of the local manufacturers amongst
foreign tourists, the government has decided to exempt
all locally manufactured goods sold at the duty free
shops, present in the airports across the country, from
excise duty.
The reduction in the excise duty would bring down the
prices of the products significantly, with the actual
figure being around 10 per cent. The change comes as a
pleasant one, especially in the current times, since along
with the different aspects of the global economy, the
aviation sector in India has been having a torrid time.
The economic predicament has made it difficult for the
Indian manufacturing sector, to maintain its growth rate,
as it has added to the woes that the Chinese competition
was presenting it with. The airport duty free stores are
a great opportunity for local manufacturers to get
premium pricing for their products, which helps in the
sustaining of operations even in the most difficult of
times, and this is what makes this move by the
government a very important one.
EXCISE DUTY EXEMPTED FOR LOCAL GOODS
AT AIRPORT STORES
The indigenous items being sold at these shops would
now cost almost 10 per cent less than what the
consumers have been traditionally been charged. This
would help the local vendors fend off the competition
that the imported products have been giving them,
helping them to see through difficult times.
The move would also help in enhancing the image of
India as a brand across the world, since all tourists
and Indians travelling abroad, would be able to carry
with them exclusive souvenirs representing the homely
and warm feeling associated with the country.
The parity with the imported products though, would be
the single largest advantage that the step would provide,
as it would help out both the manufacturers and the
average person visiting the airport.
Cheaper goods have registered great buying in airports,
according to the official data from airports across the
world, and Indian airports do not promise to be an
exception. The popularity of Indian merchandise and
exclusive products is well known and well understood
both by the local vendors and the manufacturers, and
thus the implications for them are great, as the sales
would get a major push because of the price fall.
The government has been treading on sticky grounds in
the recent times regarding concerns over the faltering
economy and the lack of substantial measures in
tackling it, which has led to it taking a series of steps in
progressive directions and the move to exempt
indigenous goods is another one on the right track.
Source : The Economic Times, 12th June 2013

Designing and deploying a green supply
chain requires optimization expertise, a
strong understanding of all operational
processes and involves participation from
many key stakeholders in your organization.
G
reen Optimization is Profit Points next generation
of supply chain design.
Here are 7 steps we can take to integrate your
sustainability goals into your supply chain:
1. Sustainability is a term that is used very broadly
throughout industry, regulatory agencies, communities,
and the news media. We need to determine what,
precisely, we are trying to accomplish with respect to
sustainability. Are we trying to reduce our impact on
the watersheds in which we operate? Are we trying to
reduce packaging waste? Are we involved in a regional
plan to cut certain types of emissions or reduce peak
energy consumption? Are we trying to reduce our carbon
dioxide (CO2) footprint? And, for any of these questions,
is there a certain targeted reduction that we have in
mind? Without answers to these questions, it is very
difficult to analyze your alternatives and develop a plan
to meet your goals.
2. We need to determine the boundaries of the supply
chain we are trying to improve. Are we looking at our
entire global supply chain, or are focusing on our
distribution operations in a single region of the world?
Are we bounding our analysis within assets and
processes that are totally controlled by our company,
or are we including our suppliers and/or customers in
the analysis? Are we trying to achieve our sustainability
goals within our existing supply chain infrastructure,
or do we need to factor in potential expansions or
contractions of the supply chain?
3. Once we have unambiguously defined your goal and
have clear boundaries around the supply chain we must
improve, we need to collect and understand the
information that is available to analyze and model our
supply chain. This will be information will include
things like production capacity, plant operating costs,
grams of CO2 produced per kg of finished goods,
transportation costs, and product pricing. We may want
to include the sources of electricity used by our
manufacturing facilities or raw material suppliers to
favor those sites using renewable sources of electricity
over those that use coal-based electricity. Likewise, we
may want to include our transportation suppliers so
that we favor carriers with more fuel-efficient fleets.
This step is usually the most time-consuming step in
the process but is critical to the generation and
GREEN IMPROVEMENT PROCESS
implementation of the changes you will make to meet
your goals.
4. With this collection of information, we need to model
the supply chain (this needs to link to our 5 step process
on the website) to generate options that both meet our
sustainability goals and maximize our profitability. In
this step, the art and science of green optimization
comes to bear. It is here that we may need to make trade-
offs between sustainability goals and profitability or
cost goals. For example, we may be able to make a very
significant reduction in our CO2 footprint with a very
slight increase in cost or reduce peak energy
consumption by carrying more inventory. Where these
trade-offs can be accurately quantified, the science
is used. However, where the sustainabi lity
improvements cannot be quantified, then we use the
art to bracket the value and the cost of the
improvement.
5. Now that we have selected the top options, we need
to discuss them with the key stakeholders and decision-
makers to get buy-in for a single option so that a
successful implementation can follow. This discussion
is especially important when future-based assumptions
have been made in the analysis. For example, if weve
assumed a 5% growth in demand and assumed the price
of crude at $85/bbl to choose the best solution, will our
choice still be the best one if our demand only grows by
2% and the price of crude moves to $100/bbl? If there is
a lot of uncertainty in these key parameters, it is
important that all stakeholders have a good
understanding of the risks associated with each of the
options presented. In fact, it may well be time for a
more robust type of optimization analysis, but that will
be the subject of a future blog article.
6. With all stakeholders on board, it is time to implement
our new plan to achieve our sustainability goals. In
addition to the communication, selling and training/
education facets of our change management plan, we
need to include a measurement system ensure we are
getting the improvements we anticipated and to check
for unintended consequences of our change. This
measurement system will also directly feed the last step
in this process
7. which is to periodically recheck our assumptions and
refine our analysis and plan as external events like
new customers or unanticipated costs present
themselves, or as we find that a key assumption does
not hold true for our sustainability gains.
Source : profitpoint.com

BENEFITS OF COMPETITION POLICY IN PUBLIC PROCUREMENT
WITH SPECIAL REFERENCE TO INDIA
DR. S CHAKRAVARTHY
CIVIL SERVANT, ADVISOR/CONSULATNT ON COMPETITION & CONSULTANT FOR
THE WORLD BANK, ASIAN DEV. BANK & OTHER ORGANISATIONS
chakravarty38@gmail.com
P
erformance of Government procurement in most
countries (particularly developing ones) impacts
governance and the interests of their citizens. It
cannot be gainsaid that performance is positively
impacted, if procurement is competition driven. For
procurement to be pro-citizen interest and pro-good
governance, overt and conscious policies promoting
effective competition among potential bidders/suppliers
are imperative. In absence of such policies, procurement
system is unlikely to be healthy. In turn, a healthy
operation of competition depends upon measures that
effectively checkmate collusion among bidders and
suppliers.
Effective competition can be and is a tool for reducing
corruption and imparting integrity in the process of
procurement. This in turn enhances the quality of
governance.
For promoting competition, transparency, integrity and
enhanced value for money in national procurement
regimes, an appropriate legal instrument is a sine qua
non.
The author suggests that the instrument should be
designed to secure better value for the money spent by
the Government on its procurement. It should therefore
mandate increased level of competition, transparency
and discipline.
By providing fair and clear procedures, the instrument
should seek to increase efficiency within procurement
agencies. This will help check overt corruption saving
finances by increasing efficiency of resource allocation.
The instrument needs to incorporate provisions limiting
discrimination in awarding tenders. WTO provisions
on national treatment and non-discrimination should
inform the overall approach of the instrument towards
entities and sectors covered by it. This is likely to
engender the general benefits of greater competition -
lower prices, better quality and more efficient firms.
The instrument needs to incorporate a transparent
framework of laws, regulations, procedures and
practices regarding Government procurement. This will,
likely encourage transparency in the transactions of the
procurement agencies and provide non-discriminatory,
timely, transparent and effective procedures enabling
suppliers to challenge alleged breaches of the
instrument.
The article attempts to identify several areas of
procurement policy in India that could benefit from the
transparent rule based system such as that provided by
the WTO GPA. Government of India is understood to have
identified tangible benefits from accession to WTO GPA.
India is committed to improving its procurement markets
and to underpin its reforms, as a first step, has chosen
to become a GPA observer.
I. Introduction.
Government procurement is of great potential interest
for most developing and developed countries, as it
accounts for a substantial proportion of GDP. But the
prevalence of discrimination in this area of Government
procurement, as well as other practices, creates
significant barriers to trade, ultimately impacting
adversely the countries growth and their GDP. Essentially,
barriers to efficient and sustainable development are
identified as corruption and clientism in public
procurement policies.
1
This article lists the challenges that exist in Government
procurement and gives an overview of the need for and
the features of an appropriate instrument to govern
Government procurement policies. It further seeks to
address the Indian scenario covering procurement
policies, practices and institutions, the reforms
undertaken in 2005 and the specific problems and
challenges faced by India in this area.
II. Government Procurement, Competition and its
Significance for Governance.
Performance of Government procurement in most
countries (particularly developing ones) impacts
governance and the interests of their citizens. It cannot
be gainsaid that performance is positively impacted, if
procurement is competition driven. For procurement to
be pro-citizen interest and pro-good governance, overt
and conscious policies promoting effective competition
among potential bidders/ suppliers are imperative.
Absent such policies, procurement system is unlikely to
be healthy. In turn, a healthy operation of competition
depends upon measures that effectively checkmate
collusion among bidders and suppliers. The economist
and jurist Frederic Jenny takes this proposition further
when he says that promoting competition involves not
only preventing collusive practices but also removing
barriers that unnecessarily impede healthy competition.
2
Procurement jurisdictions in many parts of the world
accord a high role for competition law. Competition
policy and law frown upon collusive practices and bid
rigging. In most competition laws, collusive practices
(including bid rigging) are a part of cartelisation and
are prohibited. Indeed, they are declared anti-
competitive and illegal per se. Such practices are
perpetrated even in countries with effective competition
regimes, imposing a heavy cost to the Governments and
their citizens/ consumers. Clarke and Evenett have noted
that as much as a quarter of documented competition
law enforcement actions in developing economies
involve bid rigging in relation to public procurement
activities.
3
Anderson, Kovacic and Muller have surveyed
the experiences of some developing countries and
suggest that gains (cost savings) from implementation
of transparent and competitive Government procurement
regimes can be substantial.
4
At a Conference in early
September 2009 of BRIC countries (Brazil, Russia, India
and China) in Kazan, Capital of Tatarstan, an estimate
placed the benefit (cost savings) flowing out of
competition driven government procurement at US $10
billion.
5
The possibility of bid rigging is particularly
relevant to public sector purchases, given their legal
obligations to award contracts by competitive tenders.
Further, parties involved in bid rigging often perceive
Government to be blind to collusive practices and
consequently indulge in bid rigging while responding to
tenders.
Another beneficial dimension of the impact of
competition, besides cost savings and protecting the
interests of the procuring agencies, Government and
consumers, is the engendering of integrity in the
administrative process of procurement. Government
procurement, massive particularly in food grains, is
handled by an army of functionaries at the village and
farmer levels. Many of them are low-paid employees of
the Government (and of PSUs) and integrity is not always
assured. In procurement operations, rent-seeking
activities and corruption at the level of lower order
functionaries obviously result in higher prices. Bidders
sensing the presence of corruption tend to factor it in
while finalising and submitting their bid amounts/
tenders. Higher prices of procurement mean higher costs
for the Government with the attendant lower economic
growth impeding development.
6
Corruption, as noted earlier in the first paragraph of
this article, constitutes a barrier to efficient and
sustainable development and is a scourge on welfare of
citizens in many countries, particularly the developing
ones. Corrupt practices are a subset of the generic
phenomenon of (rent-seeking), which means the
dissipation of a societys resources through activities
that enrich individual market participants at the expense
of others, without contributing to the welfare of society
as a whole.
7
Corruption is an internal issue for all Governments and
not just a trade issue. Transparent procedures will
reduce the adverse effects of corruption on procurement
and incidentally send positive signals for foreign
investors.
Effective competition can be and is a tool for reducing
corruption and imparting integrity in the process of
procurement. This in turn enhances the quality of
governance.
8
III. Need for an Appropriate Instrument.
For promoting competition, transparency, integrity and
enhanced value for money in national procurement
regimes, an appropriate legal instrument is a sine qua
non. An instrument that readily comes to mind is the
WTO Agreement on Government Procurement (GPA). GPA
is an important international legal instrument, which
can and will facilitate procurement reform. But, it is not
the only available tool for countries to address
procurement reform. Countries could negotiate
procurement provisions in Bilateral and Regional Trade
Agreements (RTA) or adopt and implement unilateral
reforms based on UNCITRAL Model Law, for instance.
The selection of an appropriate instrument and
establishing a scheme of procurement around its
principles despite the costs and challenges that this
would involve, would provide an unparalleled
opportunity to promote good governance and
competition in procurement practices, in addition to
important export market opportunities engendering
sustainable economic and social development.
IV. What the Instrument Needs to Inher
(1) As a general proposition, the instrument should be
designed to secure better value for the money spent by
the Government on its procurement. It should therefore
mandate increased level of competition, transparency
and discipline. By providing fair and clear procedures,
the instrument should seek to increase efficiency within
procurement agencies. This will help check overt
corruption saving finances by increasing efficiency of
resource allocation.
(2) The instrument needs to incorporate provisions
limiting discrimination in awarding tenders. WTO
provisions on national treatment and nondiscrimination
should inform the overall approach of the instrument
towards entities and sectors covered by it. This is likely
to engender the general benefits of greater competition -
lower prices, better quality and more efficient firms. The
evidence on the impact of nondiscrimination provisions
are based on first principles. Baldwin and Richardson
note that bans on procurement discrimination lead to
greater imports from foreign suppliers when the
domestic industry is substantially or predominantly
dependent on the Government as the buyer of the goods
that it produces for the domestic market, and the price
paid by the Government exceeds the price paid by
domestic private customers to import the same product.
9
It would be apposite to say that national treatment and
non-discrimination commitments such as those set out
in the GPA can induce more foreign bidders and are likely
to generate the greatest improvements in value-for-money
for Governments and enable them to spread their scarce
budgets further across their populations.
(3) The instrument needs to incorporate a transparent
framework of laws, regulations, procedures and
practices regarding Government procurement. This will,
likely encourage transparency in the transactions of the
procurement agencies and provide nondiscriminatory
timely, transparent and effective procedures enabling
suppliers to challenge alleged breaches of the
instrument. A Government that implements such an
instrument is therefore likely to reduce rent-seeking
tendencies and corruption. This is likely to lead to
procurement being based on more objective criteria
thereby further reducing costs. Greater clarity in the terms
and conditions for applying for State procurement
contracts is likely to attract larger numbers of both
domestic and foreign firms to bid. Small and Medium
sized enterprises, which many Governments historically
seek to protect, would welcome and respond positively
to increases procurement-related transparency.
(4) The instrument could be bilateral or a Regional Trade
Agreement or even multilateral. As noted supra, GPA is
one such instrument.
If a country were to assign its signature to the GPA, access
to its market for GPA signatories would follow as a
consequence. Notwithstanding the legitimate need to
provide protection to some sensitive sectors of the
economy, this should lead to various benefits flowing
from opening up domestic public procurement to
competition, including improved value for money from
better-value goods and services offered by foreign
industry and from pressure on domestic firms to improve
their own competitiveness as a result of foreign
competition. It should also result in the greater ease
and propensity for transfer of technology, which should
benefit certain high technology procurement areas.
Finally, membership of a binding plurilateral agreement
on Government procurement sends powerful signals to
both governments and foreign investors that there is a
commitment to the principles of transparent, fair and
competitive procurement markets in a country. The GPA
provisions require both a transparent and effective bid
challenge mechanism to monitor the system and offer
firms redress. It incorporates the WTO Dispute Settlement
Mechanism, which offers a binding independent forum
to any party that feels its rights under the agreement are
being denied.
V. India - Procurement Policies, Practices and
Institutions.
Definition of Government procurement differs from
country to country. In India, it is defined as procurement
made for and on behalf of the Government, and includes
Central Government, State Governments, Public Sector
Undertakings (PSU) and Public Bodies.
10
While data from
cross-national studies suggest that Government
procurement typically constitutes in the range of 1015
per cent of total economic activity or more,
11
in India, its
overall value is very likely significantly higher given the
role of public companies in key sectors of the economy,
such as the Railways. The value of Indian procurement
markets in 2003, according to the World Bank was
estimated to be in the order of $100 billion, representing
over 20 per cent of GDP.
12
Indian procurement policy has been discriminatory, at
least to a degree, as it admonishes Government
Departments and entities to follow certain hierarchy of
preferences. The said hierarchy requires them to - first,
prefer purchase of goods wholly produced in India;
secondly, for goods manufactured in India from imported
materials; thirdly, for foreign manufactures held in stock
in India and last, for imported products received for
supply through Indian agents or India-based
establishments. Participation by foreign firms has been
accorded welcome in particular sectors. Purchasing
entities have been accorded the discretion to give price
preference to domestically produced products over
imported ones and also to articles produced by cottage
and small-scale industry over those manufactured by
larger ones. For instance, in 1980 the Bureau of Public
Enterprises mandated Central Government Ministries
and Departments as well as PSUs to grant a price
preference to PSUs up to 10 per cent and even more in
appropriate cases. If the price quoted by a PSU was
within 10 per cent of the lowest quotation, negotiations
were held with the PSU and the tender awarded to it at
that lowest quoted amount.
13
Social responsibility informs the rationale for price
preferences in India. Small firms, cottage industries and
womens employment schemes operate in economically
backward regions and procurement can provide
employment to these sectors of the population. The Indian
Government has used procurement contracts to direct
employment towards marginalized groups such as the
scheduled castes, for example, in labour-intensive public
works contracts or by unbundling or splitting up large
contracts into smaller packages to enable domestic firms
and particularly SMEs to fulfill them. The procurement
of specific pharmaceuticals has also been restricted to
some PSUs for similar social welfare arguments. PSUs
have been protected from competition through
reservation, and mandates have allowed both Central
Government Departments and public sector enterprises
to apply price and purchase preference in favour of the
public sector.
14
At the federal level, there is no single law exclusively
governing public procurement of goods in India.
15
The
federal regulatory framework in place consists of:
(i) the General Financial Rules (GFR;
(ii) the Delegation of Financial Powers Rules (DFPR);
(iii) the Manual on Policies and Procedures for
Purchase of Goods issued by the Ministry of
Finance (Manual);
(iv) Government orders regarding price or purchase
preference or other facilities to sellers in
theHandloom Sector, Cottage and Small Scale
Industries and to Central Public Sector
Undertakings, etc.; and
(v) the guidelines issued by the Central Vigilance
Commission to increase transparency and
objectivity in public procurement.
16
Acknowledging the need for enhancing administrative
flexibility and ensuring full accountability for the use of
public funds and appropriate transparency
mechanisms, the Indian Government ushered in reforms
in 2005 in the area of procurement by Government and
its entities. The General Financial Rules (GFR) governing
Central level procurement in India were overhauled
laying down certain basic underlying principles and
providing that every authority delegated with the
financial powers of procuring goods in public interest
shall have the responsibility and accountability to bring
efficiency, economy and transparency in matters relating
to public procurement and for fair and equitable
treatment of suppliers and promotion of competition in
public procurement. All Government purchases were
mandated to abide by the principles outlined in the GFR.
Organizations with a website must publish their tender
notices and enquiries on those websites, while those
without a website must post the notices on the National
Information Centre (NIC) website. Central procurement
agencies are required to follow the procedures set out
below
17
depending upon the circumstances and factors
underlying the procurement:
The normal procedure for procurement over Rs. 2.5
million (1 US Dollar is approximately 50 Indian Rupees)
is through open tender. However, Department heads have
discretion in deciding whether to advertise tenders
abroad. Open tenders are invited through advertisements
published in the Indian Trade Journal, and in two
national daily newspapers.
Limited tendering is allowed for procurement up to Rs.
2.5 million, advertised to pre-selected approved
suppliers. This is also allowed in cases of urgency and
where justification is provided by the Ministry/
Department; where it is considered not to be in the public
interest to procure goods through open tender; and where
the possibility of additional suppliers being tapped is
deemed to be remote.
Commonly used goods required by Central Government
entities on a recurring basis typically are purchased
under rate contracts administered by the Directorate-
General of Supplies and Disposals (DGS&D) in the
Department of Commerce. These contracts are intended
to allow the procurement of goods from reliable sources
without the need for recurrent tenders. It is important to
note that, in principle, there is no preference for domestic
as opposed to imported goods for such procurement.
Foreign manufacturers may be registered, with or without
Indian agents.
However, both Indian and non-Indian suppliers must be
able to provide after sales support in India, and the
products purchased must be suitable for use in India.
For petty purchase of goods or works, cash purchase is
resorted to. A minimum of three quotations is obtained
from suppliers and the order given to the lowest.
The GFR also provides for purchase of goods without
quotation (up to Rs 15,000) and purchase of goods by
local purchase committee (up to Rs. 100,000). (Rule 151
GFR).
Procurement in the Railways, Postal System, Telegraph,
and Defense sectors is subject to specialized procedures
but within the overall framework of the GFR. Competition
from foreign suppliers is generally permitted in respect
of high technology or high value items. In the Railways
sector, foreign firms are free to participate in tenders
advertised in India. Payment against such contracts must
be made in Indian Rupees at par with indigenous
suppliers. Global tendering is frequently used in
procurement of rolling stock, wheels, machinery and
plant equipment, including technology transfer.
As a part of the modernisation of federal procurement,
tender documents have been substantially standardised
on the basis of national or international standard
specifications. In respect of global tenders, more time is
generally given for submission of overseas bids than in
the cases of domestic tenders and notices are published
or disseminated through Indian Embassies.
The reforms of 2005 were designed with the specific
objectives of promoting competition and of ensuring
fair and equitable treatment of suppliers, but yet for
political reasons and for inhering social responsibility
approach, the preferential policies were retained in
practice for Central public-sector and micro and small
enterprises. The 2007 WTO Trade Policy Review noted
that for tenders valued between Rs. 50 million and Rs. 1
billion, a Central public-sector enterprise whose bid is
within 10 per cent of that of a large private unit is allowed
to revise its price downward and is eligible for a contract
or parallel-rate contract. Further, micro and small
enterprises (MSEs) receive purchase and price
preferences in procurement by Central Government
Ministries and Departments and public-sector
enterprises. Under the purchase- preference system, 358
specified items must be procured exclusively from MSEs.
The price preference system also provides that if the
price offered by the micro or small enterprise is not
more than 15 per cent above the price offered by a large
enterprise, the product must be purchased from the
former.
18
Transparency takes a back seat for unsuccessful bidders.
They are informed of not having been successful through
a regret card. Experience of unsuccessful bidders
suggests that the competent authority deciding on the
tenders does not generally furnish reasons for the
rejection of their bids. There also is no requirement to
publish details of the contracts awarded.
However, India has a good dispute resolution
mechanism. In the event of a dispute, the parties are
encouraged to resolve differences with the purchaser by
mutual consultation. If this fails to resolve the dispute
within 21 days, then, either the purchaser or the supplier
may give notice to the other party of its intention to
commence arbitration. Citizens can also lodge
complaints with the Central Vigilance Commission (CVC)
or with ombudsmen to trigger investigations into alleged
acts of corruption in procurement by public officials or
politicians. This is complemented by the Right to
Information Act, 2005 which enables general access to
information about procurement decisions within a
specified time frame. Internal and external audits of
procuring agencies and offices at the federal and local
levels are other instruments in place to curb and detect
corruption in public procurement. The reports of external
audits are made publicly available.
19
There is one important valve for redress for unsuccessful
and disappointed bidders. They can avail of invoking
the writ jurisdiction of the High Courts and the Supreme
Court (Articles 226 and 32 of the Constitution of India).
They are entitled to challenge any administrative action
that violates fundamental rights.
Having said this it cannot be gainsaid that, when
compared to challenge mechanisms set out in the WTO
GPA or most Regional Trade Agreements, the Indian
framework for challenge is incomplete and
unsatisfactory.
20
Chakravarthy and Dawar note that Overall, while
various regulations governing Government purchasing
practices exist in India, in general procurement
legislation and bid challenge mechanisms in India are
incomplete and in places ill-defined. Furthermore, the
procurement framework does not have the quality of
Parliamentary Law and therefore not all deviations from
the rules are subject to judicial review.
21
VI. Suggestions for a Road Map for India
22
.
(1) Given the problems and challenges facing India in
the area of Government procurement, it needs to posit
an appropriate instrument to inher the elements of
transparency, integrity, fairness and efficiency in the
procurement apparatus and schema. GPA is one such,
despite reservations on accession to it.
Presently, India has decided to become a GPA observer.
India could evaluate the pros and cons of becoming a
party to GPA and become a signatory.
(2) As noted supra, the Government of India still uses
preferential treatment in Government procurement as a
tool of industrial policy. The existing preferential policy
in favour of the small scale sector and PSUs and other
organizations is likely to continue as a part of Indias
strategy for economic development, social responsibility
and protection of the small and vulnerable sections of
the society.
23
Discontinuing preferential treatment may
not be either desirable or politically feasible. Mention
must however be made that it is the declared intention
of the Indian Government to eliminate purchase
preferences. At present, the purchase preference policy
for PSUs is extended from year to year. Policies of
preference to smallscale and cottage industries have
continued, although the list of products is gradually
being reduced.
Accession to the GPA could offer the Indian Government
the vital legislative push that is needed to overcome
inertia and vested interests, while still protecting those
sectors of the economy and population that can genuinely
benefit from preferences.
(3) Acceding to the GPA poses nondiscrimination and
national treatment requirements on all tenders above
the GPA thresholds on those entities and sectors covered
by the Agreement. This necessarily restricts the use of
ad hoc and discriminatory policies as an important
component of fair and transparent procurement. India
needs to strike a balance between its social obligations
and the need for nondiscrimination and national
treatment in procurement policies as mandated by the
GPA. This implies that India may negotiate and get specific
sectors and agencies (sensitive and critical) excluded
from the coverage of GPA, as the Agreement provides for
such exclusions.
(4) The challenge for India, therefore, is in defining those
sensitive and critical sectors of the economy that need
to be excluded from the coverage of the GPA during the
accession negotiations. On the obverse side, the Indian
Government has to mount an effort to form coherent and
comprehensive development policies towards sensitive
sectors of the economy and society, without
compromising on the need for transparency and integrity
reforms in these sectors. The more sectors of
procurement that are sheltered from good governance
principles, the less likely reform measures will ensure
efficient procurement markets.
(5) In many cases, as Hoda et al
24
point out, the weakness
is not in Indian procurement legislation or policies but
in its weak implementation. If the Central Government is
committed to reform, it needs to strengthen
implementation through greater oversight and devising
stronger bid challenge mechanisms.
(6) There will be financial costs in implementing the
requirements of the GPA associated with its
transparency and procedural requirements. It is
important to acknowledge the resource costs not only in
terms of setting up new bodies and training staff, but
also the costs associated with publishing changes in
procurement practices and publishing statistics on
procurement decisions. Moreover, the benefits of greater
transparency to potential bidders for State contracts
are likely to be maximised or fully realised only when
additional steps are taken to ensure due process and to
challenge the decisions of procuring entities. This too
involves expense and new expertise.
Despite these costs, the benefits of transparency, due
process, and rights of appeal would be enjoyed both by
potential domestic and foreign bidders for State
contracts. Some of these costs are a necessary element
of reforming a domestic procurement system, rather than
being specific to the GPA.
It is interesting to note that in some respects, Indian
procurement procedures are already broadly in line with
the requirements of the GPA. For instance, the procedures
relating to invitation to participate in the intended
procurement, selection procedures, time limits for
tendering and delivery, submission, receipt and opening
of tenders are all in broad conformity with the GPA
stipulations. In these cases, the problem is with
implementation because the procuring agencies are seen
to have deviated from the rules in practice. There have
been very few complaints of the absence of rules but
many of failure to observe them in letter and spirit. If
India accedes to the GPA, such fai lures may be
actionable. This would have a positive impact on the
implementation of procurement rules.
While some Indian procurement procedures may be in
de jure conformity with GPA requirements, Hoda et al
have given a call for promoting transparency in
procurement transactions and for fostering competition
in procurement and supplies. The current practice in
government procurement is opaque. Accession to the
GPA would provide the welcome clarity and certainty to
bidders. It would also improve implementation because
disappointed bidders are those with most interest in
having the rules of procurement observed. Again, as Hoda
et al note, making these changes would really be
tantamount to bringing about much needed reform to
this area of Government activity.
25
That is, the costs of
accession are typically the costs of reform.
VII. Finale.
This article has attempted to identify several areas of
procurement policy in India that could benefit from the
transparent rule based system such as that provided by
the WTO GPA. Such a system would provide a fair, efficient
and transparent system for spending public resources,
besides providing for greater competition, value for
money, technology transfer and ultimately more efficient
use of public money.
To conclude, the Government of Indias decision to
become a GPA observer indicates that it has identified
tangible benefits from accession to this Agreement.
Firstly, India believes it can take advantage of the market
access it gains to other Parties procurement markets,
and also that it will benefit from the greater choice it is
exposed to by allowing more foreign firms to bid for
procurement tenders. Secondly, it is clear that the costs
and challenges associated with Indias accession to the
WTO GPA are by and large the same costs as those
associated with implementing comprehensive policies
to ensure a transparent, fair and effective domestic
procurement system in India. India is committed to
improving its procurement markets and to underpin its
reforms, as a first step, has chosen to become a GPA
observer.
1. R. Wade, The System of Administrative and Political
Corruption: Canal Irrigation in South India, Journal of
Development Studies, 18, 1982 and R Wade, Governing
the Market: Economic Theory and the Role of Government
in East Asian Industrialization, Princeton University
Press, 2003.
2. F. Jenny, Competition and Anti-Corruption
Considerations in Public Procurement in OECD (eds.),
Fighting Corruption and Promoting Integrity in Public
Procurement, OECD, Paris, 2005.
3. Robert D Anderson, William E Kovacic and Anna
Caroline Muller, in The WTO Regime on Government
Procurement: Challenge and Reform, WTO, Cambridge
University Press, UK, 2011 (Chapter 4, p.136 and Chapter
22)
4. ibid.
5. Information provided by Mr. D. Kumar, former
Chairman, Competition Commission of India, New Delhi
is referred to in Chapter 4 in The WTO Regime on
Government Procurement: Challenge and Reform, WTO,
Cambridge University Press, UK, 2011 (note 3)
6. K.A. Elliot, Corruption and the Global Economy,
Institute for International Economics, Washington, DC,
1997; A. K. Jain, Economics of Corruption, Kluwer
Academic Publishers, London, 1998.
7. Robert D Anderson, William E Kovacic and Anna
Caroline Muller, Ensuring Integrity and Competition in
Public Procurement Markets: A Dual Challenge for Good
Governance, in The WTO Regime on Government
Procurement: Challenge and Reform, WTO, Cambridge
University Press, UK, 2011 (Chapter 22).
8. This paragraph and the four preceding paragraphs
lean on Section 4 of Chapter 4 of the book The WTO
Regime on Government Procurement: Challenge and
Reform, WTO, Cambridge University Press, UK, 2011
9. Baldwin, R.E., Non Tariff Distortions of International
Trade, Brookings Institution, Washington, DC, 1970,
Chapter 3; Baldwin, R.E. and Richardson, J.D., Government
Purchasing Policies, Other NTBs, and the International
Monetary Crisis, in H. English and K. Hay, (eds).,
Obstacles to Trade in the Pacific Area: Proceedings of
the Fourth Pacific Trade and Development Conference
Carleton School of International Affairs, Ottawa, 1972.
10. World Trade, S/WPGR/W/11/Add.14, dated 17th
January, 1997.
11. See, The Size of Government Procurement Markets,
OECD, Paris, 2001.
12. World Bank, India Country Procurement Assessment
Report, 2003
13. A. Hoda and B. Suchi, Transparency in Government
Procurement. Indian Counci l for Research on
International Economic Research in International
Economic Relations. Working Paper No. 129. April 2004.
14. V. Srivastava, Indias Accession to the GPA:
Identifying Costs and Benefits in A. Mattoo and R. Stern
(ed), India and the WTO Oxford: OUP, 2003.
15. Certain State Legislatures have enacted such laws,
for example, Tamil Nadu.
16. Chapter 4 in the book The WTO Regime on
Government Procurement: Challenge and Reform,
Cambridge University Press, UK 2011.
17. WTO Secretariat, Trade Policy Review, India, 2007
(WT/TPR/S/182/Rev.1).
18. ibid note 16.
19. Curbing Corruption in Public Procurement in Asia
and the Pacific, ADB/OECD Anti-Corruption Initiative
for Asia and the Pacific, Paris, 2005.
20. See for background on the WTO requirements in this
area, S. Arrow smith, Government Procurement in the
WTO, Kluwer, The Hague, 2003.
21. http://go.worldbank.org/DKSUMKG4D0
22. Chapter 4 in the book The WTO Regime on
Government Procurement: Challenge and Reform,
Cambridge University Press, UK 2011.
23. Raghavan, Chakravarti, Behind the Talks on
Transparency in Government Procurement in Third
World Network, 2002. Details at http://
www.twnside.org.sg/title.
Procurement. Indian Counci l for Research on
International Economic Research in International
Economic Relations. Working Paper No. 129. April 2004
(See note 13).
Procurement, (note 24).
This article / paper was presented by Dr. S. Chakravarty
at the 7th ASCOLA Conference on State Initiated
Restraints of Competition in Sao Paulo, Brazil held on
April 12-14, 2012.

EXPORT PROMOTION BONANZA
- CAPITAL GOODS IMPORTS @ 0 % DUTY
B.B.PUROHIT, EXIM, CONSULTANT
bbp1957@gmail.com
C
ommerce ministry has reintroduced capital goods
import @ 0 % duty scheme w.e.f. 18.04.2013 along
with other changes in Foreign Trade Policy 2009-
14 offered to all sectors of products. Now only one
scheme is operative : Import @ 0% duty with export
obligation : six times duty saved. The scheme is
prevailing without benefit of 1% to status house holder
scheme.
Prior to 18.04.2013, there existed two types of schemes.
For reference purpose, it is essential to know these two
schemes mentioned as under :
The exporter can import their capital goods at
concessional rate of duty. The scheme is named as
EPCG ( Export Promotion Capital Goods Scheme ) As
compared to normal duty, the exporter has to pay 3 %
duty under the scheme subject to undertaking specific
amount of export obligation to be completed in eight
years as specified in the scheme. The detailed scheme
is mentioned at Chapter 5 of Foreign Trade Policy 2009-
14. It is in real sense export promotion scheme and
offers various financial benefits to the exporter. The
scheme was offered to all sectors of products.
An additional modified scheme was introduced in the
year 2012 wherein exporter had to pay NIL duty for import
of capital goods provided he undertakes export
obligation @ 6 times of duty saved to be completed
within 6 years of issuing the licence. At present normal
import duties for capital goods is 25 .61 % / 22.7 % as
per the type of capital goods. The exporter does not
have to pay ANY duty to customs and can clear the
capital goods by submitting necessary undertaking. The
scheme ( 0% duty) was discontinued on 31.03.2012 and
reintroduced w.e.f. 05.06.2012 with modified and more
attractive features.
Both the Schemes( 0% & 3% duty) are pre import
schemes i.e. one has to take licence with either benefit
and then clear the capital goods from customs. The
scheme is operated vide customs notification no. 102/
2009 . EPCG scheme is also available for EOU ( 100 %
export oriented units ) units which propose to converts
their units into DTA units(normal unit).
The exporter saves substantial amount of fund by way
of duty and has direct financial benefit on his working
capital. The scheme 0%duty) is available for certain
sectors of industries which are manufacturing value
added manufactured items and covers most of the items.
We have to take reference of another export incentive
scheme known as SHIS(Status House Incentive Schemes)
as it has impetus on 0% duty EPCG scheme. SHIS benefit
offers duty licence ( duty scrip ) @ 1 % of FOB value of
Physical export. The said scheme is not available to the
exporter who opt for 0 % EPCG Scheme.
While adopting % duty EPCG scheme, the exporter has
to carry out a critical comparative analysis of this
scheme with respect to SHIS benefit. For the particular
financial year. The exporter, holding Status house
certificate, has to work out projected benefit under both
the the scheme i.e . export projection & projected import
of capital goods to be cleared under 0 % duty scheme.
SHIS benefit scheme and 0 % duty scheme are mutually
exclusive and hence it is important to carry out this
exercise.
As a further modification to above scheme, the import
policy offers the same scheme ( EPCG Scheme) as a post
import capital goods scheme. After import of capital
goods the exporter has to undertake necessary export
obligation. A duty Scrip for the equivalent amount of
duty paid at the time of import, is issued which can be
utilized for import of various goods. Its serves as
replenishment of duty paid by the exporter while import
of machines.
The regular EPCG scheme import of capital goods @
3 % duty is also equally popular and beneficial. The
exporter has to pay duty @ 3 % only irrespective of
duty prevailing for particular capital goods item. He
has to under take export obligation for 8 times of duty
saved amount ( i.e normal duty leviable of an item less
3 % ) and export obligation is to be completed within 8
years from the date of issuance of licence. This scheme
is scrapped off w.e.f.18.04.2013.
That is : the EPCG scheme offers two types of options.
:- (a) Pre-Import : Duty payable @ 0 % at the time of
import (b) post Import - duty licence available after
import of any capital goods.
As usual, export made by the firm under any of the duty
exemption scheme will be sub assumed for fulfillment
of export obligation under this scheme i.e. export made
under any of scheme will also be consider under this
scheme as fulfillment of export obligation. The scheme
( 0% duty) has proved to be export incentive scheme in
real sense and exporters are availing benefit in a big
way.

SUPPLY CHAINS OF THE FUTURE - LEAN AND AGILE
R V RAMAKRISHNAN
MANAGEMENT & TRAINING CONSULTANT, CHENNAI
rvr1936@vsnl.net
Business Challenges
T
oday, manufacturers operate in an increasingly
demanding environment that includes global
competition, increasing pressures for cost
reductions, quality driven compliance and
improvements in on-time and in-full orders. Andy Grove,
CEO, Intel, talked about Business of the future with an
interesting example -
Every morning in Africa, when a gazelle wakes up, it
knows it must run faster than the fastest lion or it
will be killed.
Every morning, when a lion wakes up in the same
jungle, it knows that it must out run the gazelle or it
will be starved to death.
It does not matter whether you are a lion or a gazelle
when the sun comes up, you would better be
running.
To stay ahead of competitors, organizations have to
raise their performance standards in areas of design,
manufacture and introduction of new products. This
has resulted in a shift in the focus of companies from
one that is totally internal to a model that is customer-
centric. A companys ability to be an industry leader
depends on how quickly it can respond to changes in
customer demands and come out with the right products
and services. The evaluation of a supplier and his status
until the nineties was based on factors such as product
performance, price, quality and timely supply but lately
two more requirements have got added. They are
responsiveness and reliability. It was the practice in
the past to manufacture products in bulk and stock them
while their sales force went in search of customers.
This model, also known as the push production
resulted in the production of large runs of standardized
products that were produced based on sales forecast
that may turn out to be inaccurate and unreliable feed-
back from sales. Today there has been a turn around
with the customer dictating what products are produced
and when. The shift has been from the push model to
a pull model where products are made to order. This is
called Lean Manufacturing. The system is no longer
static and organizations have to cope with continuous
change. In the context of the world shrinking into a global
village, Supply Chains have become complex.
Manufacturing plants are being set up in developing
countries to reduce cost while searching for markets in
developed economies. Li & Fung is the largest trading
company in Hong Kong innovating in Supply Chain
Management, producing genuine global products by
manipulating the manufacturing value chain and
optimizing each step with the help of the pull strategy.
In todays turbulent business environment a number of
challenges are faced by many organizations. They are
related to the rate, scale and predictability of change.
The new millennium faces the following challenges:
unpredictable changes in a turbulent market
rate of innovation in technology affecting products
and processes
competition demanding frequent product changes
declining life time of products and technology
forecast-based projections of demand is no longer
viable
execution against actual demand
In order to face the above challenges, organizations
are initiating corporate-wide Lean Programmes so as
to compete in the 21
st
Century.
Lean Wins the Race : Let us look at this story. Laurel and
Hardy are ready for a 100-metre race at the Community
Club. They are eagerly waiting for the gun shot to start
the race. The race is on and Laurel is well ahead of
Hardy to reach the win-post and to grab the trophy.
Hardy is left far behind and struggling to run. Obviously,
what is the moral of the story Lean Wins the Race.
This applies to Organizations as well. Many
organizations are struggling since they have been
accumulating fat in the form of wastes. Only such
organizations that can shed their wastes can enhance
competitiveness and remain in business. At this stage,
many questions come to our mind. What are the types
of wastes, how do we identify them, what are the tools
available, how do we implement and sustain Lean culture
and what are the success stories? The following
chapters explain the concepts of Lean & Agile Supply
Chains so as to Win the Race in this competitive
environment.
Lean Supply Chains : Basically, Supply Chain
Management (SCM) is the network of organizations that
are involved through upstream and downstream
linkages, in the different processes and activities that
produce value in the form of products and services in the
hands of the ultimate consumer. The need for
innovation, because of competition among companies
has compelled them to seek new ways of business and
Supply Chain Management perhaps could be considered
as an effective tool that might be used to gain leverage
over competitors. The two-fold aim of reducing cost and
increasing value for the customer requires a totally
different approach in the way business responds to the
demands of the market. Lean Thinking is imperative in
todays market if there is to be an improvement in cycle
times, work-in-process, inventory levels and quality. The
idea behind Lean Thinking is to shorten the time between
orders from the customer to the delivery of the goods by
eliminating waste.
A Lean Supply Chain is a set of organizations directly
linked by upstream and downstream flows of products,
services, finances and information, that collaboratively
work to reduce cost and wastes by efficiently and
effectively pulling what is needed to meet the needs of
the individual customers. Lean Supply Chain
Management techniques are ways to simplify and
streamline how organizations work with their suppliers,
customers and their own production processes. The
components of Lean Supply Chain include the following:
Lean Manufacturing - producing what the customer
wants at the right quantity at the right time and
with minimum resources
Lean Suppliers - who can respond to changes,
maintain lower prices, improve quality and deliver
on time
Lean Logistics covering Warehousing & Distribution
- eliminating waste in product, storage and
processes, transportation & distribution, creating
synchronized flow
The benefits of Lean Supply Chain are the following:
speed and responsiveness to customers (Time
reduction of 10 to 30%)
reduced inventories (10 to 30%)
reduced cost (10 to 25%)
on-time performance of 99%
reduction in cost of quality by 60%
Robert Martichenko, CEO of LeanCor, US, says:
Successful organizations going forward will be those
that focus on the customer, eliminate all non value added
activities, and reduce lead times and inventories, and
build leaders who can navigate the Supply Chain from a
cross-functional perspective. He added that when
Lean is successfully implemented in the Supply Chain,
revenue will go up and costs will go down. This is the
model of margin management and cash flow
improvement required for todays success.
Lean Manufacturing : Toyota Production System (TPS)
introduced the concept of Lean several decades ago and
this turned Toyota into an industrial and automotive
giant. As a consequence manufacturing organizations
world-wide accepted TPS as a model for eliminating
waste, since that is the ultimate goal of industry in order
to survive in a competitive environment. Toyota have
identified seven types of wastes Over production,
Waiting, Transporting, Inappropriate processing,
Unnecessary inventory, Unnecessary motions and
Defects which are detrimental to Supply Chain
performance. The principal objective of Lean
Manufacturing is the elimination of all wastes which is
facilitated by JIT systems. JIT makes use of a pull strategy
as its operating principle as opposed to a push
strategy. This means that there is no production until
a customer has placed his order. If the system is to
work efficiently it is essential that there should be a
smooth flow of information upstream through the
Supply Chain along with a synchronized flow of
material, downstream to the customer. What a customer
is willing to pay towards a product is its value, in the
context of Lean. Anything that does not add value to a
product from a customer perspective is called waste. It
is thought provoking to learn about Toyotas Lean
Strategy Brilliant process management is our strategy.
We get brilliant results from average people managing
brilliant processes. We observe that our competitors
often get average (or worse) results from brilliant people
managing broken processes. The book, The Machine
that Changed the World had such a global impact that
two of its authors Prof. Jim Womack (USA) and Prof.
Daniel Jones (UK) started a study of how several western
businesses had emulated and implemented the Lean
approach in different sectors. The success stories were
chronicled in the book Lean Thinking
Lean Procurement : Lean Procurement is a concept
that goes along with Lean Manufacturing and utilizes
its principles to identify, recommend and implement a
seamless process using e-commerce as a means to place
orders, get confirmations and use reports for controls
and invoicing. Information sharing and collaboration
with suppliers are effective tools to optimize performance
and achieve an advantage over the competition.
Organizations are constantly upgrading their
technologies to improve their procurement processes.
Vendor Managed Inventory (VMI) makes the supplier
responsible for replenishing the customers inventory.
VMI makes it unnecessary for the customer to generate
purchase orders or check order confirmation against
purchase orders. Further invoices do not have to be
verified against goods received since these tasks take
place automatically. These features result in a reduction
of transaction cost by as much as 50%.
Lean Logistics : Logistics Management is the process of
planning, implementing and controlling the efficient flow
and storage of goods, services and related information
from the point of origin to the point of consumption for
the purpose of conforming to customer requirements.
Logistic function being a key value lever in achieving
business effectiveness, its potential will create
significant opportunities for corporate success,
performance and profit. In todays context, the
wholesalers, distributors, manufacturers, retailers and
suppliers and others connected with business find it
difficult to cut costs, balance time and inventories,
retain their profits, all the while satisfying the customers
in both domestic and global economies. In order to
achieve their goal the best method would be to
implement Lean Logistics which would eliminate waste
from their internal and external Supply Chains.
Reduction of excessive inventories, replenishment times
and unnecessary costs will all help in reducing waste.
Lean Logistics helps business by compressing cycle
times, reducing logistic costs, decreasing inventory
levels and improving supplier and logistics
performance besides enhancing Supplier Chain
visibility. Lean Warehousing activities eliminate non-
value added activities by a re-arrangement of layout
and routings besides optimizing storage and picking. A
Lean Warehouse serves customers faster with the use
of less space, less inventory and a greater accuracy at
reduced over-all costs. New technologies are also
introduced that include Bar Code, RFID and cross-
docking.
Information Technology for Lean Supply Chains : In order
to enable Managers to make more informed and better
decisions, information within the Supply Chain is
crucial. Information on customer demand, inventory
levels, production and shipments are included for
appropriate decisions to optimize the flow of materials
throughout the Supply Chain. Information sharing
through integrated information systems is very
necessary to achieve increased visibility of demand and
responsiveness. Information on everything from Supply
Chain inventories to production planning and shop-
floor scheduling is very essential because collecting,
analyzing and sharing information by manufacturers
has become a basic requirement for global Supply Chain
operations. An integrated ERP system has the potential
to offer manufacturers the opportunity to reduce cost
structures, increase speed and improve transparency and
thereby enhance customer satisfaction and the
profitability of the company. Many leading Software
Companies are now offering Lean Supply Chain
Solutions, for streamlining manufacturing processes
and reducing waste within the enterprise and across
the entire Supply Chain.
Agile Supply Chains : Prof Martin Christopher has
defined Agility as the ability of an organization to respond
rapidly to changes in demand both in terms of volume
and variety. Agility is a business-wide capability that
embraces organizational structures, information
systems, logistics processes and the key characteristic of
an agile organization is flexibility. Lean Supply Chains
are more suited to functional and stable products while
Agile Supply Chains are preferable for innovative
products that are less predictable. Leanness aims at
developing a value stream that eliminates all waste
including time to achieve a level schedule. Agility refers
to the ability to grab profitable opportunities in a
volatile market scenario by making use of market
knowledge and virtual corporation. Leagile is a
telescopic combination of Lean and Agile which aims
at optimizing the management of the Supply Chain. An
important element in the Agile Supply Chain Strategy is
the concept of Postponement. The real challenge in
Supply Chain Management is to develop lean strategies
up to the decoupling point and shift to agile strategies
beyond that. Up to the decoupling point the flow of
product may be forecast driven while after that point it
could be driven by demand.
Implementation of Lean Supply Chain : Although Lean
Thinking tools are good to learn and appreciate, the
real challenge is in the implementation of the system
and its sustenance to achieve optimum results. Culture
and Strategy are the double helix in the Lean process.
Because it has tools and techniques that can be taught
and understood, implementing the strategy is easy. To
change the way a company thinks and acts, that is, to
build a culture is difficult. Reluctance to change, effort
involved in laying down a foundation on a sound
philosophy, taking decisions every day and the need for
strong leaders stand in the way of achieving lean results
though there is a great desire to do so. For a successful
transformation, the changes in thinking must begin at
the top. Then there is the problem of training managers,
supervisors and workmen on tools and techniques and
to create a sense of involvement. Lean Supply Chains
have been implemented by many corporations
successfully and they have reaped rich rewards and
remained competitive even in difficult times.
Challenges of Supply Chains in India : Most Indian firms
have focused on Production and Sales aspects,
neglecting Logistics, which include inventory-carrying
costs across the Supply Chain and transportation costs.
The following are the factors contributing to poor
performance of Supply Chains:
Taxation structure : Most decisions on facility
location have been based on taxation benefits and
not by customer service requirements. Further,
companies are forced to have one stocking point in
each state to avoid taxes on inter-state sales. It is
hoped that the proposed GST (goods and service
tax) will remove this anomaly. Many of the highways
have stretches of roads managed by private parties
and they collect toll for entry; many cities have
octroi collection centres at the entry. These
collection centres create bottle-necks for the
movement of vehicles.
Poor infrastructure : The national highways are in
poor condition, resulting in unreliable lead times.
Both the transportation and warehouse industry
are in the unorganized sector. To take care of the
risk in uncertain led-times, companies tend to
increase inventory. In most of the sea ports, we see
accumulation of containers awaiting
documentation and customs clearance, both for
inbound and outbound cargoes. Most of the States
have severe power shortages, affecting the
manufacturing operations of large-scale and small/
medium scale industries; they are forced to have
power back-up with use of Generators, which
obviously increase operations cost. However, of
late, the government has initiated actions to
improve national highways and sea ports to world-
class standards.
Success Stories : In spite of the above constraints, many
Indian organizations have faced the challenges and
converted these constraints into business
opportunities:
Retail industry: To reduce transport complexities
and cost, the bicycle manufacturers limit their
activities to production of frames, handle bars and
transmission parts. Other suppliers provide the
tyres, tubes, seats and fittings. The manufacturers
offer a high variety of bicycles for the three
segments men, women and children. They find it
convenient to send the bicycle parts to their dealers,
who assemble the right product based on the
customer order. Thus the manufacturers achieve
the postponement strategy in the assembly of the
bicycles.
Auto industry: India has become a global hub for
compact cars and many of the leading auto
manufacturers like Maruti, Hyundai, Tata Motors,
Toyota, Ford, General Motors, Nissan Renault,
Honda, TVS-Motors, Bajaj Auto and Hero Honda,
have considerably increased their manufacturing
capacity. It is interesting to note that both the auto
companies and component industries has focused
on global best practices like TQM, TPM, Six Sigma,
Lean Manufacturing and Lean Supply Chain
management.
Auto ancillaries : The success of the Indian Auto
Industry is very much dependant on the capabilities
of the auto component industries, supporting them.
It is regrettable to realize that they have been
lagging behind in the implementation of Lean
concepts in their manufacture. In view of this, the
Government of India under the Ministry of Micro
Small and Medium Enterprises (MSME) is
implementing the Lean Manufacturing Programme
(LMP) for the benefit of these enterprises. This
programme is highly significant in relation to the
productivity and competitiveness in the MSME
sector. The main objective of LMP is to enhance the
manufacturing competitiveness for the MSMEs by
applying Lean techniques to identify and eliminate
wastes in their manufacturing processes and also
to streamline the system. The Lean techniques will
be of assistance to MSME units in reducing the
manufacturing cost through proper personal
management, better space utilization, scientific
inventory management, improved process flows,
reduced engineering time etc. Lean Manufacturing
Programme also brings in improvement in the
quality of the products and lower costs, which are
essential for competing in national and
international markets.
(Extract from the Book Lean & Agile Supply Chains by
the author and released on 1
st
Feb 2013 at SPECTRUM
2013, IIMM, Chennai)

WTO UPDATE :
HONBLE PRESIDENT OF INDIA
SHRI PRANAB MUKHERJEES SPEECH AT THE
GOLDEN JUBILEE CELEBRATIONS OF INDIAN
INSTITUTE OF FOREIGN TRADE
1. It gives me great
pleasure to be here
today for the
Golden Jubilee Day
celebrations of the
Indian Institute of
Foreign Trade (IIFT).
This is an occasion
to recognize the
e n o r m o u s
i n t e l l e c t u a l
contribution made
by the Institute in
foreign trade and
i n t e r n a t i o n a l
business.
2. I have fond
memories of my
association with
the Institute during
my two tenures as
the Commerce
Minister. During
one of my visits to
the Institute in
1994, I remember
releasing a book,
titled Trade in
Services: The Uruguay Round and After. I am told
that this book continues to be an important
reference for understanding the nuances of Trade
in Services. As the Commerce Minister, I had the
privilege to contribute to the negotiations that led
to the formation of the World Trade Organization
(WTO) in January, 1995.
3. The IIFT, since its inception in 1963, has been at
the forefront of research and capacity building in
international trade. This Institute has provided
able support to the Government in responding to
the challenges faced by our trade and industry
from the very beginning. The countrys external
sector was stressed on several occasions. In 1966,
the foreign exchange position became unstable
due to increased food imports necessitated by
drought. The oil price shocks of 1973-74 and 1979-
80 had similarly
strained our foreign
exchange reserves. In
1991, a host of factors
like the Gulf crisis, fiscal
imbalance, and
weakening of
i n t e r n a t i o n a l
confidence led to a
balance of payment
problem. In July of that
year, we had foreign
exchange reserves
enough to finance
imports for only a
fortnight. Crises of such
proportions required
deft handling that called
for sound policy advice.
Seminars, research
projects, and other
academic programmes
conducted by IIFT have
rendered valuable
inputs to our policy
makers for better
understanding of the
problems.
4. The setting up of the WTO marked an important
event in international trade and investment. To
facilitate greater understanding of the multilateral
trade regime and to build expertise in the
Government, a Centre for WTO Studies was
established in IIFT in 1997-98. I am told that this
Centre has been instrumental in assisting the
Government to formulate our countrys strategy
in the WTO and other fora.
5. Ladies and Gentlemen, our approach to the external
sector has been guided by our countrys economic
position. We have viewed exports as a means of
employment generation and have given a thrust
on employment intensive industry. To reduce
dependence on imports, we have encouraged
domestic manufacturing for inputs to export
industry. To build export competitiveness, we have
promoted technology up-gradation. We have
pursued market diversification to evade the risk
of global downturn. We have also encouraged
exports from the North Eastern Region, which has
a special place in our economy.
6. Experience of many economies has shown that
reducing trade barriers increases the efficiency
of resource use leading to higher growth. In the
Union Budget for 1991-92, the maximum rate of
import duty was reduced from 300 to 150 per cent.
After progressive liberalization, the peak rate of
customs duty for non-agricultural products today
stands at only 10 per cent.
7. We have been following a policy of globalization
as a strategy to achieve higher economic growth.
The international trade to GDP ratio, which was
just 15 per cent in 1991-92, is now 44 per cent.
Our export sector has done well. From US Dollar
17.9 billion in 1991-92, the value of exports has
increased to US Dollar 300.6 billion in 2012-13.
The compound average growth rate of our exports
during 1991-92 to 2000-01 was 10.7 per cent. This
has increased to 19.1 per cent during the period
2001-02 to 2012-13.
8. India is today the worlds largest rice exporter and
second largest wheat exporter. While we must be
proud of our performance in commodity exports,
there is a need to monitor and exercise caution.
We must ensure the availability of enough food in
the country at all times. Every citizen should have
access to affordable food.
9. Higher export growth has contributed to an
improved economic performance in the last
decade. The average annual growth rate during
the last 10 years was a healthy 7.9 per cent. The
recovery of Indias economy from the impact of
the 2008 global crisis was much stronger than
initially believed. During 2009-10 and 2010-11,
Indias economy grew by 8.6 per cent and 9.3 per
cent respectively though the growth rates earlier
estimated for these years were much lower. The
ongoing global financial crisis has decelerated
our economic growth in the last two years. The
GDP growth in 2012-13 has been estimated at a
muted 5.0 per cent but I am confident that we will
bounce back.
10. Ladies and Gentlemen, the increased integration
of our economy with that of the world calls for
managing our economy from the risk of any global
financial crisis. We have diversified our export
market, by focusing on countries in Asia, Africa
and Latin America. These geographies accounted
for two-third of our exports in 2012-13. The
slowdown of the global economy has impacted
our external sector. But due to the market
diversification strategy, we have been able to
mitigate the impact considerably.
11. A matter of concern is the current account deficit,
which at 5.4 per cent of GDP during the period
April to December, 2012 is very high. Though we
have managed this deficit through capital flows,
we have to increase our exports to bring it to a
sustainable level. A strong revival of the global
economy is expected in 2014. At a time when global
demand is yet to firm up, there is a need to
strengthen our export industry.
12. Our efforts have for long been to build the
competitiveness of our export sector. To give
greater thrust to export promotion, over 158
Special Economic Zones have been set up. The
Export Promotion Capital Goods scheme has
enabled exporters to import machinery and
equipment for producing quality goods for export.
13. We have taken a proactive stance at forging trade
and economic partnerships with several
economies and trading blocs. Comprehensive
Economic Partnership Agreements have been
entered into with Singapore, South Korea, Japan
and Malaysia. Such an agreement has recently
been concluded with ASEAN. Similar agreements
are being negotiated with Indias prominent
trading partners like the European Union.
14. Increased trade liberalization and economic
cooperation will not count much unless they result
in tangible benefits for our people. Hence, thrust
should also be placed on meeting other objectives
like employment generation and regional
development. Our export sector should be able to
drive the socio-economic development of our
country.
15. Over the years, IIFT has broadened its academic
framework by providing management education
and PhD courses. Its endeavour should not only
be to produce successful managers, business
leaders and academic thinkers but also to prepare
them as socially conscious citizens who have the
capacity and willingness to respond and
contribute to our societys needs.
16. I am confident that IIFT will continue to impart
relevant training and undertake intellectually
sound research in the area of foreign trade and
international business. I wish the Institute all
success for the future.
Source : PIB

INNOVATION VALUE CHAIN
S.N.PANIGRAHI
snpanigrahi@rediffmail.com
Innovation is the specific tool of entrepreneurs, the
means by which they exploit change as an opportunity
for a different business or a different service. It is
capable of being presented as a discipline, capable of
being learned, capable of being practiced.
Entrepreneurs need to search purposefully for the
sources of innovation, the changes and their symptoms
that indicate opportunities for successful innovation.
And they need to know and to apply the principles of
successful innovation.- Peter Drucker
..if we want to succeed as a company and as an industry
we must drive innovation into everything we do: into
technology, into safety, into design and into real-world
solutions for environmental issues, like the impact of
energy usage on our world.
-Chairman Bill Fords speech, NATIONAL PRESS
CLUB WASHINGTON, DC November 22, 2005
I
n todays fiercely competitive global business
environment, corporations are under compulsions
to find new and unique ways to create and deliver
value to customers through innovations and the demand
to innovate and deliver better value addition is growing
ever stronger and stronger.
There is a growing recognition that through effective
management of the Value Chain both cost reduction and
value enhancement can be achieved. Since value chain
function has been identified as a key value lever linking
demand to delivery, in order to capture this value, the
focus has been on taking Value Chain to a central stage
of business strategy. Unlocking its potential will create
significant opportunities for corporate success,
performance, and profit - it can become a key strategic
differentiator and a corporate contributor.
Moreover, many organizations acknowledge that
innovation is very important to create business value
in turn for their growth and success. Innovation is
creating value by implementing new ideas. Innovation
concerns the search for and the discovery,
experimentation, development, imitation and adoption
of new business models, new products, new processes
and new organizational set ups. Un-leasing innovation
in the value chain drives organizational growth.
VALUE ADDED IN VALUE CHAIN :
In a value chain additional value is created at each stage.
Value added refers to any additional value created (the
difference between input cost and output value in
financial terms and / or also perceived / intangible
value enhancement in services) at a particular stage
that include both tangible value added through raw
material transformation, through various stages of
production / processes by using man, machines and
money and intangible value added through services,
intellectual capital and capabilities of a firm (firm
attributes, firm controlled information, use of
knowledge assets and experience) and relational
exchange like building of collaborative relationships
to enhance efficiency and effectiveness. Value added
(both tangible and intangible) at different stages making
different levels of contribution towards value
generation are being transferred along the supply chain
from point of origin to point of consumption creating
value chain.
INNOVATION : VISION TO ACTION :
Vision animates, inspires, transforms purpose into
action. - Warren Bennis
Good business leaders create a vision, articulate
the vision, passionately own the vision, and
relentlessly drive it to completion. - Jack Welsh
All achievements, all earned riches, have their
beginning in an idea. - Napoleon Hill
You can have brilliant ideas, but if you cant get
them across, your ideas wont get you anywhere. -
Lee Iacocca
The air is full of ideas. They are knocking you in the
head all the time. You only have to know what you
want, then forget it, and go about your business.
Suddenly, the idea will come through. It was there all
the time. - Henry Ford
The starting point for innovation is vision with objective
and generation of creative ideas to attain the objective.
Innovation is the process of taking those ideas to market
or to usefulness
Innovation is a process of identifying an opportunity or
need and developing an idea, imagination, concept or
creative thinking, coupled with use of knowledge,
information, skill, ability and other resources (including
financial resources) and taking risk to translate these
into an outcome or change(Commercialization) that is
substantially different, creative or new and the resultant
product or service / process / method or way to do
things is intended to create value by solving a problem,
satisfy wants / needs and make some-thing or some-
body better off strategically, technologically,
economically, intellectually, socially and that is widely
accessible and adoptable.
Innovation Idea / Creativity Commercialization

Commercialization
Put into Use by
Application of
Resources
Taking Risk
Change Value to Customer

INNOVATION IS CHANGE :
Without change there is no innovation, creativity,
or incentive for improvement. Those who initiate
change will have a better opportunity to manage the
change that is inevitable. William Pollard
I begin with an idea and then it becomes something
else. - Pablo Picasso
Innovation and change are more than just words; they
are critical challenges in todays workplace. Vision of
changeis center to enterprise transformation. Change
in different platform is possible only through innovation
and innovation and change can make the difference
between success and failure.
Change may be described as the adoption of an
innovation, where the ultimate goal is to bring in new
or improved outcomes through an alteration of
practices or doing things altogether in a new way.
However, the process of change may turn to be complex,
with many different types of change possible. Further,
there are a number of differing strategies for
implementing these changes, with the success of
implementation being highly variable. Factors that drive
change may be internal or external to the environment
and innovations may be initiated at any level in the
organizational structure and may bring in success.
I know quite certainly that I myself have no special
talent. Curiosity, obsession and dogged endurance,
combined with self-criticism, have brought me to my
ideas. - Albert Einstein
Kites rises highest against the wind and not with it
- Winston Churchill
NECESSITYIS MOTHER OF ALL INNOVATIONS :
It is true that necessity and crisis precedes
innovation.Very often, crisis events, situations, dare
need / necessity or a set of extreme conditions and
survival challenges, forcingto look at things in a different
way, finding ways for something different and this search
to mitigate the situation forces to make some new
initiatives, thinking for creative problem-solving, trigger
for new ideas that lead to very different types of
solutions even challenging the present believes and
practices and in this process forces one to look for
various options and this allows for innovation space
and opens up new innovation trajectory. That is crisis
opens up options. Options provide opportunity to trade
off with resources and strategy. Crisis challenges
precedence and existing practices drives mindset to new
ideas to face the problem and a real test starts from
there. Crisis, Chaos, disruption, confusion and even in
frustration and dent when stared at with the right lens
with strong desire to come out of the situation can lead
to opportunity and re-energize thought process to
generate ideas and put into action those ideas forms
innovation.
Crisis driven innovation takes advantage of situation
as an opportunity for change and improvement. There
are many real life and historical facts of Innovation in
times of crisis that lead tosuccess.
INCREMENTAL & RADICAL INNOVATION:
Innovation may vary in degree of newness that
differentiates Radical and Incremental Innovation.
Incremental innovation seeks to improve the products
and systems that already exist, making them better,
faster, cheaper or improved version in its perceived or
functional value. This is sometimes called Market Pull
Innovation. Radical innovation is more focused on new
technologies, new business models and breakthrough
businesses. This is sometimes called Technology Push
Innovation
INVENTION &INNOVATION :
Innovation differs from invention in that innovation
refers to the use or application of a novel ideainto
commercial success or widespread use resulting in
value addition or better way of doing, whereas invention
refers more directly to the creation of the idea or
concept or method itself. Moreover, all inventions may
not lead to innovations as many inventions may die out
at the inception itself or may not translate into customer
value or commercialization and similarly all
innovations may not come out of great revolutionary
inventions as small ideas may proves to be great value
to the customers.
TYPES OF INNOVATION :
In his book Innovation With IT MrSanjiva Shankar
Dubey described that in business and economics,
innovation is often divided into five types:
1. Product innovation, which involves the
introduction of a new good or service that is
substantially improved. This might include
improvements in functional characteristics,
technical abilities, ease of use, or any other
dimension.
2. Process innovation involves the
implementation of a new or significantly
improved production or delivery method.
3. Marketing innovation is the development of
new marketing methods with improvement in
product design or packaging, product
promotion or pricing.
4. Organizational innovation (also referred to as
social innovation) involves the creation of new
organizations, business practices, ways of
running organizations or new organizational
behavior.
5. Business Model innovation involves changing
the way business is done in terms of capturing
value e.g. Compaq vs. Dell.
INNOVATION DRIVERS :
Drivers for innovation are centered on to increasingly
complex challenges with constrained resources. The
challenges may be the pace and scale of change;
operational pressures; demands for efficiencies;
pressure for improved service delivery; financial
pressures to reduce costs;increased competition;
shorter product life cycles; value migration; stricter
regulations; increased demend for accountability;
industry and community needs for sustainable
development; increasing and changing government and
community expectations; rising awareness regarding
service and quality; demographic, social and maket
changes; changing economy; technological
advancements and challengesetc.
Since innovation is considered as a major driver of
value, growth and change, the factors that lead to
innovation are also considered to be critical to
organizational growth and transformation. Although the
factors that drive value creation differ by industry, some
of the major areas of innovation include strategy,
technology, alliances / collaborations, management
capabilities, employee relations, customer relations,
community relations, and brand value.
Innovation drivers may be broadly classified as :
Individual Drivers Individual need, initiation,
involvement, interest, inner motivation, out of box
/ creative thinking, creative bled of mind; Driven by
external compulsions / crisis situations
Organizational Drivers Complex organizational
challenges with constrained resources; operational
pressures / demands for efficiencies / profits / cost
reductions; competition / survival / entry barrier
to competitors; customer / social / cultural drivers;
Market opportunities & Threads; technology driven
challenges; regulatory compulsions;
Organizational strategies / tactics, organization
structure / systems, conducive environment,
(effective utilization of business resources and
knowledge, to develop, sustain and enhance its
mission effectiveness and /or competitive
advantage.) also drive innovation.
Customer Driven Drivers :In customer-driven
innovation programs, the customer is the key
playerinnovation is done by customers, with
minimum involvement by the organization.
Customersare the primary source of ideas -
customerbecamedriving force in the process.
Technology Driven Drivers : Considers technology
a core input. Practically every breakthrough
innovation is based on a technology driven
orientation. Scientific / Technological break-
through to meet demands of competitive advantage
/ differentiation; cost reduction through IT
Socio-Economic-Political-Environmental Drivers:
Shift in the inter-dependent roles of business,
society & politics and environment and
transformations; Changing values, systems,
practices etc compel for innovate and change. These
innovations focus attention on the ideas and
solutions that create social or economic or
political or environmental value.
Regulatory Drivers :Social / political / Regulatory
compulsions drive for change.
INNOVATION LEADS TO VALUE CREATION :
Creativity is thinking up new things. Innovation is
doing new things. - Theodore Levitt
Innovation is a function of creativity and risk taking to
commercialize an idea. Risk is to invest resources and
experimenting with creative idea for something new
outcome which has some element of uncertainty. An
essential element for innovation is its application in a
commercially successful way. Innovation drives value
creation that is transformation of ideas into vital
products and processes into customer value into
revenues in turn into increased stakeholder value. That
is innovation in both products and processes contribute
positively to company growth, prosperity and
sustainability if it translates into business value
through value added in the value chain.
INNOVATION VALUE CHAIN :
This innovation translated into value in a chain of events,
forms Innovation Value Chain. Organizations are
investing in the time, energy, creativity, research,
planning, refining, modeling and retesting with the hope
that innovation driven value chain will pay off in terms
of improved product, process, better teamwork, a new
business model, a refined brand and value addition
to customers in terms of improved product, price,
distribution and service levels. These are assets that
add value to the company, therefore innovation driven
value addition in the value chain become absolute
necessity for organizational growth, prosperity,
enhance long-term competitiveness and sustainability.
INNOVATION :THE HEART OF THE KNOWLEDGE
ECONOMY Innovation is the central issue in
economic prosperity Michael Porter
An economy that is driven by research, ideas, skills,
knowledge and innovations can help promote greater
economic growth and spur competitiveness and generate
high-impact economic advantages for all out benefits
that create wealth, prosperity and high-wage jobs.A
strong, sustainable knowledge-innovation driven
economy can stimulate growth for individuals,
organizations, nations and community as a whole. The
implementation of a knowledge and innovation-based
development strategy requires a vision, strong
coordination at the top level of government, senior
executives of an enterprise and a participatory
approach to mobilize the resources backed with needed
reforms and right policies. Managing knowledge driven
innovation, is a critical driver for enhancing
productivity that in turn offers higher and sustainable
economic growth.
In the knowledge-economy model, a new kind of
development strategy with a knowledge and innovation
at its very heart is essential in organizing, creating,
developing, disseminating and transferringknowledge
in proper integration and positive contribution.
INNOVATION INNOVATES THROUGH COLLABORATION:
The organizations of the future will increasingly
depend on the creativity of their members to
survive. Great Groups offer a new model in which
the leader is an equal among Titans. In a truly
creative collaboration, work is pleasure, and the
only rules and procedures are those that advance
the common cause. - Warren Bennis
As innovation becomes more pivotal in business
decisions, and innovation based strategies and actions
become critical to the generation of business value.
However innovation does not often happen with one
person. Research shows that most innovation is the
result of multiple people working together to generate
ideas and identify new opportunities. It is well
recognized that collaborative innovation is one of the
most powerful means of creating new ideas that impact
business success and also recognized that differentials
in thinking are the primary source of innovation, and
this can only come from having a broad series of
alliances both internally and externally. Collaboration
increases the chances of ASSOCIATIONS between ideas
that result in an innovative combination and also results
in more CONNECTIONS to people that can help push a
good idea forward and speeds up actions through
broader networks and social circles. Teams in
collaboration provide ENERGY and help overcome the
expected resistance.Thusmost of the innovations in
business where advancements and successes are stem
directly from collaborative relationships developed
among key stake holders and participants.
ORGANISATION WIDE FOCUS ON INNOVATION :
Innovation requires multiple skill sets, whether its
invention, development, funding, marketing, patenting,
operations, etc. Those skill sets almost never exist in
one person or in one organisation. So multiple people
are needed to move it forward. Involving the team in a
commonly understood creative and innovation process
increases the probability that value driving innovation
will see the light of day. For achieving an organization-
wide focus on Innovation - Value creation is to understand
the sources and drivers of value creation within the
industry, company, and marketplace. Understanding the
customer / stakeholder or market need and identifying
opportunities that what creates value will help focuson
new ideas, creative thinking, brainstorming and
mobilizing resources.
Value need not be always in financial terms, it can be in
the form of various intangible factors like delivery of
services, consistent quality, delivery of variety in
shorter lead time, new product developments, product
or market or service differentiation, timely delivery,
loyalty of customers / suppliers, good will, customer /
supplier relationship, personalized offerings, sense of
community, technology support, knowledge /
information sharing,image enhancement or co-branding
opportunities, collaborative service aspects etc.
DRIVING PROFITS AND GROWTH THROUGH VALUE CHAIN
SYNCHRONIZATION : Myriad of changes around the
world are posing greater challenges characterized by
different levels of value added but also by diverse
relationships among the various actors involved, as
well as by heterogeneous characteristics in termsof
labour, technology, knowledge, capabi lity and
infrastructure requirements. The global economy has
significantly increased competition; to successfully
compete and gain the competitive advantage all the
resources need to be optimized, processes synergized
and need to collaborate with all the concerned
stakeholders. This Integration is all about to
synchronize within and across the value chains - and
related strategies and operations / processes and to
leverage their strengths in collaboration, flexibility,
visibility and technology to drive profits and growth.
UNLEASH THE POWER OF THE VALUE CHAIN
In an era of rapid shifts in technology, consumer
demands, and public awareness challenges, a capacity
for organizational innovation isnt a luxury its an
imperative the imparative isto demonstrate how to
bui ld organizational Innovation-Value Chain that
facilitates transfer of value both within the firm and
across the value chain to gain the capability to position
the organization for future growth.That is un-leasing
Innovation in Value Chain drives organizational growth
References :
1. Innovation Drives Value Creation By Pete Harpum,
Affliate Professor, University of Manchester
2. What Drives Innovation By Renee Hopkines
Callahan & Gwen Smith Ishmael
3. Customer Driven Innovation By Kevin C Desouza,
YukikaAwazu, SanjeevJha, Sridhar Papagari

LOGISTICS AND SUPPLY CHAINS MANAGEMENT
A CASE STUDY WAL-MART
Mohd. Ziya Quadri, IIMM Member
Govt. Industrial Training Institute Washim
kadriziya@yahoo.com
Abstract
T
he paper attempts to establish the relevance and
important of logistic and supply chain
Management Every organization supplies products
that satisfy customer demand. Creating and delivering
these products needs an efficient flow of materials.
Logistics is the function responsible for all aspects of
the movement and storage of materials. It moves
materials into organizations from suppliers, through
operations, and out to customers. This is an essential
function in every organization, even those providing
intangible services No organization works in isolation,
and each forms a link in broader supply chains. A
supply chain consists of the series of related activities
and organizations that a product moves through on its
journey from initial suppliers through to final customers
Introduction : In olden days , the goods that people
wanted were not always produced where they wanted
to consume them, or these goods were not accessible
when people wanted to consume them. Food and other
commodities were widely dispersed and were only
available in abundance at certain times of the year.
Early peoples had the choice of consuming goods at
their immediate location or moving the goods to a
preferred site and storing them for later use. However,
because no well developed transportation and storage
systems yet existed, the movement of goods was limited
to what an individual could personally move, and
storage of perishable commodities was possible for
only a short time. This limited movement-storage system
generally constrained people to live close to the sources
of production and to consume a rather narrow range of
goods
There is a need of, a well-developed and inexpensive
logistics and supply chain system that would
encourage an exchange of goods with other producing
areas of the country, or even the world.
Definition of Logistic and Supply Chain Management
A dictionary definition of the term logistics is, The
branch of military science having to do with procuring,
maintaining, and transporting material, personnel, and
facilities.
A Logistics is the function responsible for all aspects of
the movement and storage of materials on their journey
from original suppliers through to final customers.
Logistics is that part of the supply chain process that
plans, implements, and controls the efficient, effective flow
and storage of goods, services, and related information
from the point of origin to the point of consumption in
order to meet customers requirements.
A dictionary definition of supply chain Management
of material and information flow in a supply
chain to provide the highest degre of customer
satisfaction at the lowest possible cost.
A supply chain consists of the series of activities and
organizations that materials move through on their
journey from initial suppliers to final customers
Supply chain management is defined as the systematic,
strategic coordination of the traditional business functions
and the tactics across these business functions within a
particular company and across businesses within the
supply chain, for the purposes of improving the long-
term performance of the individual companies and the
supply chain as a whole.
Activities of logistics : Logistics is a broad function which
consists of a series of related activities. You can imagine
these by following some materials on their way through
an organization
1-Procurement or purchasing : The flow of materials
into an organization is usually initiated by a purchase
order sent to a supplier. To prepare this a purchasing,
or procurement, department finds suitable suppliers,
negotiates terms and conditions, organizes delivery,
arranges insurance and payment, and does everything
needed to get materials into the organization
2-Inward transport or traffic : Moves materials from
suppliers to an organizations receiving area. For this,
managers have to choose the type of transport
3-Receiving : Receiving makes sure that materials
delivered match an order, acknowledges receipt,
unloads delivery vehicles, inspects materials for
damage, and sorts them.
4-Warehousing or stores : Warehouse moves materials
from the receiving area into storage and makes sure
that they are available when needed.
5-Stock control : Stock control means sets the policies
for inventory. It considers the materials to store, overall
investment, customer service, stock levels, order sizes,
order timing, and so on.
6-Material handling : It is the general term for moving
materials within an organization. Every time that
materials are moved around operations, it uses
materials handling, whose aim is to give efficient
movements, with short journeys, using appropriate
equipment, with little damage,
7-Order picking : Order picking means finds and removes
materials from stores
8-Packaging : It is a process of wraps materials to make
sure that they are properly protected during movements
so that damage is kept to a minimum.
Activities of Supply Chain
1-Production : Production refers to the capacity of a
supply chain to make and store products. The facilities
of production are factories and warehouses What
products does the market want? How much of which
products should be produced and by when? This activity
includes the creation of master production schedules
that take into account plant capacities, workload
balancing, quality control, and equipment maintenance
2-Inventory : Inventory is spread throughout the supply
chain and includes everything from raw material to
work in process to finished goods that are held by the
manufacturers, distributors, and retailers in a supply
chain. The primary purpose of inventory is to act as a
buffer against uncertainty in the supply chain. However,
holding inventory can be expensive, so what are the
optimal inventory levels and reorder points
3-Location : Location refers to the geographical sitting
of supply chain facilities. It also includes the decisions
related to which activities should be performed in each
facility Where should facilities for production and
inventory storage be located? Where are the most cost
efficient locations for production and for storage of
inventory
4-Transportation : This refers to the movement of
everything from raw material to finished goods between
different facilities in a supply chain How should
inventory be moved from one supply chain location to
another?
5-Information : Information is the basis upon which to
make decisions regarding the other four supply chain
drivers. It is the connection between all of the activities
and operations in a supply chain Timely and accurate
information holds the promise of better coordination
and better decision making. With good information,
people can make effective decisions about what to
produce and how much
EXAMPLE OF EFFCTIVE USE OF LOGISTIC AND SCM IS WAL-
MART
Wal-Mart is a company shaped by its supply chain and
the efficiency of its supply chain has made it a leader in
the markets it serves. In 1962 Sam Walton opened a
discount store in Rogers, Arkansas. He started with the
idea that, The secret of successful retailing is to give
your customers what they want and this includes a
wide assortment of good quality merchandise; the
lowest possible prices; guaranteed satisfaction with
what you buy; friendly knowledgeable service;
convenient hours; free parking a pleasant shopping
experience. Sam called his store Wal-Mart, and was so
successful that his chain grew quickly. In 1983 he opened
a Sams Club warehouse for members, and in 1988 the
first Supercenter selling groceries. During the 1980s
Wal-Mart became the leading retailer in the USA, and
started its international expansion. Early moves into
Mexico, Puerto Rico and Canada were followed by South
America, Asia and Europe with most of the later
expansion from buying local companies (such as ASDA
in the UK and Interspar in Germany).
Wal-Mart is a classic example of how to manage rapid
growth without changing the companys underlying
values in this case the basic value was, and is,
customer service. This is emphasized from the front
door of each store, where someone greets each customer
and tells them about special offers and promotions.
Wal-Mart is now the worlds largest retailer and in 2007
had 6700 stores, serving 176 million customers a week,
employing 1.9 million staff or associates and a
turnover of US$345 billion.
A large Wal-Mart store stocks 120,000 different items,
each of which has its own supply chain. Not surprisingly,
the company needs a huge logistics effort, with 61,000
suppliers delivering $4 billion dollars worth of goods
a week. In the mainland USA products move through a
hundred distribution centres, and on to 1000 Wal-Mart
stores, 2300 Supercentres, 600 Sams Clubs and
Neighbor hood Markets. Efficient logistics plays a large
part in Wal-Marts success, and it uses the industrys
most efficient and sophisticated distribution system.
This includes high levels of automation, sophisticated
communications, utilization of resources, and
guaranteed availability of products. The logistics costs
are so high that small improvements can have a
considerable effect on profit. For instance, improving
fuel consumption in their fleet of 7000 trucks by one
mile a gallon would save more than US$50 million a
year. In 2006 installing auxiliary power units in trucks
that made overnight stops (meaning that the main
engine could be turned off for longer) saved 10 million
gallons of diesel fuel a year, US$25 million and 100,000
tones of carbon dioxide emissions.
References
1- Shapiro, R.D. and Heskett, J.L. (1985) Logistics
strategy, West Publishing,
2- Bowersox, D.J., Closs, D.J. and Cooper, M.B. (2007)
3- Supply chain logistics management (2nd edition),
McGraw-Hill, New York, NY.
4- Malone, R. (2006) Logistics costs soar, Forbes.com,
18 July 2006.
5- International Journal of Logistics Mgt, 8(1), 2
6- Industrial Organisation and Management OP
Khanna
7- Indian Institution of Industrial Engineering Journals

MANAGING RISKS IN SUPPLY CHAINS
DR. V. K. GUPTA
FORMER CEO INDIA, JMA MANAGEMENT CENTER, JMA GROUP, JAPAN
PROFESSOR, IMT GHAZIABAD
dr.vkgupta@gmail.com
A
bstract : Main goal of supply chain management
is to efficiently and effectively match supply and
demand for a product or services or both.
Demand by its nature is uncertain and most commonly
used methods to estimate demand are forecasting
models with varying degree of complexity. Demand
inherently pose a risk for the producer or the supplier
and as actual demand is known only when it actually
occurs. Supply side too is full of uncertainties due to
complexity and multiple locations, value addition
processes, multiple agencies and ownerships having
specific interests.
Purpose of this paper is to identify major risks affecting
demand and supply and suggest a practical approach
to manage the risks of mismatch in demand and supply.
Introduction : Corporations, big or small, continue to
face a challenge of managing demand and supply
variability. The variability comes from a lot of factors
both on demand side as well as on supply side. Demand
side variability is caused due to many global and local
factors such as state of the economy, changes in
government regulations, taxes, level of competition in
the industry, disposable surplus with the consumers,
overall business and economy outlook and the need of
the consumers. Supply side variability is also caused
by global factors, competition, and availability of
competent suppliers, availability and cost of inputs,
locations of suppliers and manufacturing locations as
well as location of the markets. Transportation plays a
major role in supply side variability and sometime
disruptions causes in supply. Longer the supply lead
time, larger is the possibility of supply side variability.
Demand Side Variability
Variability in Demand : Demand for goods and services
at the customer facing end of the supply chain is known
only when it actually happens. Since there is a lead
time required from the time a customer places the order
to the time the order can be fulfilled by product and
supply of goods and services, one of the very commonly
used method is keeping inventory of finished goods as
near to the customer as possible. Organizations need
to plan how much inventory is required and when or
when it is required for each stage of the supply chain
depending upon the lead time needed. Some of the
techniques
Demand Forecasting : Most commonly used method is
time series forecasting technique such as moving
average method. More sophisticated methods are
exponential smoothing adjusted for trends etc. However,
generally forecast needs to be adjusted for expected
trend and seasonal variations. More accurate a
forecast is less is the variation between demand and
supply. Cos are still struggling to find more accurate
forecasting method.
Demand shaping : Marketing research has led to
expectations that the demand can be shaped or shifted
to match the supply constraint. Some of the methods
are to give huge discounts when supply is excess and
withdraw discounts when the supply is expected to be
constraint. During festival seasons, discounts and other
promotions are given to ensure that the expected
demand is fully realized.
Inventory positioning : It is possible to position the
inventory of finished goods or service providers at
strategic locations in the supply chain so that in case
of shift in demand from one geographic location, the
increase in demand in another can be met without
incurring any extra cost.
Lead time reduction : One of the most effective
techniques to reduce the gap in demand and supply is
to reduce the lead time. Some companies have been
very successful in reducing the lead time such as Toyota,
Zara, Dell etc. However it the most difficult system to
replicate as it required a cultural change in the entire
supply chain. Some of the methods for lead time
reduction include:
Delayed differentiation: Manufacturing a common
product or providing facilities or a standardized service
and customizing as per specific customer order only
after receiving the specific order. This leads to
substantial reduction in the cycle inventory without
comprising on the service level. Domino, Asian Paints
etc use this method to reduce lead time substantially.
Locating manufacturing and service facilities near the
customers: Outsourcing and subcontracting has been
widely accepted as the best strategy adopted by many
corporations to reducecost to remain competitive.
However, frequent changes in customer demand many
times lead to loss of sales due to long lead time from
far off low cost locations. Leading companies have
realized that even though cost of operating of
manufacturing or service facility in the home market
such as Europe or US may be much higher, locating
facilities near to customer help to meet changing
demand thereby gaining customer preference and also
overall profitability. This also leads to overall lower
cycle inventory and less obsolescence in a fast
changing market.
Redesigning business processes: Redesigning business
processes (commonly known as BPR) is one of the most
effective methodology to reduce lead time and demand
supply gap. One of myth is that our processes should
be robust and comprehensive to take care of all
possibilities and all types of customer requirements.
This leads to making the processes very complex and
naturally slow. In addition it becomes difficult to make
changes and adjust the processes in case of change in
requirements. Redesigning processes leads to several
independent processes each suited to one type of
customer requirements and thereby increasing
throughput and speed and accuracy of delivery. Multi
format outlets are an example of redesigning business
processes where each type of customer is serviced by
separate retail formats. Toyota successfully did this
for their high end, mid segment and low end cars. Many
car rental companies are also following similar process
redesigns.
Supply Side Variability
Suppliers : Outsourcing and procurement has become
inherent part of business today. No longer is it possible
for any one company to produce everything it needs in
the finished product or neither service nor it can do it
as efficiently as another company using outsourcing
and procurement as a competitive practice. Reliability
of supply in terms of quality, quantity and timeliness
depends a great deal on the supplier. Identifying,
developing and nurturing a supplier are the most
important activities to reduce this risk.
The growing pressure to innovate is driven by the
competitive environment in which firms operate. In
view of individualized customer preferences and
globalized markets, depending upon past success by
managing current assets and optimizing existing
processes endanger tomorrows success. The speed and
intensity of change ultimately leads to new challenges
to corporate and individual capabilities of dealing with
change. Instead of operating according to rules and
regulations, all functional areas and organization
levels, from the top management to the shop-floor level,
require ever greater innovative competence and
especially own initiative, self-development and
creativity.
Various important supplier related activities are:
a. Supplier identification
b. Supplier evaluation
c. Supplier certification ISO 9001, EMS, OSHA etc.
d. Supplier performance measurement - Vendor
rating
e. Supplier education and up gradation
f. Supplier support program through cluster
mechanism
g. Supplier integration VMI
h. Involving suppliers in product or service design
process from the beginning.
Supplier support activities
Economics of scale in purchase of raw materials and
services: Providing continuous support in sourcing of
raw materials and services by identifying and
negotiating with major suppliers by clubbing all the
demand for the entire supply chain including suppliers
of components and sub-assemblies.
Economics of scale in fund requirements: Identifying
and negotiating loans with leading banks for own
requirement as well as requirement of the suppliers
allowing suppliers a lower cost of finance.
Economies of scale in warehousing and transportation:
Negotiating with third party logistic companies (TPL)
for incoming and outgoing transportation requirements.
Encouraging suppliers to share transportvehicle (milk
round system) to reducetransportations cost while
reducing the lot size for each supplier.
Cluster for sharing experts for supplier certification
and quality improvement initiatives: by using a cluster
method rather than each supplier engaging the services
independently.
Information sharing and Integration: It is very helpful
to standardize on information systems and
communication software for uninterrupted flow of
information amongst the supply chain partners. Sharing
of information on production plan and supply status
can be very helpful to cut down uncertainty and keep
cycle inventory low.
Conclusion
Some of the strategies discussed above may help
companies to reduce gap in demand and supply thereby
managing the risk more effectively.
References
1. Gupta, V.K., Strategic framework for managing
forces of continuity and change in Inward Supply
Chain in Indian Automotive IndustryProceedings
of GLOGIFT 08, June 14-16, 2008, Stevens Institute
of Technology, Hoboken, New Jersey, USA, pp. 467-
489.
2. Gupta, V.K., Strategic framework for managing
forces of continuity and change in Supply Chain
Management, Proceedings of PICMET 09 -
Technology Management in the Age of Fundamental
Change held at Portland USA, 2-6 Aug 2009, IEEE
Catalog Number: CFP09766-PRT, ISBN: 978-1-
8908-4319-9. pp. 3014-3022.
3. Gupta, V.K. Strategic framework for managing
forces of continuity and change in Risk
Management of Banks in India,Global Journal of
Flexible Systems Management, 2009, Vol. 10, No. 2,
pp 1-13.ISSN: 0972-2696, A Springer Publication.
4. Gupta, V.K., Flexible strategic framework for
managing forces of continuity and change in Value
Engineering Processes: Study in Indian Context,
Global Journal of Flexible Systems Management,
2009, Vol. 10, No. 4, pp 43-54. ISSN: 0972-2696, A
Springer Publication.
managing continuity and change, Knowledge
Management and Intellectual Capital Emerging
Perspectives, (Edited by Batra S.K. and Francisco
Javier Carillo), 2009, pp 477-488, publisher Allied
Publishers Pvt. Ltd. India
6. Gupta V K, Flexible strategic framework for
managing forces of continuity and change study
of outbound automotive supply chain
management in India, International Journal of
Value Chain Management, Vol 4. No 4, 2010, pp.
365-379
managing forces of continuity and change: Study
of Supply Chain Management of Lighting Industry
in India, Global Journal of Flexi ble Systems
Management 2010, Vol. 11, No. 3, pp 39-50.
ISSN: 0972-2696, A Springer Publication
8. Gupta V K, Flexible strategic framework for
managing forces of continuity and change study
of inward supply chain of a leading automotive
company in India, Internationals Journal of
Business Excellence, Vol. 4, No. 2, 2011, pp. 142-
159
9. Gupta, V.K., Flexible strategicframework for
Managing Forces of continuity and change in
Retail Banking Business Processes in India,
Business Process Management Journal, 2012, Vol.
18, Iss 4, pp. 553-575.
Knowledge Management in Supply Chain with the
perspective of continuity and change: Study of KM
in Supply Chain Management, Proceedings Sixth
International Forum of Knowledge Asset Dynamics,
Tampere Finland 15-17 June, 2011, pp. 470-491
(Selected for Publication in Journal of Knowledge
Management, Emerald Publication).
Knowledge Management in Supply Chain with the
perspective of continuity and change, Global
Journal of e-Business & Knowledge Management,
2011, Vol. 7, No. 1, pp. 34-44.A Springer Publication
managing forces of continuity and change in
supply chain management of fast food ( quick
service restaurant) industry, International Journal
of Business Continuity and Risk Management, Vol.
3, No. 2, 2012, pp. 148-166.
13. Gupta, V.K., Flexible strategic framework for KM
factors with the perspective of continuity and
change: study of supply chain of MNCs in electrical
and lighting industry, International Journal of
Value Chain Management, 2012, Vol. 6, No. 4 (
under print ).
14. Gupta, V.K. and Bindu Gupta, Innovation in small
and medium auto ancillary enterprises in India,
International Journal of Business Innovation and
Research (IJBIR), 2012 (under print).
15. Gupta, V.K. and Bindu Gupta, Flexible strategic
framework for managing innovation and
technology from perspective of continuity and
change: a study of auto ancillary SMEs in India,
Accepted for presentation and publication at
PICKMET, 2013 at San Jose USA from July 28-Aug 1,
2013.
16. DividSimchi-Levi, Philip Kaminsky, Edith Simchi
Levi, Ravi Shankar, Desing and Managing Supply
Chain, Text Book, 3
rd
Edition, Published by Tata
McGraw Hill Co, 2008
17. Sunil Chopra, Peter Meindl, D V Kalra, Supply
Chain Management, Text Book, 5
th
Edition,
Published by Pearson, 2013
18. Handfiled, Monczka, Giunipero, Patterson,
Sourcing and Supply Chain Management, Text
Book, 5
th
Edition, Published by Cenage Learning,
2011.
CURRENCY EXCHANGE RATES

INR
Australian Dollar (AUD) 54.73
Bahraini Dinar (BHD) 157.00
British Pound (GBP) 91.65
Canadian Dollar (CAD) 57.06
Chinese Yuan (CNY) 9.64
Danish Krone (DKK) 10.50
Euro (EUR) 78.29
Hong Kong Dollar (HKD) 7.63
Iraqi Dinar (IQD) 0.05
Japanese Yen (JPY) 0.61
Kuwaiti Dinar (KWD) 208.39
Omani Rial (OMR) 153.73
Pakistani Rupee (PKR) 0.60
Qatar Rial (QAR) 16.26
Saudi Arabian Riyal (SAR) 15.78
Singapore Dollar (SGD) 46.55
South African Rand (ZAR) 5.80
Swedish Krona (SEK) 9.01
Swiss Franc (CHF) 63.83
UAE Dirham (AED) 16.12
US Dollar (USD) 59.20
Source : Rediffmail.com dated 21st June 2013
MATERIAL MANAGEMENT FOR
HEALTHCARE SECTOR
PROF. AKHIL CHANDRA
CONSULTANT LOGISTICS & SUPPLY CHAIN MANAGEMENT
akhilchandra06@gmail.com
A
bstract: Healthcare sector is a mission critical
application due to huge risks involved in life of
patients and there is a lot of capital investment
and recurring costs involved in hospitals. Hospital
management team has a huge challenge to control ever
increasing costs in terms of their inventory to become
competitive in the market place. An efficient Material
Management in hospitals coupled with robust supply
chain management can result in increased efficiency
and improved quality service levels thereby increasing
responsiveness to the patients. RFID technology in
providing visibility of the movement of material,
patients and machine within the hospital supply chain
can be a boon to this critically important sector
Healthcare sector is one of the largest and fastest
growing sectors in the world. For this phenomenal
growth, the prominent key drivers are-
- Globalization and the advancement of information
and communication technologies
- Control and automation techniques embedded in
different and changing governance systems.
Supply chain management techniques which are part of
modern material management and which have
successfully been employed almost throughout the
segments of Industry are employed in health care sector
also. Like other segments, here also these techniques
have successfully been employed to match supply and
demand so as to supply the material in the right quantity,
at the place and at right price.
Why Supply Chain approach to Hospitals?
A popular notion is that supply chain concepts can be
applied largely to manufacturing operations and are
not applicable to service operations. But this is not true.
Like every Enterprise, hospitals and health systems are
equally under pressure to control their rising costs of
supplies primarily locked up in inventories consisting
of pharmacy, surgery, medicines and drugs and yet
maintain their ultimate obligation in providing timely,
efficient and effective treatments to their customers
(patients). The supply chain costs represent today the
second largest expenditure category of hospitals
operating expenses next to costly manpower. These
costs are increasing exponentially due to
Growth in usage of medication and very expensive
and very clinically sensitive devices and implants
Service lines such as interventional cardiology and
total joint replacement surgery using high value
supplies such as supplants and drug coated stunts.
The rise in IT budgets at healthcare institutions
Increased cost of drug development, production and
distribution
Cost of packaging and labeling requirements of
Drugs
It is as such important to have a close look on supply
chain management system of hospitals with an
Endeavor to make it efficient, integrated and
synchronized. The subject popularly known as HSCM
(Hospital supply chain management system) due to its
potential in saving heavy costs and in satisfying
patients has gained its prime importance in healthcare
industry. Senior financial executives as such these days
need to recalculate the strategic significance of the
supply chain and plan accordingly
Inefficiencies in supply chain unlike in other domains
of industry may result in extreme cases even into death
of patients. As such apart from cost reductions, an
effective supply chain is very vital to human life and its
longevity. Ultimate objective of this subject is to manage
materials/equipments and manpower like doctors,
nurses and other supporting staff and treat patients
and transform them into a healthy person at a
reasonable and optimum cost in minimum time so as to
satisfy their expectations through quality treatment.
Innumerable flows between suppliers and customers,
both upstream and downstream, have to be considered
to strike a balance.
Supply Chain of Hospitals :
Supply Chain (also can be characterized as value Chain)
of hospitals integrates suppliers, transport and
warehouses and hospital services (including
outpatient, emergency, in-patient, laboratory, radiology,
stores and purchase, food, laundry and medicines /
equipments) so as to serve the patients by optimum
utilization of resources. The resources in terms of
materials/medicines used in the hospital can be
classified majorly based on their applications such as
diagnostic, Surgical, Therapeutic, Bedside, Service,
Engineering, Housekeeping and ICT to substantially
reduce supply-related costs, a hospital must develop a
fully integrated enterprise wide supply chain in which
all processes as mentioned above are coordinated and
supported by state-of-the-art technology. A pertinent
question which should be asked to hospitals is whether
your organization delivers the right product to the right
place at the right time and for the right price? If not then
situation demands for a thorough check up of your
processes and give your hospitals a treatment of Supply
Chain Management.
How Improvements in supply chain in healthcare sector
can be affected?
Basically the process improvement opportunities exist
in five key areas: (1) contingency plans (2) supply chain
integrity; (3) Demand pull model (4) Cutting down on
too many intermediate partners (5) value visibility.
Contingency plans
As the supply chain involves factories producing
medicines and diagnostic equipments, temperature
controlled warehouses and distribution facilities to
keep the material flow in order, what happens if a factory
producing life saving medicine gets destroyed or the
distribution facilities disruptions hamper the product
flow endangering human life? The most effective action
is to develop systematic contingency plans, including
factors like alternative production sites, manufacturing
flexibility, factory-direct shipping capabilities, offsite
backup distribution center capacity, and critical safety
stocks.
Supply chain integrity
Quality assurance, such as lot integrity and tracking, is
a crucial healthcare supply chain function. It ensures
that patients receive safe therapies, and that problems
are contained and minimized. New technologies, such
as radio frequency identification (RFID), offer the
prospect of ensuring supply chain integrity. Through
automatic identification, traceability and visibility
tools, healthcare companies are given the opportunity
to make the Healthcare supply chain more efficient and
accurate, and thus safer by:
Reducing medication errors
Making counterfeiting more difficult
Enabling efficient and effective traceability
Decreasing the production and supply chain cost
Demand Pull Model
Healthcare supply chains need to move toward an
integrated demand-pull model, so that manufacturers
have much earlier visibility into actual consumption.
In many other industries, this integrated supply chain
system has enabled the participants to align production
and distribution much more closely with actual
demand. All the channel participants can see and
understand what they need to do individually and
together in order to successfully lower costs and
increase service levels. Healthcare supply chains would
free up tremendous amounts of valuable resources by
adopting this channel model; important elements, such
as ICT and process control systems to provide real-
time information at point of patient infusion/injection,
are now being put in place.
Cut down too many intermediate partners
The prospect of disintermediation, moving product
directly from manufacturers to providers, is growing
stronger in healthcare supply chains. This process offers
important economic benefits. But it is only appropriate
in certain situations, and it requires that manufacturers
and providers develop new expertise and trust. To give
a successful example from other segment of industry,
Wal-Mart and Proctor and Gamble built a strong and
sustainable relationship between them and the rewards
were in terms of win-win situation for both of them to
become world leaders in their respective areas.
Value Creation by individual partners
At present health care supply chains are fragmented
and the current pricing structures and channel policies
reinforce the inefficiency of this fragmented sector.
Distributors negotiate volume discounts from
manufacturers, and offer discounts to providers. What
is important is to have trust in each partner and work
towards common goal of value creation, which is the
precondition for major improvements in supply chain
efficiency. In well-functioning supply chains, each
participant has an important role in creating unique,
visible value as product flows from source to
consumption. Instead of competing within the value
chain, one supply chain of the hospital should compete
with another value chain of the hospitals for
sustainability, survival and competitive advantage.
Role of RFID Technology in material management of
hospitals
Foremost technology which contributes to the efficient
and visible material management is RFID Technology
which is now widely accepted by Hospitals and Health
care providers throughout the world. The rewards are
huge in terms of its vital applications like tracking
patients and precious assets like diagnostic and
surgical instruments and drugs in the hospitals and
ensure patients safety. The pi lot tests are being
conducted and it is a well known fact that the
applications shall bring far reaching effects in the
healthcare segment. At times, during the catastrophic
situations like out-break of human version of mad cow
disease, it is important to track the contaminated and
infected equipments to avoid exposure to patients. RFID
Technology makes such tracking and identification fast
and smooth. Proper protocols and the use of radio
frequency identification (RFID) technology could prevent
such outbreaks by ensuring instruments are properly
tracked and classified. This and other RFID
Applications can provide significant benefits to the
healthcare industry to ensure patient safety and improve
supply chain efficiency.
RFID technology can greatly contribute to the healthcare
industry creating a single information system that can
track patients and hospital assets, improve patient
safety, play a role in running clinical trials of drugs,
manage critical care assets and hospital equipment,
reduce counterfeiting of pharmaceutical products,
reduce medical errors, and cut costs improving
efficiency.
The applications are plenty and can be broadly
summarized as:
Patient tracking and identification
Asset and Equipment management and tracking
Reducing drug and blood administration errors
Making newborns more secure
Simply put these potential applications provide
advantage to healthcare industry in terms of: tagging
patient wristbands with ID and care information,
managing distribution of medications, coupling with
Nano sensor technology to remotely monitor patients
via implant, provide inventory control, and prevent theft.
A popular and vital application of RFID is to track
surgical sponges to ensure they are not inadvertently
left behind inside patients. And many hospitals are now
tracking patients to ensure the right patient is given the
proper care. These systems tend to reduce the data-
entry workload of nurses, and also let them spend more
time caring for patients. Additionally, hospitals are
tracking high-value assets, including, wheel chairs,
oxygen pumps and defibrillators. These systems reduce
the time employees spend looking for assets, improve
asset utilization and enhance the hospitals ability to
performed scheduled maintenance.
What is RFID Technology?
RFID is a wireless technology working on UHF range of
frequencies. RFID system consists of transceiver
equipped with an antenna, a tag and a reader acting as
an intermediary between the identification and the
background system consisting of computer system and
associated software displaying the information about
Goods like country of origin, description, expiry date,
destination, handling details etc. Electronic product
code is the key standard for RFID in Retailing driven by
EPC global which works in close collaboration with GSI.
RFID tags were earlier used for marking cattle and pets
and as such are not a new invention. However during
the last few years plans encompassing entire value chain
using RFID Tags right from procurement of material up
to the finished goods available on the shelves at the
point of purchase for the customers have emerged. Tags
make it possible to identify each Logistics unit or even
each individual product and track their way through
the supply chain.
R
F
I
D
s
y
s
t
e
m
s
i
n
c
l
u
d
Acquisition of Information by computer system from
RFID TAG
RFID Tags are used in different shapes and sizes and
their costs have been brought down to few cents. The
Tags are divided in two parts viz. Active and passive:
Active Tags can usually be complemented with new
information as they proceed in the supply chain.
Whereas Passive Tags are for one time use and only
send data which is stored in them initially. A passive
tag draws energy from the reader whereas an active tag
has its own battery and draws power from there. Read
write tags can be erased and can be used many times
along with the ability to rewrite the data. Wal Mart
made it mandatory the use of RFID Technology by its top
100 suppliers at the case level.
Jewelers
tag
HF/LF
Ring Tag
Laundry Tag used for
costume tracking
Tag directly used on
metals
Nail Tag for non-
metal objects
Wrist Tag for
personal tracking
RFID Tags
cost few cents
only
Variety of RFID TAGS
Advantages of RFID Technology over traditional
identification methods like bar code
RFID Technology makes it possible to read large
number of items simultaneously
The process is automatic without involving manual
intervention.
The devices are always on and ready to read.
Code reading does not require a visual line of sight
so it can take place even through the side of truck
without unloading.
Tags can contain large amount of information.
RFID is now generating significant interest in the
marketplace because of its robust application
capabilities. RFID enables healthcare facilities improve
overall safety and operational efficiency because it
operates without line-of-sight while providing read/
write capabilities for dynamic item tracking. Surgical
instruments and other devices must be properly cleaned
and packaged between uses. Tags on the instruments
and readers on the sterilization chambers and storage
cabinets can validate proper cleaning and help locate
needed instruments. Since medical devices are often
mounted on portable carts, smart tags placed on the
devices and readers installed in the doorways can
enable personnel to quickly locate a crucial piece of
equipment and immediately determine its fitness for
use.
Category of Application in Healthcare segment
Patient Tracking
Patient identification and location assistance are often
needed to ensure patient safety when urgent medical
attention is needed. Patient tags with RFID chips will
meet this need.
Product Tracking
Hospitals currently have to track health hazardous
radioactive isotopes throughout the facility from
storage to transport and then from administration to
disposal. RFID tags and readers can automate these
tasks thereby saving time and resources. Active RFID
tags with read/write capabilities can be used to detect
seal integrity for containers and individual packages.
The tag can record the time and duration of seal loss,
allowing even problems that occur mid-shipment to be
detected. Asset tracking by RFID thus can minimize thefts
and losses increasing thereby return on investments.
Due to RFID Tags being read in automated operation
without requiring manual intervention, unattended and
constant tracking is provided by the well designed RFID
systems.
Inventory Management
Large amounts of inventory need to be managed in
hospital operating rooms. RFID technology can provide
an accurate account of both official and unofficial
inventory levels.
Drug Counterfeiting
Pharmaceutical companies, distributors, and hospitals
need technology to deter drug counterfeiting. According
to world Health Organization, t between 5 to 8 percent
of global pharmaceuticals is counterfeit. While in some
countries this percentage may still go higher ranging
between 25 to 40 percent. The losses reported are
around $2 billion per year due to counterfeit drugs.
Counterfeit drugs adversely affect peoples lives by
preventing patients from receiving needed medication
and in country like India, many patients fall prey to it
due to its low cost. Fortunately, RFID tags can help detect
products that are, Counterfeit or fake, Tampered with,
adulterated or substituted expired.
Clinical Trials
As new drugs go through the clinical trial phase, RFID
technology is used for accurately tracking patient usage.
In fact It improves the tracking of drug usage throughout
the clinical-phase testing protocols.
Medical Device and Asset Tracking
RFID has strong application potential with medical
device companies. Medical device companies need
better control on consignment with hospitals because
returns can occur more than 50 percent of the time.
RFID technology that improves visibility into returns
could enable faster redeployment since the company
would know sooner when an unused product could be
returned.
RFID (Radio Frequency Identification) Technology helps
Pharmaceutical Companies and Retailers to improve
their supply chains and resulting in reduction of cost
and improvement in Efficiency RFID technology helps
in tracking movement of medicines and items through
the supply chain of Enterprises helping in reduction of
costs and improvement in efficiency. The movement of
goods starts right from supply of raw material from
initial suppliers to manufacturing unit of such
companies and then movement of finished goods to
Customers through distribution channels consisting of
dealers, Wholesalers and retailers. The transportation
of material in cartons and pallets to warehouses takes
place via ships, rail road, air and trucks. Companies
like Wal-Mart have successfully used the RFID
Technology and rose to become number one company
in the world after beating big Conglomerates like K-
Mart and Sears in their own game of retailing.
RFID technology has been used by major pharmaceutical
companies and Retailers like Wal-Mart, Target, Tesco,
Metro, and Albertsons and by Government departments
like U.S. Defense.
Indian Scenario
In India, RFID will be used extensively across the country
in near future. Apollo hospital uses RFID technology to
speed checkups of the patients. As of now, the Department
of Posts and Companies like BHEL have stated using
RFID to track parcels. The awareness of RFID application
is catching up and bar codes shall soon be replaced by
far superior and potent technology like RFID with
industries, utilities and service organizations like
hospitals.
Conclusion : Supply Chain Management is an integral
part of material management applied to almost every
segment of industries. The subject has got its due
recognition and this subject now is considered to be a
board level topic. Now conditions are right for major
healthcare supply chain improvements due to pressure
on management to reduce costs and increase efficiency
and have a customer responsive approach. This has
happened especially after hospital chains of
multinationals have arrived in India. Healthcare budgets
are very tight, supply chains have critical
vulnerabilities, and providers have significant
opportunities for much-needed process improvements.
The supply chain as such should be part of the enterprise
strategic plan, incorporated across all components and
service lines of hospitals. A hospitals or health systems
strategic plan should include supply chain management
as a key strategy for maintaining fiscal goals, improving
quality and satisfaction levels, and addressing industry
trends and developments. There is a tremendous scope
of applying IT, telecommunication techniques and
Automation in hospitals. The mantra is to concentrate
on improving efficiency, quality, and responsiveness to
patients and apply innovative methods of supply chain
coupled with technology to achieve the end goals.
References :
1. Supply Chain Management by Stanley E. Fawcett,
Lisa M.Elram , Jeffrey A. Ogden Pages 411-413
2. Designing and Managing the Supply Chain : By David
Simchi Levi, Philip Kaminsky, Edith Simchi Levi,
Pages 8 to 10
3. Business Logistics/Supply Chain Management : By
Ronal H. Ballou , Samir Srivastava-Page 22,23

NEGOTIATION SKILLS
ARUN BANAVALI, VICE PRESIDENT SOURCING & SUPPLY CHAIN,
M/S. HINDUSTAN CONSTRUCTION CO. LTD.
arun.banavali@hccindia.com
Negotiation is a business process. It is a demanding
activity. It helps to settle a deal. It clarifies the terms
and conditions. It can give the fighting edge in the
competitive world. It smoothens relations
Negotiation is an art. There are very few books on
negotiation skills. As such this art can be learnt by:
a. Practicing it with seasoned personnel.
b. Get good feedback
c. Correct yourself in this process
d. The skill will come over a period.
Negotiation process consists of
Good preparation
Understanding the goal
Use of communication skill
Adding presentation technique
Power tactics
Body language
With privatisation, globalisation and liberalisation, the
market has become more and more competitive. To face
this competition, we have to be like the Kite. Kites rise
against and not with the wind.
Preparation for Negotiation
One minute negotiation means 10 minutes of
preparation. With this statement we can visualize
significance of preparation for negotiation. Success
behind every good negotiator goes to their preparation
or homework.
a. Where to begin?
b. Who will talk?
c. What matter is to be talked about?
d. Who all will be involved in negotiation?
e. Directly or indirectly?
f. Who is to be called for negotiation? These are
all parts of preparation.
Stages of preparation for negotiation
Team selection
Fix time and appointment
Information collection
Decide one stage or multistage
Study of available information
Set goal short term & long term. Look for totality.
Place of negotiation
Strategy
Conclusion
Who will minute?
Team selection depends on value and criticality of the
negotiation. It is advisable to stick to the time and
appointment of negotiation as prefixed. However,
sometimes a purposeful delay is adopted as a pressure
tactic.
Past data, market trend, competitors and their status,
importance of quality, cost and delivery are valid
information required for negotiation. More, correct and
latest information means adding trump card to your
side.
In recent times information has acquired vital place.
Crucial decisions are based on available information.
Therefore, for correct decisions, study of reliable and
latest information is a must. Some information needs
to be sent to the other side prior to the negotiation.
Whereas few information need to be kept tight lipped,
as you know even fish would not get into trouble if hed
keep his mouth shut.
Time available, criticality of requirements and value of
deal decides the negotiation as single stage or
multistage.
While setting a goal whole package or look for totality
is to be kept in mind.
Place of negotiation could be at buyers or at sellers
end. Some time it could be at third place like a dealers
end.
Depending upon needs, the conclusion could be a win,
win lose, lose win or lose lose situation. However, the
win win is always preferred.
Strategy for negotiation depends on:
To set high target & then come down OR Set one target
and stick to it (saves time. Target set must be realistic)
Is bargaining required?
Who has to be active & do the talking in negotiation?
First make the team come for negotiation comfortable
OR Charge with all the problems, we had in their last
supplies. Show them your application first OR finish
discount/commercial terms and conditions first.
Use of body language during negotiation.
What is body language?
It is language which you want to convey in which there
is not a word to be used.
Yes still it is called language as it conveys message. It
could be expression by coded signs which is understood
by your team alone. Otherwise it could be just silence
for a while creating impatience or bringing a needed
pressure. Body language plays important role when
negotiation is by a team. It can act as a tool to bring
pressure tactics.
Techniques of good Negotiator
Good Preparation
Well placed argument
Use of body language
Well planned proposal
Bargaining power
Right time conclusion
Requirement of good negotiators:
Good Knowledge
Presentation skills
Be a good listener
Be tactful
Leadership qualities
Free, frank, fearless
Good confidence
Good sense of humor
Having good analytical thinking abilities
Able power to influence
CNL MINu1L
NLGC1IA1ICN
MLAN8
MINu1L8
kLAkA1ICN
NEGOTIATION
CNL GL18 IN LIIL
NC1 WnA1 CNL
I8 WCk1n 8u1
CNL I8 A8LL 1C
kAC1ICL
MAkL8 MAN
LkILC1
8CD LANGuAGL
CNL LxkL88L8
1nING8 IN LIIL
NLLD NC1 8L CNL
8 WCkD8
Effective logistics services and communication

technologies level the field for trade
A
RECENT IHS and DHL Express survey on small
businesses presents some interesting insights on
SMEs. A key finding of the survey is that
international trade & cooperation has become a key
driver of small business success. SMEs engaged in
international markets are twice as likely to be successful
than those that only operate domestically, according to
this survey of 410 SME directors in G7 and BRICM (Brazil,
Russia, India, China and Mexico) economies. Of the
surveyed SMEsthose with 10-249 employees and an
annual turnover of under 50 million euros 26%
companies that were trading inter-nationally
outperformed their market significantly, while only 13%
of those with operations limited to their home country
did so. SMEs cited the key bene-fits of an international
approach as ac-cess to new markets, know-how and
technology, and diversification of their products/
services.
The report does however highlight that inadequate
business infrastruc-ture has constrained SME
competitive-ness by reducing business efficiency, and
that SMEs are having to work harder to overcome
infrastructure inefficiencies compared to larger
compa-nies. The biggest concerns of SMEs re-lating to
international trade are the lack of information on
foreign markets, high customs duties, and the difficulty
in establishing contacts with foreign partners and
customers.
In India, some industry estimates state there are roughly
30 million SME units, which employ 60 million and
cre-ate 1.3 million jobs every year. Twelve million
persons are expected to join the workforce in the next
three years. The contribution by SMEs to the Indian GDP
is expected to increase by 22% by 2020. Indian SMEs,
given their entre-preneurial approach, are eager to
adapt to the best practices, and the fact that logistics is
13% of any business cost here as compared to 6-7%
globally, efficiency in this area can make them
competitive globally.
Effective logistics services, along with cost-effective
communication technologies, can be level-playing fields
of trade that could help SMEs compete internationally.
In cross-border trade, it is important for SMBs to choose
a supply chain partner who has interna-tional expertise
in dealing with cus-toms regulations and access to
destina-tions worldwide.
SMEs have to appreciate that logis-tics is a true
facilitator of trade and in-ternational players in this
field can help SMEs overcome barriers, and in some
cases even remove them altogether.
FACILITATOR OF CROSS-BORDER TRADE

R S SUBRAMANIAN
COUNTRY MANAGER, DHL EXPRESS INDIA
E-BUSINESS AND SUPPLY CHAIN MANAGEMENT
PROF. KAVITHA VENKATACHARI
IBS MUMBAI
swaka2007@rediffmail.com
A
bstract: The web is having a significant impact
on how firms interact with each other and their
customers. Past stumbling blocks for supply chain
integration such as high transaction costs between
partners, poor information avai labi lity, and the
challenges of managing complex interfaces between
functional organizations are all dissolving on the web.
In this article, we examine how the web is changing
supply chain management. We classify the work into
three major categories: e-Commerce, e-Procurement, and
e- Collaboration.
Introduction: Nothing has rocked the young field of
supply chain management like the emergence of the
Internet. While the management of information flows
have always been a key aspect of supply chain
management, the rapid growth of web-based
information transfer between companies, their
suppliers, and their customers has decided to increase
the importance of information management in creating
effective supply chains. Indeed, the Internet has
emerged as a most cost-effective means of driving supply
chain integration. We define e-Business as the link
between the Internet and supply chain integration. This
link is transforming many processes within the supply
chain from procurement to customer management and
product design.
In this article, we explore how e-Business is changing
supply chains and examine the rapidly evolving
research in this area. Following the framework of Lee
and Whang (2002c), we divide the various forms of e-
Business applications into three categories e-
Commerce, e-Procurement, and e-Collaboration . E-
Commerce helps a network of supply chain partners to
identify and respond quickly to changing customer
demand captured over the Internet. E-Procurement
allows companies to use the Internet for procuring
direct or indirect materials, as well as handling value-
added services like transportation, warehousing,
customs clearing, payment, quality validation, and
documentation. E-Collaboration facilitates
coordination of various decisions and activities beyond
transactions among the supply chain partners, both
suppliers and customers, over the Internet. For example,
coordination of engineering changes in the bill-of-
materials for a product that is manufactured by an
outsourced partner.
E-Commerce : E-commerce (electronic commerce or EC)
is the buying and selling of goods and services on the
Internet, especially the World Wide Web. In practice,
this term and a newer term, e-business, are often used
inter changeably. For online retail selling, the term e-
tailing is sometimes used. E-Commerce has had a
profound impact on the supply chains of many products.
Clearly, the supply chains of information goods have
seen the most change (for example, see Dewan, Freimer,
Seidmann (2000)). Manufacturers of physical products
have also turned to the Internet as a direct channel of
distribution. The direct channel poses a different set of
decisions and challenges from those in the existing
bricks-and-mortar retail channel. These two channels
differ in customer types, operations of order fulfillment,
cost structure, profit contributions, priority in
rationing, logistical requirement, expectations of
service quality, degree of market segmentation, access
to demand/supply information, and returns policies.
Much of the early work on consumer related e-Commerce
focused on the changes in channels and the downward
market pressure on prices.
E-commerce can be divided into:
E-tailing or virtual storefronts on Web sites with
online catalogs, sometimes gathered into a virtual
mall
The gathering and use of demographic data through
Web contacts
Electronic Data Interchange (EDI), the business-to-
business exchange of data
E-mail and fax and their use as media for reaching
prospects and established customers (for example,
with newsletters)
Business-to-business buying and selling
The security of business transactions
E-tailing or The Virtual Storefront and the Virtual Mall
As a place for direct retail shopping, with its 24-hour
availability, a global reach, the ability to interact and
provide custom information and ordering, and
multimedia prospects, the Web is rapidly becoming a
multibillion dollar source of revenue for the worlds
businesses. A number of businesses already report
considerable success. As early as the middle of 1997,
Dell Computers reported orders of a million dollars a
day. By early 1999, projected e-commerce revenues for
business were in the billions of dollars and the stocks
of companies deemed most adept at e-commerce were
skyrocketing. Although many so-called dotcom retailers
disappeared in the economic shakeout of 2000, Web
retailing at sites such as Amazon.com, CDNow.com, and
CompudataOnline.com continues to grow.
E-Procurement : Modern manufacturing requires
flexibility due to stiff competition, fast changing
customer preferences, shortening product life cycle and
product variety proliferation. Along with dynamic
capacity allocation, efficient material procurement
forms a pillar to support flexible manufacturing. The
Internet again offers a natural platform to facilitate
efficient procurement as numerous buyers and sellers
find each other and transact according to some pre-
specified protocols (governed by the marketplace or
traders internal rules). While e-Procurement is the
mirror image of e-Commerce, they have many different
aspects. For example, e-Commerce often faces a large
number of individual consumers, while e-Procurement
usually involves dealings with companies. Of course,
many e-Procurement ideas such as dynamic markets
and auction theory have been long studied areas within
economics (e.g. auctions, see Milgrom and Weber (1982)
or Riley and Samuelson (1980)). Recent work has begun
to explore how on-line exchanges impact the
procurement process and the supply chains of
individual companies.
E-Collaboration : While e-Commerce and e-Procurement
have captured most of the business press headlines
over the past five years, the promise of e-Collaboration
may be far greater. We define e-Collaboration as
business-to-business interactions facilitated by the
Internet. These interactions go beyond simple buy/sell
transactions and may be better described as
relationships. These include such activities as
information sharing and integration, decision sharing,
process sharing, and resource sharing. Lee and Whang
(2002b) provide this taxonomy of e-Collaboration and
link the idea to earlier research in supply chain
management. Of the three areas, information sharing
has seen the most research. With widespread interest
in the bullwhip effect (Lee, Padmanabhan, Whang
(1997)), many researchers have worked to quantify the
impact of the bullwhip (Chen et al 2000) and examine
the benefits of sharing information (for examples, see
Cachon and Fisher (2000), Iyer and Ye (2000), Moinzadeh
(2002)). There has also been significant work to
understand the benefits of IT investments within an
enterprise (for example, the impact of ERP (McAfee
2002)).
Process sharing like collaborative innovation and
product design is also another exciting opportunity.
Many researchers are wondering how the web will
change innovation within and between companies
(Sawhney and Prandelli (2000)). In a pair of papers,
Johnson (2000, 2002) examines web-centric
collaboration for product design in both the high tech
and apparel industries. He develops a framework for
understanding the supply chain benefits of design
collaboration.
For example, the Solectron case focuses on how the use
of information has transformed Solectron from a simple
contract manufacturer into a full service supply chain
integrator. Likewise, the Third-Party Logistics Services
case examines how companies like transportation
provider Flying Cargo are using information to enhance
their service offerings in a near commodity business.
On the other hand, cases like General Motors and
Lufthansa illustrate how information can be used to
increase customer loyalty and manage the prices.
Hewlett-Packard examines the reverse supply chain and
the information integration issues of managing returns.
Finally, Marks & Spencer and Zara examine competition
between two apparel companies, including the role of
integrated design and manufacturing.
E-Supply Chain Management
Electronic Supply Chain Management (e-SCM) is an
optimization of business processes and business value
in every corner of the extended enterprise - right from
your suppliers supplier to your customers customer.
It uses e-business concepts and Web-technology to
manage beyond the enterprise, both upstream and
downstream. This strategic approach unites al the steps
in the business cycle, from initial product design and
procurement of raw materials, through shipping,
distribution, and warehousing. Right up to the point
when the finished product is delivered to the customer.
The scope of an e-SCP solution covers:
Online integration through the internet
Demand planning
Supply planning
Fulfillment planning
Consistent predictability of flow of goods
Improved relations with channel partners
Better control over budgeting and investments
An e-SCM solution can bring about a dramatic reduction
in your costs, and integrate your enterprise closely
with all the other players involved in your processes.
And in doing this, it goes one big step beyond a mere
ERP solution.
Fig :1 Key SCM Concepts
Here, is what it can do for your company:
Tie together all the players in the extended
enterprise, from raw materials to final point of
distribution
Give real-time market information to these players,
allowing them to anticipate and adjust their
operations in response to market conditions
Help eliminate costly stockpiling against demand
spikes, fee up resources and reducing costs
Lower costs, improve speed and increase the
accuracy of data sharing within the extended
enterprise
A truly integrated supply chain creates value- for the
enterprise, its supply chain partners, and its
shareholders. e-SCM is particularly relevant to
diversified business houses with complex supply chain
networks, to companies with wide distribution systems,
and to enterprise that depend on a large number of out-
sourced products.
Conclusion: Internet-based software products developed
by start-up companies have recently experienced a
major setback. But while the Internet bubble may have
burst as an opportunity to make quick money, we believe
the influence of Internet on supply chain management
is still alive and well. Rather than disappearing, it is
expanding in breadth and depth alike. More companies
are opening Internet channels, and more buyers are
ordering over the Internet. Also applications are getting
more sophisticated. For example, industry exchanges
do not only handle transactions, but also generate data.
This in turn creates a whole new stream of research
and a new breed of execution software products that
enable a company to take real-time data and make
dynamic decisions. They complement traditional
planning systems such as ERP. Indeed, SAP recently
unveiled plans to enhance manufacturing applications
to better interact with their planning systems and added
a freight-tracking program to its transportation
management system.
At the same time, the huge amount of data coming from
Internet transactions leads to information overload.
This also creates an opportunity to develop solutions
to aggregate, summarize and interpret them in a
manager-friendly manner. Indeed software products and
solution providers have emerged to address the needs
in various terms like dashboard, cockpit and
command center. For examples, see Broadvision, Power
market (part of Tradec), and Manugistics. Given the
numerous challenges in global supply chain
management and the unlimited creativity in the business
community, it is only a clich to say that the new powerful
tool called the Internet would find its way to more and
better applications for a long time.
References:
Boyer, K.K. and J.R. Olson (2002), Drivers of Internet
Purchasing Success, Production and Operations
Management, Vol. 11, No. 4.
Brynjolfsson, E. and M.D. Smith (2000), Frictionless
Commerce? A Comparison of Internet and
Convetional Retailers, Management Science, Vol.
46, No. 4, 563-585.
Cattani, K. and G.C. Souza (2002), Inventory
Rationing and Shipment Flexibility Alternatives for
Direct Market Firms, Production and Operations
Management , Vol. 11, No. 4.
Cachon, G. (2001), Stock Wars: Inventory
Competition in a Two Echelon Supply Chain with
Multiple Retailers, Operations Research , Vol. 49,
No. 5, 658-674.
Cachon, G. and M. Fisher (2000), Supply Chain
Inventory Management and the Value of Shared
Information, Management Science, Vol. 46, No. 8,
1032-1048.
Chen, C-Y, Zhao, Z-Y, and M.O. Ball (2002), A Model
for Batch Advanced Avai lable- to-Promise,
Production and Operations Management, Vol. 11,
No. 4.
Chen, F., Drezner, Z. Ryan, J.K., and D. Simchi-Levi
(2000), Quantifying the Bullship Effect in a Simple
Supply Chain: The Impact of Forecast, Management
Science, Vol. 46, No. 3, 436-443.
COMMODITY INDEX
Commodities Dayss Index Prev. Index Week Ago Month Ago
Index 2428.5 2453.7 2437.2 2394.6
Bullion 4679.2 4868.7 4834.3 4597.2
Cement 1848.3 1848.3 1848.3 1841.7
Chemicals 1788.7 1776.3 1721.8 1734.2
Edible Oil 1401.5 1405.7 1417.6 1403.1
Foodgrains 2097.7 2100.9 2108.5 2104.4
Fuel 2216.9 2216.9 2139.7 2139.7
Indl Metals 1817.0 1817.0 1817.0 1816.9
Other Agricom 2064.9 2064.9 2061.1 2106.5
Plastics 2015.3 2013.6 1988.1 1952.4
Source: ETIG Database dated 20th June 2013
BRANCH NEWS
DELHI BRANCH
VADODARA BRANCH
VISHAKHAPATNAM BRANCH
DELHI BRANCH
MATERIALS MANAGEMENT DAY CELEBRATIONS
TRIBUTES TO THE FATHER OF THE NATION : Delhi Branch
launched MM Day celebration programme after paying
tributes to Father ofthe Nation, Mahatma Gandhi
Samadhi at Raj Ghat, Mr. C Subbakrishna, NP-IIMM,
Mr.Sanjay Shukla, Chairman, IIMM Delhi Branch Mr.
Suresh Kumar, IPP-IIMM & Mr. M KBhardwaj, Co-
Chairman, BOS-IIMM alongwith the EC team of Delhi
Branch were present.
GREEN RALLY : Green Rally was organized by Delhi
Branch which was flagged of Honble Minister Sh.Haroon
Yusuf, Power, Food & Civi l Supplies Department,
Industries, Employment, Govt. ofNCT of Delhi. The rally
has proceeded to various industries to propagate the
concepts ofGreen Purchasing & the importance Green
Environment & plantation. Sr. Vice President(Materials)
of M/s. Bhushan Steel Ltd, Mr. Kishi Saxena appreciated
the efforts made by the Institute for the development of
the profession. IIMM has earlier decorated him with
the fellowship of the Institute. In recognition of the
support given by M/s. Bhushan Steel Ltd. or the
promotion of the professional activities a memento was
presenting to Mr. Kishi Saxena by National President
Mr. C Subbakrishna, IIMM.
L to R: Mr. Mr. Sanjay Shukla, Chairman IIMM, Delhi
Branch, National President - IIMM Mr. C Subbakrishna
felicitating to Mr. Kishi Saxena, Sr. Vice President
(Materials) Bhushan Steel Ltd.
FACTORY VISIT :
The factory visit was organized by Delhi Branch at M/s.
Denso India Ltd where most of the members
haveparticipated. Mr. Manoj Mehra of M/s. Denso India
Ltd has coordinated the programme. Mr. Hemant Jain
hasshown the innovative concepts launched by the
stores department. A memento was given by Chairman
IIMM Delhi Branch Mr. Sanjay Shukla to Sr. General
Manager Mr. Kiyoshi Furuoka M/s. Denso India Ltd
inreconition of outstandincontribution made for
imlementinnew concets in stores and urchase dett.In
Denso India Ltd.
Chairman IIMM Delhi Branch Mr. Sanjay Shukla present
the memento to Mr. Kiyoshi Fukuoka, Sr. General
Manager Denso India Limited
MM QUIZ PROGRAMME :
Mr. Sanjay Shukla, Chairman IIMM given the first prize
to Mr. Amitabh Kumar, inmiddle Mr. T G Nandakumar,
Vice President(North)
Delhi Branch has organized MM Quiz progamme. Mr. T
G Nandakumar, VP (North) & Head of the Education
Committee has coordinated. The first prize given to Mr.
Amitabh Kumar. The programme ended vote of thanks to
all the participants.
SEMINAR ON THE THEME OF MM DAY : Delhi Branch
also organsied the seminar on the theme of the MM Day
at Hotel Connaught, New Delhi.National President IIMM
was the Chief Guest and the Key note Speaker of this
seminar was Prof. AkhilChandra. Chairman Delhi Branch
Mr. Sanjay Shukla welcomed the National President,
Delegates and otherpersonalities sitting on the dias.
Mr. T G Nandakumar Vice President (North)-IIMM
highlighted the activitiesof Northern Region. Mr. M K
Bhardwaj, Co-Chairman Board of Studies has
highlighted about the educationalactivities. Mr. Suresh
Kumar, Immediate Past President has spoken on the
theme of the MM Day and aboutthe IFPSM activities.
Mr. V K Jain, Former President has spoken on the theme
of MM Day and asked thedelegates to take maximum
benefit from the professional activities & educational
programmes of theInstitute. Mr. M K Mittal, Hony.
Treasurer Delhi Branch proposed vote of thanks to all
the dignitaries andspecially the National President who
has come along come from Bangalore and participated
the MM Dayactivities of Delhi Branch.
------------------------------------------------------------
VADODARA BRANCH
MM week was celebrated with great vigor by IIMM
Vadodara Branch.
Swami Deveshya nand with EC members in IIMM
conference room
Swamiji addressing the audience
The MM week celebration started on 20.4.2013 with
Swami Deveshanand Saraswati giving his spiritual
lecture on the topic of U Turn. The event was well
attended, which was held in IIMM lecture hall.
Section of audience
Second event was the main celebration held on MM
day on 23.4.2013 in Hotel Surya Palace. Chief Guest for
the occasion was Shri Ajit Telang Managing Partner
Synergesic Management Market Research and
counseling Firm and Guest of honour was Mr. Milind
Phulse VP strategic sourcing with RR Kabel.
Mr. L.P.Patel addressing the audience
Mr. Anand Purohit addressing the audience
Mr. Milind Phulse making presentation
Mr. Ajay Padhye giving interview to the media on the
occasion of MM day
Shri Ajit Telang addressing the audience
Section of audience
Shri Ajit Telang giving certificate of Merit to
For coming 1
st
in GDMM
Mr. L.P.Patel giving best faculty award to
Prof. Tere Desai
Mr. Malay Mazumdar(Vice Chairman) addressing the
audience
Third event in the series was MatQuiz contest was held
on 27.4.2013 in Hotel Surya palace in which 20
Companies from in and around Vadodara had
Participated. Team from Deepak Nitrate stood 1
st
in the
competition, Team from Daniel Measurement came
second and Team from Linde Engineering came third.
Dr. Bharti Trivedi as Quiz Master
Participating Teams for MatQuiz
Mr. Malay Mazumdar(Vice Chairman ) as Quiz Master
Mr. Bharat Sodha(NC Member) giving prize to
2
nd
Runners Up Team from Linde Engineering
Mr. D.B.Trivedi(NC Member) giving prize to
1
st
Runners Up Team from Daniel Measurement
Mr. L.P.Patel(Sr. VP IIMM) giving prize to the winning
team from Deepak Nitrate
Mr. L.P.Patel giving memento to Dr. Bharti Trivedi
Mr. L.P.Patel giving memento to Mr. Malay Mazumdar.
Also seen in the photo Mrs. Malay Mazumdar
Fourth event in the series was Industrial visit on
28.4.2013 to Polycab Ltd. And HNG Float Glass Ltd. At
Halol.
--------------------------------------------------------------------------
VISHAKHAPATNAM BRANCH
IIMM Vishakhapatnam Branch has conducted a Press
Meet on 18.4.2013 at CMA Bhavan, Vishakhapatnam in
lieu of material management Day, week celebrations
2013. The news was covered in Hindu and all the local
news papers. Sri N. Udayabhanu, VP (South), Sri U.
Prakash, VC ICAI, Vizag, Sri S Prabhakara Rao, Course
Director, Sri A.V. Rajendra Kumar, Hon. Secy. Vigaz Branch
conducted the Press Meet and informed objectives and
courses offered by IIMM and ICAI and the MM Day week
programme.
22-4-2013 : Quiz & Industrial Visit :
Sri J.C. Narayanappa, Chairman, Vizag Branch conducted
the Quiz Programme. Thirty two members and students
of various organizations actively participated for
Industrial visit to Visakhapatnam Steel Plant.
23-04-2013 : Valedictory Celebrations at Ukkunagaram,
Sri S.K.Gupta, ED (MM) Visakhapatnam Steel Plant was
the Chief Guest. members from VSP, NTPC and other
organizations were attended. Sri S.K.Gupta, ED(MM)
delivered an excellent speech with power point
presentation on INNOVATIVE SUPPLY CHAIN
MANAGEMENT which was the highlight of the complete
week programme. The Chief Guest presented the
certificates and gifts to the winners of the various MM
Day competition during the week.

EXECUTIVE HEALTH
FIVE HEALTHY DRINKS FOR SAFE WEIGHT LOSS
SEAN JOHN JACKSON
M
any obese people successfully lose those extra
pounds by just not being cautious about what
they have on their plate, but also by watching
what they have in their glass. Yes! By simply watching
your drinking menu and drinking habits, you can also
lose a considerable amount of body weight. It is a
general assumption that what we eat counts to our body
weight; however, the fact is that even what we drink
adds up to our body fat. There are many liquids that
contain high amount of calories that can quickly
increase fat consumption in your body; however, if you
become somewhat careful on what kind of liquid you
consume, you will be able to contribute to weight
loss safely and much effectively.
Below suggested are some healthy ways of consuming
liquid without adding to unwanted body fat. On top of
that, these liquid diet options help stimulate safe and
successful weight loss much quickly and successfully.
Ice Cold Water
You all must be aware that water helps reduce body
weight safely; however not many people know that you
will burn an extra 300-500 calories a day if you drink
8-10 glasses of chilled water. This is because when you
drink ice cold water, your body has to burn calories in
order to heat the ice cold water back up to your body
temperature. So, in this process, you can lose up to 1 lb
a week. Try drinking about 2 extra glasses of water
everyday so that you can boost your metabolism by
more 40% and can safely shed some pounds.
Fat Free Milk
We all know that milk is high in calcium and calcium
helps stimulate weight loss by breaking down fat from
fat cells. However, this does not imply that simply
drinking milk will work. Only milk that is low in fat can
double the rate of fat breakdown from your body. Try
drinking fat free milk or at least milk that is low in fat
count.
Benefits of Green Tea with Lemon
Studies show that you can burn 40-50% more fat by
drinking 3-5 cups of green tea every day. Green tea helps
improve metabolism and stimulates weight loss much
faster than any other beverage does. Plus, it contains
healthy antioxidants that are good both for your health
as well as skin. Drink a cup of green tea an hour before
your meals as it will help to speed up your metabolism
and will help you consume less food. You can go for
other healthy options likeblack tea and black coffee
too.
Green tea is rich in antioxidants and polyphenols that
helps increase metabolic processes of the body. It also
has no known side effects, and it helps reduce the risk
of heart diseases, diabetes, and etc. But most green tea
lovers like their green tea strong and aromatic, and
they gulp it as easy as drinking a glass of water.
Moreover, some green tea lovers add some squeeze and
zest of lemon to their green tea, not just to add more
flavor, but to also enhance the health effects of their
dink. When combined, both green tea and lemon with
provide two-fold weight loss effects.
When you ingest lemon or its juice, you actually
stimulate your digestive processes. When your system
digests really slow, more chances of fat storage and
unhealthy accumulation of fat cells. Thus, when you
have a good working digestive tract, your metabolism
is actually at its best levels, and you can lose more
weight, faster. Additionally, when you regularly have
lemon intake, you are also allowing healthy hydration
of the body.
Vegetable Juice
Like fruits, vegetables also are rich in nutrients. The
best part is that veggies contain lesser calories than
fruits as they are void of any sugar content. Drinking a
glass of vegetable juice before your meals also helps
you to consume less calories than you usually intake.
Carrots, spinach, cucumber and celery are some
commonly known veggies that account for best tasting
juices.
Coconut Water
Replace your usual liquid beverages with coconut water
as it contains more electrolytes than most fruit juices
and energy drinks. In addition, it is without the extra
sugar and artificial flavorings. Coconut water naturally
speeds up your metabolism and aids in giving your body
more energy so you can work out for longer times with
more intensity to lose weight much faster.
Authors Bio:
Sean Jackson is a health freak. According to Sean, a
healthy body is the index of a healthy mind. He believes
that besides a healthy diet and proper exercise regime,
weight loss dietary supplements also aid in quick
weight loss. He himself is a regular user of Calotren,
and inspires others too to use it in order to stay taut, fit
and healthy.
Source : EzineArticles.com

AHMEDABAD
Harish Kumar Gupta, Chairman-IIMM
C/o SPR International, B-34, Circle-B,
Behind Pakwan-2, S G Road, Bodakdev,
Ahmedabad-380015Tel: (079)26872567
E-mail : iimmahmedabad@gmail.com
iimmedu.ahd@gmail.com
AURANGABAD
Anil Pimpalkar, Chairman-IIMM
C/o. IMTR, 2
nd
Floor, Arth Complex
Near. IMA Hall, Off: Adalat Road,
Aurangabad 431001
Tel: (240) 2331039
E-mail : anilpimpalkar@lupinpharma.com
BANGALORE
Mr. Channbasappa, Chairman-IIMM
# 304, A-Wing, III Floor,
Mittal Tower # 6,
M G Road, Bangalore 560001
Tel: (080) 25327251/52
E-mail : iimmbg@airtelmail.in
BOKARO
Chairman-IIMM
C/o. Pur. Dept. Ispat Bhavan,
Bokaro Steel City -827001, Bokaro
Tel: (o6542) 240263/280768
E-mail : iimmbokaro@gmail.com
BILASPUR
M. Pande, Chairman IIMM,
C/o. Chief Gen. Mgr (MM),
South Eastern Coalfields Ltd,
Seepat Road, Bilaspur-6 (CG)
Tel: (07752) 241087/75014
E-mail : iimm.bilaspur@rediffmail.com
BHARUCH
Ravi K. Jain, Chairman, IIMM303, Vinay
Complex,
Near Dudh Dhara Dairy, Old N.H. 8,
Bharuch 392015
Tel: (02642) 237405
E-mail : ravijain@sanofi-aventis.com
BHILAI
Chairman - IIMM, Room # 316,
Ispat Bhavan,
Bhilai Steel Plant, Bhilai-490023
Tel: (0788) 2853850
BHOPAL
Dr. Sameer Sharma, Chairman-IIMM
C/o.4/9-B, Saket Nagar, Bhopal 462023
Tel.: 0755-2451802, 8085856437
BURNPUR
R.K. Agrawal, Chairman-IIMM,
Matls. Dept. New Matls Bldg. IISCO,
Bunpur Works, Burnpur 713325 (W.B.)
E-mail : monotoshsaha@gmail.com
CHANDIGARH
A.N. Chaudhary, Chairman-IIMM,
SCO 19-B, Swastik Vihar, Mansa Devi
Complex, Sector-5, Panchkula 134109
Tel: (0172) 2556646
E-mail : iimmchandigarh1@gmail.com
CHENNAI
V. Seetharaman, Chariman-IIMM
4
th
Floor, Chateau DAmpa,
110 (New # 37) Nelson Manickam Road,
Aminjikarai,
Chennai 29
Tel: (044) 23742165
E-mail : iimmchennai@yahoo.com
COCHIN
Chairman IIMM
GCDA Shopping Complex,
Gandhi Nagar, Cochin -682020, Kerala
Tel: (0484) 2203487/2317687
E-mail : iimmkoch@md4.vsnl.net.in
DURGAPUR
Shantanu Chakravarty,Chairman IIMM,
C/o. GM (Comml ) Pur Dept,
Alloy Steel Plant,
Durgapur-713208
Tel: (0343) 2545301
E-mail : dgp_aspmmd@bsnl.in
DHANBAD
Himendra Prasad, Chairman-IIMM
C/o CGM (MM), B.C.C.L,
Koyla Bhawan, Koyla Nagar,
Dhanbad-826005 (Jharkhand)
E-mail : iimmdhanbad@gmail.com
DEHRADUN
Nikhil Gaur, Chairman-IIMM
Chief Manager (MM) ONCG,
Central Store, Kaulagarh Road,
Dehradun 248195
Tel: 0135-2795617
E-mail : goelpardeep@hotmail.com
GANDHIDHAM
M.G. Agrawal, Chairman-IIMM,
Shop # 14, Gokul Park, Plot # 356,
Ward-12B, Tagore Road,
Gandhidham -370201, Kutch (Guj)
Tel: (02836) 231295/231711
E-mail : iimm_gim@rediffmail.com
GOA
G.B. Palankar, Chairman-IIMM
S-6 & S-7, 2
nd
Floor, Vasco Citicentre,
Opp: Canara Bank, Swantantra Path,
Vasco-da-GamaGoa 403802
E-mail : gbpalankar@goashipyard.com
HYDERABAD
C. Harinath, Chairman-IIMM
Indian Institute of Matls. Mgmt.
No. 8-3-483, Flat # 105Sun City Apts,
Yellareddyguda, Hyderabad 500 073
Tel: (040) 65504252
E-mail : iimmhyd@hotmail.com
HUBLI
S. Halal, Chairman-IIMM
# 47-50, 2nd Floor, Laxmi Balakrishna Square
(Harsha Complex), Railway Station Road,
Hubli-580020
email- iimmedu.hubli@gmail.com
Ph # 0836-2264699 Cell # 9972703336
HOSUR
Chairman IIMM
C/o. Mr. J H Shastri,
G.M-C/M Wendt India Ltd,
# 69/70 SIPCOT Industrial Complex,
Hosur -635126 (T.N)
E-mail : sastryjh@wendtindia.com
JAIPUR
Anil J Dalvi, Chairman-IIMM
48, Mohan Nagar,
Gopalpura By Pass, Jaipur,
Mobile: 09799299157
E-mail : direndra.m@in.bosch.com
JAMSHEDPUR
Shivaji Sinha, Chairman IIMM
Room # 6, Russi Modi Centre for
Excellence, Jubilee Road,
Jamshedpur 831001
Tel: (0657) 2224670
E-mail : iimm_jsr@yahoo.co.in
KANPUR
G.K. Agnihotri, Chairman-IIMM
C/o. IGM Computer Academy, Mallick
Comp. Nr. Rama Devi Churaha, G T Road,
Kanpur-208007 Tel: (0512) 2401291
E-mail : iimmknp@gmail.com
KOLKATA
Sudhin Mitter, Chairman-IIMM
8/B, Short Street, Kolkata 700017
Tel: (033) 22876971/22834963
E-mail : iimmcal@satyam.net.in
KGF
Chairman-IIMM
C/o. Bharat Earth Movers Ltd, EM Divn.
BEML Nagar Post,Kolar Gold Fields 563115
Tel: (08153) 265176
E-mail : emdbeml@sancharnet.in
LUCKNOW
Mrigendra, Chairman-IIMM
C-757, Indira Nagar, Lucknow (UP) 226016
Tel: (0522) 2353210
E-mail : arun_bhute@rediffmail.com
LUDHIANA
S. K. Arora, Chairman-IIM
C/o. Weltech Equipts & Infrastructur
Plot # 3, Giaspura Road, Nr PSEB Stn.
Dhandari Kalan, Ludhiana -141010 (Punjab)
Tel: (0161) 4696021/30
E-mail : iimmldhbr@gmail.com
MUMBAI
N.D. Sadri, Chairman IIMM,
2-A Arihant Bldg. Opp: Anupam Theatre,
Goregaon (East) Mumbai 400063
Tel: (022) 26863376/26864528
E-mail : iimmbom@gmail.com
MYSORE
Chairman-IIMM
B-96, Hebbal Indl. Estate, Mysore 570 016
Tel: (0821) 2500305
E-mail : iimmisp@hotmail.com
MANGALORE
Chairman-IIMM
O/o. Sr. Mgr. Stores, KIOCL Ltd, Panambur,
Mangalore 575010
Tel: (0824) 2407361/62
E-mail : mstores@kudrecore.com
NAGPUR
N.K. Singh, Chairman-IIMM
404, Suryakiran Comml. Complex-1Bajaj
Nagar, Nr VNIT Gate, Nagpur -10
Tel: (0712) 2229446
E-mail : iimmnagpur@gmail.com
NASHIK
A.A. Hasabnis, Chairman-IIMM,
1, Parag Bldg, Patel Lane # 4,
College Road, Nashik 5
Tel: (0253) 2314206
E-mail : iimm_nsk@bsnl.in
NALCONAGAR
Chairman-IIMM
Qtr. # C-352, Nelco Township,
Nalco Nagar -759145, Dist: Angul, Orissa
Mobile: 09437021092
E-mail : snbaghar@nalcoindia.co.in
NEW DELHI
Sanjay Shukla, Chairman-IIMM
Veer Sadan, 4239-A/2,1 Ansari Road,
Daryaganj, New Delhi 110002
Tel: (011) 23266089/23242124
E-mail : iimm1@vsnl.com
PUNE
Pratibha Towers, Plot No. 22,
Old Pune Mumbai Rd, CTS No. 15/2,
Above TVS Showroom, Wakdewadi,
Shivajinagar, Pune - 411 005
iimmpune1@gmail.com
RANCHI
G.K. Singh, Chairman-IIMM
O/o. Gen Mgr (MM)Central Coalfiields Ltd.,
Darbhanga House, Ranchi-834001
Tel: (0651) 2360716/2360198
E-mail : purchase-ccl@cmpdi.co.in
RAE BARELI
S.K. Bandopadhyay, Chairman-IIMM
497, Near CMO Office, Jail Road,
Rae Bareli -229001
Tel: (0535) 2703818
ROURKELA
Chairman-IIMM
Rourkela Steel Plant, 6
th
Floor,
Admin. Bldg. Rourkela -769011
Tel: (0661) 2522466/2448425
E-mail : dillip_mmrsp@rediffmail.com
SURAT
S.U. Chaudhari, Chairman-IIMM
C/o. Gen. Mgr (Comml) Krishak Bharati Co
Ltd, PO: Kribhaco Nagar, Surat -15
TelL (0261) 2802073
E-mail : sathe_cg@kribhcosurat.com
TRIVANDRUM
Chairman-IIMM
TC-9/1447, 2
nd
Floor, Future HouseTemple
Road, Sasthamangalam,
Thiruvanathapuram 695010
Tel: (0471) 2724952
E-mail : iimmtvpm@gmail.com
UDAIPUR
P.S. Taleara, Chairman-IIMM
2
nd
Flr. Above Manohar Furnityre,
Ashwini, Marg, Udaipur 313001
Tel: (0294) 2411969/2421530
E-mail : iimmudpr@sancharnet.in
VADODARA
Ajay Padhye, Chairman-IIMM
Vishal Chambers, 2
nd
Floor, 34,
Vishwas Colony. Alkapuri,
Vadodara- 7,
Tel: 0265-2359060
E-mail : iimmbrd@satyam.net.in
VISAKHAPATNAM
J.C. Narayanappa, Chairman-IIMM
#45-35-63, Flat # 401,
Vigneshwar Apts, Jagannadhapuram,
Akkayyapalem,
Vizag 530016
Tel:2726690
E-mail : iimmvazag@gmail.com
VAPI
Mukesh R Patel, Chairman-IIMM
223, C.B.Desai Chamebers, GIDC,
Gunjan Char Rasta,
Vapi -396195
Cell: 0982450114
E-mail : iimmvapi@rediffmail.com
V V NAGAR
Bharat R Patel, Chairman-IIMM
C/o. Dy. Gen. Mgr. (Matls)
Elecon Engg. Co. Ltd., Gear Division,
Vallabh Vidya Nagar,
Dist: Anand (Gujarat)
E-mail : dyjoshi@gear.elecon.com
IIMM HEADQUARTERS AND BRANCHES
IIMM NHQ : Plot No. 102 & 104, Sector-15, Instl. Area, CBD Belapur, Navi Mumbai-400614. Tel.: 27561754 / 2756 5831, Fax : 022-27571022
E-mail NHQ : iimmnhq@mtnl.net.in E-mail Edu. Wing : iimmedu@mtnl.net.in, Website : www.iimm.org

MMR July 2013

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MMR July 2013

Uploaded by

Copyright:

Available Formats

Materials Management Review 1 July 2013

Materials Management Review 5 July 2013

Materials Management Review 7 July 2013

THE GSTS EXEMPTION

Materials Management Review 10 July 2013

Materials Management Review 13 July 2013

Materials Management Review 17 July 2013

Materials Management Review 19 July 2013

Materials Management Review 20 July 2013

Materials Management Review 26 July 2013

Materials Management Review 27 July 2013

Materials Management Review 30 July 2013

Materials Management Review 32 July 2013

Innovation Idea / Creativity Commercialization

Change Value to Customer

Materials Management Review 36 July 2013

Materials Management Review 38 July 2013

CURRENCY EXCHANGE RATES

Materials Management Review 45 July 2013

Effective logistics services and communication

FACILITATOR OF CROSS-BORDER TRADE

Materials Management Review 55 July 2013

Materials Management Review 56 July 2013

You might also like