India Gears Up

When it comes to managing logistics, India has long been a place where backup plans have backup plans. The need for such redundancy is diminishing as government red tape clears, regulatory burdens are dismantled and new roads and communication infrastructure come online.

When Dan Ellens moved his wife and four children to India 10 years ago, everything was an ordeal. Infrastructure problems extended from the phone lines to the power grid. It normally took two years to get a not-very-reliable landline installed and activated, six weeks under a special, accelerated program for foreign businesses. Unplanned electricity outages totaled six hours or more each day, on top of planned power— outages that rotated around Bangalore in four-hour blocks of time.

"Imagine not being able to communicate with the other elements of your supply stream, not being able to find out what the status is," says Ellens. Not knowing if or for how long they would have power, it was impossible for anyone to make any reliable delivery commitments.

Dan Ellens is currently vice president and managing director of Webb Worldwide, which includes all of Jervis B. Webb Company's operations outside of the United States. The company's world headquarters is in Farmington Hills, Mich. (www.jervisbwebb.com).

When he moved to Bangalore to ramp up capacity and establish world-class quality standards there, the company had 12 employees. Today the privately held manufacturer of conveyor and other material handling equipment employs over 500 technical and production people in four factories, sales offices and customer sites across India. Ellens documented his family's two-year Indian odyssey in a book, A Time for India (Vantage Press, 2006).

Today, Ellens travels to India four to five times per year. Electric power is much more dependable in Bangalore now, he reports. Phone service is also more reliable on the strength of a stateof-the-art fiber-optic network completed in 2000. Regular phones as well as cell phones can be activated in one day. Although the country's roads are still congested and chaotic, the situation is vastly improved.

"In 1996 I don't think in Bangalore there was a single traffic signal. That's not a joke," he says. None of the roads had barriers down the center. Vehicles were supposed to keep to the right but everyone drove on a space-available basis. "People would be driving on both sides of the road in both directions all the time, everywhere."

Traveling the two-lane, potholed roads in the countryside between cities, Ellens describes the experience as a game of leapfrog and chicken, plagued by frequent breakdowns and accidents. Since Ellens first arrived in the country, the Indian government has constructed a network of four- and six-lane highways that connect Delhi, Mumbai, Kolkata, Chennai and other cities (see map on page 17). This has dramatically improved both speed and safety when driving within India, but the national highways only account for 2% of the country's road network.

While the new highways have made it easier for trucks and other vehicles to travel between regions, the last mile can be a challenge. To manage the congestion caused by passenger car traffic, many cities have designated certain times when trucks are allowed to enter.

"Last week when I was in India we were trying to get some containers to the customs area," says Ellens. "We missed our five o'clock deadline and all the trucks were held up until the next day. It sat alongside the road in a queue with all the other trucks that were waiting for their chance to drive into the city."

If it's not a truck curfew, there are always other logistics hiccups that have to be managed. When we talked to Ellens, one of Webb's factories was waiting for some containers to arrive so it could ship out 85 boxes of equipment for a certain project. The containers should have been delivered on Saturday but hadn't arrived by late Monday because of a strike, a common occurrence in India.

To help it manage such unpredictable events, the company relies on several freight forwarders. One of which is SEKO Worldwide (www.sekoworldwide.com). SEKO's office in Farmington Hills, Mich., serves as a single point of contact for coordinating some of Webb's global freight shipments out of India. For a recent project, it coordinated a shipment of conveyor and related equipment from Bangalore through the Port of Chennai and ultimately to a General Motors facility in San Luis Potosi in Central Mexico.

SEKO's local office in India cleared the containers through customs, arranged for their delivery to the port, created all documentation and bills of lading, which were sent to the final customer for review to make sure they were in compliance with Mexican import laws. All goods require approval from the Indian government before they can be shipped out of the country.

"Normally such goods would be subject to an export duty. However, because Webb is a major importer as well as exporter, they have credits that they can utilize to offset those costs," reports Cynthia Lewandowski, manager of special projects at SEKO's Farmington Hills office. The key when coordinating logistics in India, says Lewandowski, is to always be prepared for anything that might happen.

"For instance, there was a truckers strike a few weeks ago that impacted any movement out of Bangalore. That delayed containers through the export process because the containers couldn't be delivered to the customs warehouse for processing," she recalls. "We were able to reroute the transshipment point so that it did not lead to any delays in the overall transit time." SEKO had identified an alternative feeder vessel in advance that allowed the containers to arrive in time for transshipment in Shanghai.

Both Lewandowski and Ellens report that anyone managing logistics in India must be prepared to work through cultural differences. For example, doing something "right away" might mean within 15 minutes in the United States, compared to an hour or more in India.

"If you talked to people 10 years ago, the biggest challenge was all of the government red tape," Ellens says. But everyone was aware of such challenges, and simply accepted that nothing would go out on time or to plan. "A schedule was a plan but nobody could hold a schedule."

"Today is different. The people who have learned to deal with the uncertainties of their supply chains, and who have conquered [the issue of] repeatability of quality in India, are the people who are winning there," he says "I think we're one of those, but it's a challenge every day."

When asked to compare Webb's logistics challenges in India to China, where the company also has facilities, Ellens says the transportation infrastructure in China is much more advanced, which leads to a higher level of dependability, especially on the eastern coast. While that may mean that it's easier to export goods on time, it doesn't necessarily translate into better reliability for projects within the country.

"To execute a project in China, [it's] not quite as difficult as in India, but again there's a certain amount of tolerance and expectation for schedule variance," says Ellens.

With the improvements in communication and transportation infrastructure in India, such expectations are slowly changing. Prabhu Kumar divides the logistics challenges in India into three categories: procedural, infrastructure and professional. Kumar is manager of logistics for Rangsons Electronics in Mysore, India (www.rangsons.com). Rangsons is a contract electronics manufacturer that is both ISO 9001- and ISO 14001-certified.

"The procedural aspect was a major issue for a long, long time," he writes in an e-mail interview. "Following the [government's] liberalization policy, the procedural aspect has become much more simple with the application of IT-based solutions at all major ports and custom stations."

Kumar reports that while much progress has been made, the transportation infrastructure is still a huge issue that has a direct impact on the cost and speed of Indian supply chains. He writes that road and rail connectivity remains poor, but expresses hope that recent rule changes allowing direct foreign

investment in such infrastructure development may speed up construction for some projects. Still, politics and public opinion will hold up progress in many instances, he predicts.

On the issue of professionalism, he says expectations and performance have improved with the presence of many multinational logistics service providers, which are undergoing the same consolidation in India as elsewhere around the globe.

"In India logistics service operators show a great deal of flexibility in term of meeting customers' demands compared to the rigid, system-oriented approach in western world," he says, adding that making the impossible possible has almost become a specialty of these providers. In India today, just as it was a decade or more ago, that's a good skill to have.