Chapter 5

CONCLUSION
5.1 Summary

Logistics and supply chain management are observed as the areas in which logistics
service providers, by virtue of their expertise, are able to offer the most added value to
transactions in the freight trade. Freight forwarders, as logistics service providers,
play an important role in supply chain management, as an increasing number of firms
outsource their logistics function. These third party logistics providers are now
becoming more involved in the design, management, and control of firms' supply
chains. Asia-based regional logistics providers are the best equipped to manage
supply chains in Asia as they are familiar with the context in which they operate.

The selection of a logistics provider is critical to supply chain competitiveness

(Hensher and Chow 1999). Third party logistics plays a pivotal role in the design and
provision of an integrated supply chain that responds to the customers needs. In order
to help their customers, logistics service providers need to behave more like partners
of their customers. Not only do logistics service providers have to arrange for the
transport of cargo and facilitate its clearance through customs, they also need to
manage their customers order processing. This means that logistics providers are
involved not only in lowering their customers costs by reducing waste in ordering
operations, but also in integrating the supply chains. The objectives was to make the
partnerships so tight and seamless that the logistical services provided become part of
the customers own businesses.

The task of a logistics provider is to facilitate trade to the extent that the trader needs
only to produce and sell the goods (or to order the goods, in the case of imports).
Once this has been done the logistics provider can take over and provide every
subsequent function from factory gate to final delivery. As the distance between the
manufacturer (i.e., the exporter) and the distributor or retailer is often quite
considerable (and vice-versa for imports), problems relating to both material and
information flows are common.

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The problem of delivering finished goods on time to its customers becomes very
crucial when MNCs use JIT management techniques. LSPs main role is to deliver the
products to the customers at the right time, right cost, right price so that they are
competitive.

The present study is conducted to understand the supply chain system of logistics
service providers. In order to measure supply chain effectiveness, a tool was designed
with the help of researchers and practitioners of the field. The tool was tested for its
reliability and validity. Supply chain Competitiveness of Select LSPs was also
measured and compared. Finally, SAP-LAP analysis was carried out for Logistics
Industry.

The topic for the research was A Study of Supply Chain Effectiveness of Logistics
Service Providers in Indore. In order to fulfill this research four objectives were
framed out.

For the purpose of study, four major logistics service providers of Indore such as Gati
Logistics Ltd, Safe Express Ltd, Blue Dart Ltd. and DHL Ltd. Were considered. As
each of the LSP has different types of customers hence a sample of all types of
customers was drawn. of each LSP a random sample of 25 customers was drawn
which included 5 Individual Customers, 5 Proprietors, 5 Small Scale Industry
Customers and 10 Large Scale Industry Customers were selected, thus a total sample
was 100. All the samples were drawn on convenience and judgmental basis.

The thesis has been divided into 5 chapters named as Introduction, Literature Review,
Research Methodology, Results and Discussions and Conclusions. At the end,
Questionnaire, Intermediate results of analysis has been presented in the form of
annexure. In the last references has been presented in American Psychological
Association (APA) Style. List of Tables and figures have also been presented.

Chapter one Introduction has presented the conceptual framework. In this chapter
logistics industry and its present status, its relationship with supply chain
management, its evolution and framework has been discussed so that there is a clear
understanding of the subject. Evolution of Logistics systems which starts from
physical distribution, internal integrated logistics (3PL), external integrated logistics
(4PL), and Global Logistics Management. It also talks about various components of

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Logistics which include Transportation, Warehousing and Value Added Services.
The Compounded Annual Growth Rate of all these components during 2008-13 is
summarized as Transportation (52%), Warehousing (20%) and Value Added Services
(15%). It also discussed various subsectors such as Road Transport, Airline
Passenger, Airline Freight, Shipping and Rail Services.

Key Success Factors such as Quality manpower, Keeping pace with technology,
Enhanced operational efficiency along with the key Risk Factors such as: highly
unorganised and fragmented market, infrastructure issues, lack of standards and
processes within the sector, regulatory restrictions, lack of skilled manpower have
been discussed.

Rationale of the study is presented which gives clear justification for carrying out the
research work. In the present global scenario, when the world has become borderless,
organization started to purchase the products from all parts of the world. They had
started dictating their terms to the Logistics Service Providers (LSP) to deliver their
product at the right time and minimum price. To compete and survive in the market,
the LSPs are trying to re-engineer their processes and trying to cut their internal costs
from all corners. They need to relocate their warehouses, collaborate with their
counterparts and optimize the existing resources. In order to provide the information
and tracking facilities to the customers, they are going in for the online product
tracking system and also for Global Positioning System.

Chapter concluded by presenting the objectives of the study. Following objectives

were framed out:

1. To develop a tool to evaluate Supply Chain Effectiveness of Logistics

Industry.

2. To identify the factors responsible for measuring Supply Chain Effectiveness

of Indian Logistics Industry.

3. To Compare the Supply Cain Effectiveness of Logistics Service Providers.

4. To Carry out SAP-LAP Analysis of Logistics Service Providers

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Chapter two included the review of related work carried out by the researchers at the
National and International level. The review was carried out on logistics as well as
supply chain management areas. With the help of a graph, the variance of the total
cost of Logistics with the change of Transport mode has been explained. It also
presented Sector wise presence of various Logistics companies in India. Brief Profile
of all the LSPs such as: Gati Logistics Ltd, Safe Express Ltd, Blue Dart Ltd. and DHL
Ltd. has been presented.

Chapter three discusses the research mmethodology which refers to the

procedural framework within which the research is to be conducted. This chapter
represents the framework of the study by giving a clear description of the specific
steps which are considered to address the research problem of the study. The study
is exploratory in nature as the purpose of research was to gain familiarity with a
Logistics Operations and the Major LSPs of Indore. It was also to explore the
factors responsible for the supply chain effectiveness of the LSPs. The survey and
case study method has been used to collect primary data.

Responses have been collected from the customers of the LSPs has been collected.
The categories of customers who have been selected were: Individual, Proprietors,
Small Scale industries and Large scale Industries. Of each LSP 5 individual
customers, 5 proprietor customers, five Small Scale industry customers and 10
Large Scale industry customers were selected. Thus 25 customers of each LSP
were selected to evaluate the Supply Chain Effectiveness, resulting into a total of
100 respondents which formed a sample. From the individual and proprietor
category those customers were selected who have already availed the services of
LSP and were willing to provide the feedback on their experience with LSP. From
Small Scale as well as large scale industries one executive each has been selected
who were senior or middle level executives, from the departments directly
involved in SC activities

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For Comparing the Supply Chain Effectiveness as well as Competitiveness of
various Service Providers, the following hypothesis were formulated,

H01-H06: were framed to check whether significant difference in Supply

Chain Effectiveness of LSPs taken two at a time exists or not.

H07-H012: were framed to check whether significant difference exists in

Competitiveness of LSPs taken two at a time exists or not.

On the basis of exhaustive literature review, a self designed questionnaire was

designed to evaluate the Supply Chain effectiveness as well as competitiveness of
the Logistics Service Providers. While designing the questionnaire, the teachers
and practitioners were also consulted.

The questionnaire has a total of 10 questions. First four questions talked about the
type of logistics service user, frequency of the LS availed, LSP and duration since
when LS is being used. In question 5, respondents were supposed to rank (1-5)
various attributes considered for selecting LSP. In question 6 respondents were
supposed to tick the logistics services they are availing. In question 7, customers
ticked the IT based service provided by the LSP. Question 8 has 26 parameters
which were on Likert scale (1- Strongly disagree to 5-Strongly Agree) evaluates
the Supply Chain Effectiveness of LSP. Question 9 has 12 parameters measuring
the competitiveness of the LSP. Question 10 has the personal details of the
respondents. The data was collected after developing rapport with the subjects.

To analyse the data following tools were applied:

1. Content validity for the questionnaire was tested as it was designed having
a thorough literature review. On supply chain effectiveness, Split half
reliability and validity was computed and was found to be 0.82 and
0.905 respectively. Split half reliability was computed by finding our the
coefficient of correlation between sum of the responses on SCE of odd
numbered respondents such as (R1, R3, R5..R99) and Even numbered
respondents (R2, R4. R100) making the odd respondents. Validity was
computed by taking the square root of reliability. This high value of
reliability and validity is the indicator of a good and accurate tool used to
measure SCE.

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 2. Principle Component Factor analysis with Varimax Rotation and Kaiser
Normalization was applied for exploring factors of Supply Chain
Effectiveness. It conveged the 26 parameters of Supply Chain
Effectiveness into 10 factors. After extraction maximum value of r was
found to be 0.911 (parameter b) while the minimum was found to be 0.554
(Parameter c)

3. In order to test the hypotheses, t-Test for the difference between two means
has been applied between various LSPs which compared the Supply Chain
Effectiveness as well as Competitiveness. It was tested whether SCE and
Competitiveness of various LSPs differ significantly from each other or
not. Hypothesis testing was done by applying two tailed t-test on 5% level
of significance.

4. SAP-LAP analysis has also been carried out and few strategies are
suggested for LSPs to improve the SCE.

Chapter four presented the results and discussions on the quantitative and qualitative
aspects. It is found that out of a total of 100 respondents 63 were found to be using the
services of LSP almost everyday followed by 16 using once in a week. This reflects
that people selecting any LSP on the basis of quality of service and commitment of
LSP to provide cost effective service on timely basis are continuing the business. It is
also revealed from the study that 99% of the customers are dealing with the LSPs for
more than a year.

On the basis of preferences of all the customers for selecting any LSP, various parameters
were ranked on the basis of average values (1-5) responded by the customers on likert scale..
It is found that Delivery Reliability (4.48) is ranked 1 followed by Price (4.29) and Delivery
Lead Time (4.26). This preference is due to that fact that in this IT era when all the
information is available on a single click of a mouse, customers would like to deal with those
LSPs who have proved to be reliable. They were of the opinion that they can not tolerate the
delivery failures. At the same time, people are price sensitive too also they expect that
delivery of the product should reach to the destination in the optimal time.

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The SCE scale consisted of 22 parameters. Split half reliability and validity was
computed and was found to be 0.82 and 0.905 respectively.

Principle Component Factor analysis with Varimax Rotation and Kaiser

Normalization was applied for exploring factors of Supply Chain Effectiveness.
It converged the 26 parameters of Supply Chain Effectiveness into 10 factors namely
Conformance to Quality, Commitment, Information Adequacy & Availability,
Concern, Accuracy, Consistency, Technological Updation, Error Handling
Efficiency, Speed and Promptness. Out of this first four factors are the most
important to be considered for improving Supply Chain Effectiveness of the LSP
because these factors contributed 82 percent while other six factors contributed only
18 percent.

The Supply Chain Effectiveness Score as well as Competitiveness Score of all LSPs
was compared by calculating mean and standard deviation presented in the following
table. It is visible from that table that DHL has maximum SCE as well as
Competitiveness average value with the lowest standard deviation which reflects that
it is providing best service to its customers. In order to know the relationship between
SCE and Competitiveness, coefficient of correlation was computed and was found to
be 0.92 which shows that SCE and competitiveness are highly positively correlated.

SCE and Competitiveness Score of LSPs were compared by applying two tailed t-test
and formulating and testing 12 hypotheses H01-H012. The t-values were found to be
less than the tabulated value at 5% level of significance. All the hypotheses were
accepted which means that there exists no significant difference in the SCE as well as
Competitiveness of various LSPs.

H01: There is no significant difference in Supply Chain Effectiveness of Gati

Limited and Safe Express (Accepted)

H02: There is no significant difference in Supply Chain Effectiveness of Gati

Limited and Blue Dart (Accepted)

H03: There is no significant difference in Supply Chain Effectiveness of Gati

Ltd and DHL (Accepted)

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H04: There is no significant difference in Supply Chain Effectiveness of Safe
Express and Blue Dart. (Accepted)

H05: There is no significant difference in Supply Chain Effectiveness of Safe

Express and DHL (Accepted)

H06: There is no significant difference in Supply Chain Effectiveness of

DHL and Blue Dart. (Accepted)

H07: There is no significant difference in Competitiveness of Gati Limited

and Safe Express (Accepted)

H08: There is no significant difference in Competitiveness of Gati Limited

and Blue Dart (Accepted)

H09: There is no significant difference in Competitiveness of Gati Ltd and

DHL. (Accepted)

H010: There is no significant difference in Competitiveness of Safe Express

and Blue Dart. (Accepted)

H011: There is no significant difference in Competitiveness of Safe Express

and DHL. (Accepted)

H012: There is no significant difference in Competitiveness of DHL and Blue

Dart. (Accepted)

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 SAP-LAP analysis was carried out and presented in the following
Table
SAP-LAP Model for LSPs
Issues

Stages GATI SAFE BLUE DHL

EXPRESS DART
1. Being the oldest 1. Safe extension 1. The country's most 1. Products and
Situation logistics service Service is 'A reliable air and services are
provider enjoys a Network beyond the surface network offer customized.
It is the external
good reputation in Scheduled a pre-determined
and internal
the market. Network'. delivery schedule 2.Core product,
environment of
with close to 100% onboard
the organization
2. Understands 2. The concept is a accuracy. couriers, next-
and its
Indian Logistics very well thought flight-out and
performance
service Industry. over design, which 2. The extensive use charter options,
has come in after a of IT could plan its shippers
3. With the arrival lot of research production with interest
of competitors through the precision and avoid insurance,
facing tough Company owned expensive inventory global
competition. Center for build-up. Mail, logistic
Intelligence inventory
2. Some 3. It offers the management,
Research
representative country's most time and day
Excellence.
variables of comprehensive definite
external situation communications services.
3. Through
such as technology and
Safextension
competitive customer software to 3. Enjoys the
service, Safexpress
potential, support for managing gobal presence
has mapped and
economic policy, critical supply-chain of Network and
covered every
new technology, distribution.. able to deliver
square inch of the
and type of cost effective
country and can
supplies, services to to
deliver to every
infrastructure, and its customers.
possible place in
industry
India.
performance may
be improved upon.
4. The Company
3. Some important provides services to
variables of the the 680 districts in
internal situation the India.
are financial
performance, 5. Safextension
market share, enables the
corporate image, customer to plan the
resources, supplies even to the
capabilities and remotest locations
competencies, keeping in
plant and consideration the
machinery, core time when the
values, and so on. supplies would be
available with his
dealer/retailer.

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 1. A Team of 1. Offering the 1. Govt policies may 1. Offers cost
Actor not support the
highly motivated Scheduled Network, effective
team works to which allows the business to grow. services
Actor can be
achieve customers to plan 2. Special
individual 2. A tough
competitive his supplies. competition forces deliveries and
managers, or
advantage. towards offering the pickups, free
groups,
2. Safexpress minimal delivery lead Storage for
departments or
2. The HR policies follows a stringent time. three days, e-
class of actors
helps the transit-time com tools, e-
such as suppliers,
organization to schedule. billing, and key
competitors, 3. Use of IT,
retain the account desk.
government, 3. Good network to Community
performing
consultants, serve the customers Information Centers
employees. (CICs) and
management, in all parts of the
employees, etc. Computer Literacy
3. R & D team country. Programme (CLP)
always propose the help in obtaing the
customized 4. Not only the effectiveness
solutions. reach but even the
Transit Time has
been scheduled. We
take minimum time
in reaching the
scheduled
destination.

5. All our deliveries

are Time-definite.

1. Adopted to 1. The robust design 1.Computer and 1.Value added

Process helped in simplicity
improve upon communication services such
supply chain and hence these infrastructure have as: Insurance,
It is the overall Delivery Gateways
process, customer been set up in each trade services,
transformation are assigned the
interface process, block and are located pre-export
process that responsibility of
performance delivering to the in a Community and clearance
converts a set of
management identified Districts. Rural Development shipment
inputs into
process and building. handling,
outputs to
technology 2. Unlike other regular pickup
recreate the
transfer process. Service Providers, 2.In order to ensure service, late
situation Safexpress has uninterrupted pickups, early
2. Innovation made it possible for communication, the deliveries,
process, the lowest wing of Centers are coordination
the employees to
investment connected through a with third
identify the
process, Delivery Gateway satellite based parties for
distribution that would deliver computer onboard
process has been the consignment communication couriers, and
improved to booked by him for a network. next-flight-out
provide more Safextension and charter
flexibility. location. 3. 487 Community needs are
Information Centers introduced.
(CICs) have been set
up along with the 2.Core product,
course on Computer global mail,
Literacy Programme time and
(CLP) has been day definite
launched in almost services were
all the CIC centers introduced.

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SYNTHESIS
Learning 1. To find solutions from 1. Strong 1. Limitation 1.Regular pickup
the resources available. team should of e- network. service, data
Key issues explore news exchange
related to 2. In order to be and 2. The
process, late pickups,
situation, Competitive, technology innovative availability of
fund and early deliveries, on-
actor and services to
need to be adopted site support, e-com
customers. technology.
process tool, e-billing, special
New location
2. Synergy amongst team 3. The billing,
of services
members to be ensured.. may be added dedication of re-weight report, and
to the the daily shipment
2. User comfort is to be Scheduled development
e-reports.
kept at priority. Network from commissioner
time to time. s.
2. E-solutions,
3. System should be self
4.The easy delivery duty paid,
sustainable. 2. Saving of
the extra availability of neutral delivery
Service the services, drop
4. Technology policy is
Charge that information shipment, break bulk
missing. In its absence, the
company ends up as a mere the customer express, cross
pays for docking, one-stop
manufacturing facility.
delivering to clearance, and key
such account desk.
6. Core competencies have locations, an
not been identified. exercise
which is not a
7.Backward integration of very
high-tech or key component conscious
manufacturing by way of approach with
takeovers can help in most of the
improving technological Service
Providers.
health of the company.

8. Takeovers of high-tech
firms affect the innovation
culture adversely, and those
firms technologists lose
creativity.

9. The local company

draws benefit from the
global image of the
corporation and also can
rely on corporate
technological support when
needed.

10.The capability to cater to

local customers needs and
innovate on existing
technology requires
technology absorption to a
nearly complete level.

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 1.Technology Management 2. Developed 1.Centers are 1.Onsite mailroom
Action a transparent connected
at par with other staff, customization
management functions to system for through a of billing / operation /
rates of satellite based
be accomplished more IT solutions, key
transportation computer
professionally by communicatio account desk
. .
establishing technology n network. (dedicated customer
policy. 3. Avoid there service), and project
always 2.Enhanced management of
2. To Develop and deploy a remains Networking. customer solution.
core competence building confusion
agenda. with respect 3.Use of 2.Domestic service,
to the improved
mailroom service,
3.Strengthen perception Technologies.
and program
implementation of and reality
management of
backward integration giving rise
to solution
strategy by acquiring key implementation.
discomfort.
component 4. The location
manufacturing firms. of the last
Delivery
4. Develop in-house R&D Station of
for technology absorption different
so that further innovations Service
can be made. Providers
also raises
the issue of
establishing
the exact
distance to
the intended
location of
delivery and
hence there
is a
dilemma in
the mind of
the
customer.

3. The
company
ensured that
the Delivery
Gateways
have vehicles
in addition to
their routine
delivery
operations to
ensure the
committed
transit
schedule and
avoid any
service
related issues.

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 1.Development of 1 .Earlier the 1.Growth in 1. IT solutions
Perfor- service was the density of
sustainable competitive including EDI has to
mance advantage through core available to visitors been setup for billing,
only 3PL availing the
competence building. regular pickup and
customers. CICs services
. delivery, track and
However,
2.Higher customer trace/regular activity
now
satisfaction by way of 2.Boost to all- reporting, and same-
Safexpress
innovation to meet local has extended round day uplift.
needs. this service to development
all of its of these 5.Developed
3. Dependence on imported customers. backward
competencies to face
technology is minimized. region
through ICT. the completion.
2. Safexpress
started
operating s on 3.Increase in
the concept of substantive
'Hub & revenue.
Spoke' Model.
4.Time,
3. Safexpress money and
delivered effort saving .
goods to the
consignees on
the Scheduled
Network of
over 610
locations
through 245
Delivery
Gateways.

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5.2 Suggestions & Implications

During the study, a due care has been taken even though there are some limitations.
The study was conducted on a sample of 100 respondents because it was restricted to
Indore region only. The same study can be replicated in state or in multiple states.
Here in the study only the perception of consumers is taken, it is suggested that
internal employees of LSPs can also be considered for the study.

The competiveness of organizations may be improved by focussing upon the

following drivers which may also lead to increase shareholders and customer value.

Efficiency in Operations: Logistics companies need to be efficient in their

operations and mechanise operations to the extent possible so as to achieve cost
saving and reduce losses.
Commitment: Companies need to use metrics to measure on-time delivery, order
fulfilment, fill rate etc.
Trained Human Resources: There is a shortage of expertise in Transportation,
Logistics, Warehousing and Packaging Sector in India, due to the lack of
institutions providing training in logistics. Training of human resources in the
Transportation, Logistics, Warehousing and Packaging Sector is critical to
bridging the current gap. Resources need to be trained in different systems and
components used by companies dealing in logistics, to provide branded customer
service.
Addressing the Geographical Diversity of India: Varied and comprehensive
logistics expertise is required for each region and state to address the
geographical diversity of India. Logistics providers need to address this factor to
remain competitive.
Investment in Infrastructure and Technology and Capacity increases:
Investment in infrastructure and mechatronic warehouses with sophisticated
material handling equipment, racking and security systems are required to remain
competitive. Investments in technology to provide real time, online connectivity
by offering intelligent tracking of packages, pallets and vehicles are also required
to achieve competitiveness.

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5.3 Expected Benefits of Study
1. On the basis of findings of the research, the LSPs may concentrate upon the
ten factors explored in the study to evaluate themselves and can identify their
weak area on which organizations may work upon for improvements.

2. Society may be benefitted as they may understand that these are the
parameters to be considered for evaluating LSPs.

3. Researchers may use this study as the base study and they may undertake
similar study on a larger sample or in other industry.

4. More number of organized players (LSPs) may be encouraged by providing a

good infrastructure by the government. It may result into a fair competition.

5. Economies of scale may be introduced with the existence of proper Sales Tax
Structure.

6. Trust and awareness among Indian shippers with regard to outsourcing

logistics may be enhanced.

7. With the use of IT tools such as EDI. RFID, ERP, GIS and GPS the services
like on time delivery, transparency, visibility and real-time tracking ability
may be increased.

8. Indian shippers are gradually will become more aware of the benefits of
logistics outsourcing. They will realize that customer service and delivery
performance are equally important as cost to remain competitive in this global
economy.

9. With the emerging globalisation and integration of Indian market with the
global market, Indian companies are increasingly demanding services at par
with global standards. In thsi sitaution by offering quality services, LSPs may
have good opprtunity to enter into the untapped market.

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 10. LSPs may design, develop, provide and manage their customer-specific
requirements.

11. Indian LSPs may offer integrated global supply chain management, analysis,
re-engineering, freight payment and full seamless execution via a joint service
offerings.

5.4 Scope for Future Work

Present study leaves much of the scope for future work.
3. The study can be replicated for other LSPs
4. The study can also be replicated in India or any other country or in some states
5. Impact of e-business strategies on supply cahin effectiveness can be measured.
6. Detailed study can also be carried out to see the growth patern and opportunities
in various components of SCM such as Transportation, warehousing and Value
added activities.
7. Supply Chain Effectiveness of LSPs can also be measured by taking the view
points of its employees.

5.5 Conclusion

Changing business environment has pushed organizations in India to concentrate on

their core activities and offload a host of logistics functions to experts in the field.
Globally, the range of effective logistics outsourcing includes, apart from
transportation, warehousing and custom clearance a whole range of other activities
such as freight bill payments, auditing, contract manufacturing and assembly
operations, packaging and labeling, freight consolidation to name a few. Though the
usage of 3PL services reveals positive and significant impact on business
performance, third party logistics practices are still at a nascent stage in India.

Present study resulted in a Reliable (0.82) and Valid (0.905) Tool to measure Supply
Chain Effectiveness and Competitiveness of Logistics Service Providers.

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It explored 10 factors of Supply Chain Effectiveness namely Conformance to
Quality, Commitment, Information Adequacy & Availability, Concern,
Accuracy, Consistency, Technological Updation, Error Handling Efficiency,
Speed and Promptness.

Also it is found that Supply Chain Effectiveness as well as Competitiveness of

Gati, Safe Express, Blue Dart and DHL do not differ significantly from each other.

On the basis of SAP-LAP analysis, it is concluded that organizations should focus of

customer service delivery and take the maximum use of automated and semi
automated equipments in product handling. Use of technology such as ERP, RFID,
EDI should be used extensively for making their operations more effective so that
they can compete globally.

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