In a matrix structure, responsibility for the products goes up and down one depending on the product’s dimension such as pricing, distribution and the target market. This enables the business to use its marketing resources more efficiently, resulting in more cost and time efficient marketing efforts.  This leaves most managers with a dual reporting line: to the head of their product division on the one hand, and to the head of their geographical market on the other. Regardless of the potential confusion, the Matrix structure creates vibrancy. Matrix management was enormously popular in the 1970s and 1980s. Famous company like Philips, the Dutch multinational electronics company, was the first company to set up a matrix structure after the Second World War. It had national organisations (NOs) and product divisions (PDs), and for a while they operated successfully as a network. The network was held together by a number of coordinating committees, which resolved any conflict between the two.

The possibility of changing the organizational structure came after some years, at a point when the company took little time to ponder over the profit and loss account. Who was to be held accountable for it? At first, the answer was both the NOs and the PDs. But this was unacceptable, and the NOs ultimately got the upper hand. Philips’s PDs did not like that, and they fought back. In the 1990s, when the company was not doing so well, its organisational structure was completely refurbished. A few powerful PDs were given worldwide responsibility for the profit and loss account, and the NOs became subservient to them.

Another example is of Digital Equipment Corporation founder Ken Oslen who popularized Matrix structure Management.  There was virtually no organizational structure in the early years of the company’s existence. The company was founded in 1957 with a $70,000 loan; it became America’s second-largest computer company, after IBM. Its initial major impact was in minicomputers, but its later-introduced VAX and Alpha systems are still notable. Olsen wanted to create a setting like that of the research labs at Massachusetts Institute of Technology (MIT), where he was educated. In fact, Universities adopt Matrix structure because it is most suited to them. Also initially Digital did not lease its computers. It did not create software for its products or offer maintenance services. This policy cut down on the company’s costs, which in turn caused its products to be cheaper than those of their competitors. By 1964 the company required some organizational structure, as various engineering groups were not coordinating well with other functions of the company. Olsen structured the company in a matrix framework, which involved product line managers. Each manager had complete responsibility for a product line, from conceptualization to sales, and was accountable for its performance. Using this structure, the company had developed over twenty new product lines by the mid-1970s. The company got acquired by Compaq in 1998. However, Compaq had little idea what to do with its acquisitions, and soon found itself in financial difficulty of its own. The company subsequently merged with Hewlett Packard (HP) in May 2002. Some of DEC’s product lines were produced under the HP name till end of the decade.

ABB (ASEA Brown Boveri) is a Swedish-Swiss multinational corporation headquartered in Zurich, Switzerland, operating mainly in robotics, power, heavy electrical equipments, and automation technology areas. By creating a matrix organizational structure and establishing global and regional management, ABB earned many benefits. The operations of frontline operating companies were integrated with ABB’s worldwide operations through the matrix. As a result, these companies got an international identity, and their exports increased. The companies got access to the worldwide distribution network of ABB, through the matrix structure. For example, ABB Stromberg (Stromberg before restructuring), a Finland-based company, which manufactured electric drives, transformers, circuit breakers, generators, transformers, etc. was not financially performing well, despite its wide range of products, as all its products were not of international quality standards. ABB’s local operations were organized within the framework of a two-dimensional matrix. ABB’s matrix structure evolved over time it has been reorganized several times in search of the best organizational structure. This is a good example of the emphasis placed on structure as a solution to matrix issues. Organizational Structure plays a vital role in synergising its resources and using people’s skill set.

Using Matrix structure has its advantages and disadvantages. In an article in Harvard Business Review in 1990, Christopher Bartlett and Sumantra Ghoshal suggested that the problems faced especially by multinationals were of dual reporting which leads to conflict and uncertainty. The proliferation of multiple channels creates informational log-jams as a creation of committees and its reporting bog down the organisation. Responsibilities of managers overlap; they report to more heads and this overlapping produce clashes and accountability becomes unclear. MNCs are separated by barriers such as distance, language, time and culture. These realities make nearly impossible to clarify the confusion and resolve the conflicts.

Barlett and Ghoshal upheld the fact in their article that matrix management had been part of an attempt by companies to create complicated structures that matched their increasingly complicated strategies. They felt it focused only on the anatomy (framework) of the organisation. It ignored the physiology (the systems that allow information to flow in and around the organisation) and the psychology (the philosophy – shared norms, values and beliefs of the organisation’s managers).

The matrix organization structure is a blend of the projectized organization and functional organization. Projectized organization which means the project manager has full power and authority over resources to be utilized in the project. He controls the budget, resources, and work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a different engineering managers or a project manager while working on that project. Therefore, each engineer may have to work under several managers to get his or her job done.

Quite a lot of early literature on the matrix comes from the field of cross functional project management where matrices are described as strong, medium or weak depending on the level of power of the project manager. While some form of matrix management has become fairly common in certain industries, particularly among companies that have multiple business units and international operations, upon closer inspection, different organizations implement a matrix structure in different ways to support their needs.

Resources can be used efficiently in Matrix structure, since experts and equipment can be shared across projects. Products and projects are formally coordinated across functional departments. Information flows both across and up through the organization. Clear articulation of project objectives is possible. It offers workable way of integrating project objectives with functional objectives. Human resources can be used efficiently.

Matrix structure remained in fashion till 1980s but in terms of work flow and reporting they have negative consequences. Individuals need to define and redefine their roles in the organization as they are interdependent. Accountability becomes horizontal instead of vertical. Hence it appears like a diluted structure.

A group of closely related products constitutes a Product Line. Managing supple product lines involves more than just complementing resources for existing products.  Product managers must help maintain a full pipeline of new products and product enhancements. For Product managers managing various product lines and the overall product mix of the company requires resourcefulness and watchful market intelligence. Product management raises complex issues and to solve those issues the product managers need to juggle the product portfolio wisely.

Hindustan Unilever (HUL) the leader of consumer care products juggles its detergent product line. To elude competition for its premium brand ‘Surf’ from brands like Ghari, Sasa, Point etc HUL has down stretched its detergent line downwards with low priced detergents such as Wheel.  For many companies, this part of the process is driven internally, while focusing purely on allocating resources, concentrating on ROI, and risk/return.  Juggling with product mix needs constant thinking, re-thinking and a lot of market information. Companies need to strategies their product offerings while internally shifting their efforts on product positioning.

One of the many reasons Google consistently brings novel, world-changing products to market is because of their collaborative efforts in Product Management. They are constantly focusing on the future and their team works closely with creative and industrious technicians and engineers to design and develop technologies that improve access to the enormous world information. Google takes the responsibility of guiding its customers right from educating them. Google believes that innovation comes from anywhere; it can come from the top down as well as bottom up, and in the places you least expect. The focus is always on the user.  To give another example of how Google keeps inventing – its engineers came up with the idea of driverless cars after seeing that millions of traffic deaths come from human error. Google already had all the building blocks in place to build a self-driving car – Google Maps, Google Earth, and Street View cars. Working with an artificial intelligence team at Stanford University, Google engineers have produced experimental cars that now have travelled to Lake Tahoe and back to the Bay Area and have given the blind more independence by driving them to shop and carry out errands.

Appraisal of each product line is non-stop process in progressive organizations.  These organizations are high on market intelligence. A constant monitoring of the product line helps organizations   in line stretching, line pruning, line filling, brand/line extensions, brand rejuvenations, brand re-launches, portfolio restructuring, product quality up-gradation, packaging innovation etc.

All said and done, when managing ideas for building an expandable portfolio project and products, it’s difficult to know which opportunities show true promise and which don’t. That’s why it’s imperative that product portfolio management be integral with the tools that product development teams use to collaboratively create products and execute the project plan.

One of the major challenges Indian pharma companies are facing today is of handling diverse product lines; the reason why they are unable to handle flexibility  in diverse product lines is that their profit margins do not reflect the constantly increasing investment in drug development. Frost & Sullivan the famous market research company reports that the low returns on investment coupled with various regulatory issues account for the declining focus on research and innovation in the pharmaceutical industry in India.

Since product line involves a collection of related products, sometimes, it may so happen that a particular product line adversely affect the sales of a product in the line, instead of being complimentary to it. HUL controls about 60 per cent of the soaps in the Indian market with brands including Lifebuoy, Lux, Rexona, Breeze, Jai, Moti, Hamam, Liril, Breeze, Dove, and Pears. These brands compete with one another on the shelves creating brand cannibalization. Many of these take thrashing from their sibling brands.

Line filling

In today’s markets, various products ranged from tires to clothes are becoming increasingly value centered. More and more buyers are turning from status and luxury to lower-cost brands that deliver satisfactory quality and features. To fight this trend or to take advantage of it, firms are offering minor versions of their traditional brand-product package. Firms like HUL, P&G, Dabur, and Godrej everybody is forced to offer differently priced products – so their product lines are filled with products that suits peach pocket in each segment.

Cannibalization starts as soon as the consumer exhibits brand switching behavior or even before that. It starts manifesting itself when the manufacturer asks the retailer to stock the new product. The new product launch gets a priority and is at times stocked even at the expense of other brands. But, companies need to take balanced view on cannibalization while line filling.

Firms like Videocon have done line filling fruitfully to plug certain gaps in a range. The intention of the firm was to be seen as ‘full line’ company and customers find a full basket of the products under one roof. In its product line of room air conditioners Videocon initially had just two or three models. But within two year of entry, Videocon introduced a dozen of models. The offers included three models in split ACs, two models in window ACs with rotary compressor and six models in split ACs with reciprocity compressor. By doing this Videocon rapidly improved its market standing and rose from the position of new entrant to a company offering relatively full line products.

Line pruning

Global marketer P&G feels it is better to get rid of complexities and maintain simpler lines. The company firmly believes that whenever it can apply an existing product formula, or package to a new market, it can save a lot of resources and can also move faster. It is famous that this company in 1990s slashed the number of items to almost half: fewer shapes, fewer sizes and package formulae. P&G had thirty one versions of Head & Shoulder shampoo and fifty two versions of Crest tooth paste. The Head & Shoulder brand was pruned to less than half, to 15 variants. It went ahead and pruned its famous Crest toothpaste brand also substantially.

 In Japan, P&G cut the number of Max Factor brand of mascara and foundation items from 1,385 was slashed to 828; the cut took place within just one year, but the sales went up by 6%. P&G also withdrew brands from the market in which it could not be leaders.  In the product line of soaps and cleaning materials, it withdrew 11 brands, like Lest Household cleaner and Lava soap. P&G’s pruning exercise is an excellent example of harmonizing the product lines.

 Stretching down the line

I want explain this conceptby giving a brilliant example of TTK Group. Sometimes,when a company initially takes its position in the high price-slot segment stretches its product line downwards by offering lower-priced products in the same line for lower markets.  For the TTK group, pressure cookers are one of its major product lines their brand ‘Prestige’ is one of the leading pressure cookers in the market. Prestige enjoyed 26% market share in the 1990s. Its major competitor being Hawkins, TTK decided to expand the reach of Prestige to the lower end markets also. The company launched Prestige Popular. It was designed as an economy model and offered to the price sensitive segment. Through this down stretching Prestige increased its market share sizably.

 One more example of stretching down the line is of Parker pens. It was operating in the high price slot of the pen market for several decades. To reach the mass market Parker pens decided to down stretch its line by offering low priced models of pens which the masses could afford. This strategy worked wonders for the pen company it has now become a house-hold name.

 Stretching up the line

This happenswhen acompany is initially positioned in the lower-end of markets and decides to pull its product line by offering high-priced products for top slots. This is called stretching up. The firm moves up its original posture and makes higher priced offers from its basket. Earlier, Philips was synonymous with low-priced two-in-ones, with its wide offers in the Rs.1, 000-2,000 price range. The company soon found that to become worthwhile player in the market it had to stretch up its line for the richer customers. Philips stretched up the line by bringing its powerhouserange in 1991 which ranged between Rs.6,000 – Rs.9,000. In 1993, Philips also climbed the ladder by offering power play range to cater to the top and middle ends of the market. The Power Play priced from Rs.15,000 – Rs.25,000 Philips doubled its profits by stretching up the line and became a household name for the higher end markets too.     

Companies should rationally position and re-position product conflicts within the product line. The marketing strategy of a firm
can place products in a product line in such a way that the products can co-exist, grow, complimenting the streak. A company can add new brands, prune some brands, and rejuvenate some brands by stretching the product line upwards or downwards. A marketing savvy organization can come up with new parallel lines.   The results of efficient product lines depend on formulating elastic lines depending on internal and external environment conditions. The parameters of the product line such as the length, width and depth speaks a lot about the firm’s business policy. Just a piece of advice that the leaner the line the better it is to handle in crisis. To conclude, successful organizations are customer-sensitive and flexible to change.

In today’s over competitive business world managing the firm’s supply chain brilliantly is one of the strategic responsibilities. A well designed supple supply chain can be firm’s competitive advantage and it can support firm’s value chain. Today companies are under increasing pressure to reach out to their far-flung markets. Buyers want the products and services available to them as swiftly as possible; therefore companies are pressed to deliver when customers are ready to buy. Organizations are taking inputs directly from their customers. Customers are also in constant touch with firms; they are directing the firm’s supply chain right from what goes in the product, timing of the launch, packaging, price and delivery. And therefore, in this emerging world of demand-driven markets the supply chain plays a crucial role. It must not only be flexible and cost-effective, it must be able to respond directly to customer’s call.

Necessity is the mother of inventions. When people are hard pressed for finding solutions to their problems, they will figure out a ways to find them. This means people think laterally when they have to struggle, when they need to fight odds, when they are pushed to the corners. Since the beginning of human life, enormous changes around us have taken us to a path of scientific progress, which in turn has benefited mankind in a number of ways. In every era, men invented many things in order to cater to their rising needs. I would like to showcase in article how some great companies have brought in innovations and strengthened their supply chains.

This article is based upon pure desk research. The desk research technique is mainly acquired by sitting at a desk, using secondary data from various sources such as internet, newspapers, journals and magazines. My 20 years industry experience in the field of sales and marketing and later as my research in Marketing, has taught me that if a products however good it is, if not available when customers wants it can lose out its preference forever. 

In a news item published in Economic Times dtd 8^th June 2011, the former Finance minister Pranab Mukherjee asked chief ministers of all states in India to ‘urgently’ look into the supply chain of items and remove the bottlenecks that are driving food inflation in the country. In a letter to all the chief ministers, Mukherjee said particular attention should be paid to the local factors that are widening the gap between the wholesale and retail prices. The Food Corporation of India recently reworked its supply-chain management. It took help of some leading consultants to reduce the bottlenecks. The nodal agency that procures and distributes food grains across the country annually buys 250 lakh tones of wheat and 300 lakh tones of rice. In 2010-11, it lost a whooping sum Rs 482 crore due to lack of storage facility and constant transiting of food grains.

Food Corporation of India(FCI) uses linear programming technique to manage movement of stocks, this technique has a limited use as all loading railheads and recipient railheads cannot handle full rakes. At times, demands of nearby railheads are combined so that a full rake is used to reduce operational cost and time. Food grains are transported from surplus regions, such as Punjab, Haryana, Andhra Pradesh, Madhya Pradesh and Chhattisgarh, to deficit regions. A detailed monthly movement plan is charted out to help the Railways in allotting rakes and ensuring smooth movement of food grains. In September 2010, the Supreme Court asked the state-owned Food Corp. of India (FCI) to expand and modernize its distribution infrastructure, and noted that 50,000 tons of wheat had already worsened. The case brought renewed focus on the interlinked challenges of feeding India’s population and overhauling its food grain procurement, storage and distribution infrastructure.

According to West Bengal Governor, Mr. M. K.Narayanan, better supply chain management will help reduce inflations in the price of agro-products. Due to lack of proper governance of supply chain there is a huge wastage of food grains in India.

While on one hand when we see the Government failing to take the right measures to improve the supply chains, the private sector is using innovative techniques to combat bottlenecks in supply chain. Companies like Hindustan Unilever, ITC, and Godrej support their marketing channels such as wholesalers, retailers, stockiest for effective sales to nook and corners of the nation. In rural India mandis are emerging as the target centers for direct sales. BPCL (Bharat Petroleum) has introduced specially designed Rural Marketing Vehicle, which moved from villages to villages to fill gas cylinders on spot.

Another innovative distribution model that merits mention is the HLL’s Shakti project, which connects Self-Help Groups (SHGs) with business opportunities. Hindustan Lever promotes and uses the SHGs network present in the villages for increasing its sales in the rural areas. The SHGs are offered chance to become company’s local small scale distributor in the rural areas. The groups, typically of 15 to 20 people, buy a small stock of items such as soap, detergent or shampoos and then sell directly to consumers in their homes. The model is a win-win for the company and the village SHGs.

A supply chain that responds directly to customer needs may look quite different from the supply chains of the past. For one reason that today firms rank distribution function at the top of the value chain. Supply chains need some of the following characteristics

Visibility

Here visibility means an array of record and movement of goods with the right processes. The recording of the movement, events, and patterns that enable the automation allow accurate expectedness, this also enhances dynamic responses of all stakeholders in the business. Today supply chain professionals are insisting on the need for more visibility. After re-inventing the category of express parcel shipments, FedEx went a step further in the mid-1980s with its development of a new computerized tracking system that provided near real-time information about package delivery. Outfitting drivers with small handheld computers for scanning pick-ups and deliveries, a shipment’s status was available end to end. The Fedex system really drove the idea that information of the package movement was as important as the package itself. I must say that Fedex laid foundation of our current supply chain visibility concepts.

Adaptability

The supply chain professionals are realizing that the emerging markets in the globe are driven by middle class buyers who are cost conscious, always eager and demanding. Hence, supply chains need to adapt to the costing factor of firms. In 1982, 3M, like every other company, had to leave transportation decisions to each plant and distribution center. Roy Mayeske, at that time the Executive Director of 3M Transportation, got the idea to centralize transportation planning to look for network synergies. 3M took mainframe software being used by Schneider National – one of its major carriers and modified it to be workable from a shipper perspective. This enabled 3M to plan shipments, logical routing, curtail time gaps and intervals. Roy Mayeske thus brough a huge change to the company’s supply chain. Costs were cut, time was saved and most important damages and wastes saved.

Improved communication

A dynamic supply chain needs to respond to rapid reactions in crisis by keeping the response time short. Progressive companies in the world recognize importance of efficient communication and they take help of social media. Social media tools, like blogs, can be more effective in encouraging and idea sharing. TEVA Pharmaceuticals – a Canadian Pharma company has recognized that the speed of supply chain is about people talking to people. TEVA has beautifully harnessed the power of social media to reduce barriers in communication between internal functional groups and external functional group. Their VP –Supply Chain rests his decision by communicating with channels, suppliers, customers etc on social media sites. He says that social media has resulted in a “spontaneous association” between him and their customers.

Collaborating supply chain with value chain of the firm

Firms recognize these days that they need to team up with the right supply chain partner to enhance their value chain. Partnering with a good logistic firm for the movement of supply chain improves sales forecasting of the firm by getting closer to the points of demand and methodical supply. It strengthens strategic relationships with suppliers and marketing channels, enhances sales and operations planning to achieve corporate goals. An automated monitoring makes the supply chain hassle free.

Square D, a division of Schneider Electric, which is based in Palatine, Illinois, provides a good example of a nonlinear development flow in the electrical controls and automation management industry. Demand-driven innovation is an important part of Square D’s business, and the company actively engages its customers in developing new products. But instead of simply submitting specs for a desired product and waiting for Square D to produce it, customers collaborate online or on the phone with order engineers. Customers are allowed to talk to designers to suggest their own ideas or push back and forth on features. This however does not   create hurdles in the manufacturing process. The nonlinear program in their production process has made back-and-forth process easier, richer, and faster than it would be otherwise. The organization is always ready for innovating new designs of switches and circuit breakers. The supply chain managers are ready to plan ahead at the early stages of product development. Square D never compromises on the standard of components. Everything on the shop floor goes from step to step crisply. The overall result of Square D’s nonlinear flow helps the company a 30 percent reduction in order-taking cycle times.

Wal-Mart’s innovation in supply chain

In its persistent quest for low consumer prices, Wal-Mart embraced technology to become an innovator in the way stores track inventory and restock their shelves, cutting costs and passing the savings along to customers. In the process the company became synonymous with the concept of successful supply chain management. Through a combination of distribution practices, truck fleet management and technological innovations Wal-Mart became the model of supply chain efficiency. Wal-Mart’s core competency lies in its supply chain management. Wal-Mart showed the world that Supply chain management is moving the right items to the right customer at the right time by the most efficient means. In the 1980s Wal-Mart began working directly with manufacturers to cut costs; it went cutting costs because of eliminating the intermediaries.   From 1993 to 2001, Wal-Mart grew from doing $1 billion in business a week to $1 billion every 36 hours.

Under a Wal-Mart’s supply chain initiative called VMI (vendor managed inventory) manufacturers becomes responsible for sending the supplies directly to Wal-Mart’s warehouses. As a result, Wal-Mart is assured of 100 percent order fulfillment on merchandise.

Wal-Mart developed the concept of “cross docking,” or direct transfers from inbound or outbound truck trailers without extra storage. The company’s truck fleet and corps of non-unionized drivers continuously deliver goods to distribution centers (located an average 130 miles from the store), where they are stored, repackaged and distributed without sitting in inventory. Goods will cross from one loading dock to another, usually in 24 hours or less, and company trucks that would otherwise return empty “back haul” unsold merchandise. Collaboration Companies within the supply chain synchronize their demand projections under a collaborative planning, forecasting and replenishment scheme, and every link in the chain is connected through technology that includes a central database, store-level point-of-sale systems and a satellite network.

Wal-Mart is the first company in the world to implement ‘Universal Product Code bar codes’.  Through the bar codes store level information can be immediately collected and analyzed. Through a global satellite system the retail link is connected to analysts who forecast supplier demands effectively. In recent years, Wal-Mart has used radio frequency identification tags (RFID), which use numerical codes that can be scanned from a distance to track pallets of merchandise moving along the supply chain. Even more recently the company has begun using smart tags, read by a handheld scanner, that allow employees to quickly learn which items need to be restored so that shelves are consistently stocked and inventory can be closely watched. Wal-Mart reaps the benefits of its supply chain management by saving time, faster inventory turnover, increased warehouse space and accurate forecasting of inventory levels.

In another case from close home – in remote districts like Gadag chemists had to ensure that medicines are stocked well and can be offered during emergencies. Unfortunately, chemists such as Maranabasari had to wait for an emergency before reaching out to a distributor for life saving drugs, losing precious many hours for medicines to arrive.

Maranabasari found answers to his dilemma in the US army’s Global Combat Support System (GCSS); this is an Enterprise Resource Planning (ERP) commercial off-the-shelf application capable of managing a large volume of business transactions within a single database. It was was originally developed by Anup Akkihal, an Indian born in West Virginia. Maranabasari used it with several other chemists in the district, by paying Rs 100 every month for a software solution that tracks demand, sales and movement of drugs – all on a simple to use handset that does not need any fancy technology. Of course, the chemists had a tough time learning the usage of this technology.  

Akkihal, a post graduate in logistics from the Massachusetts Institute of Technology, found his inspiration to develop the software while working on a US Army project with defense contractor Northrop Grumman during July 2006. While working for the US defense, Akkihal realized that back home this technique could be used for the chemists’ solution of stocking life saving drugs. He along with his team, worked with local chemists like Maranabasari to develop a solution that could solve their problems in a simple, effective way. The solution developed by Akkihal, who sells the software through his firm Logistimo, is now gaining grip and holds potential for solving supply chain management problems faced by many village entrepreneurs in the country, experts say. Logistimo’s solution is finding takers in remote villages and districts of Africa.

Today, the World Health Organization (WHO) uses Logistimo’s technology to track the vaccines for the immunization drive in Tunisia since most regions there are not well connected to internet. It seems in past pipelines were used to send vaccines to remote villages; it was difficult to understand where the vaccines were. Kudos to Logistimo! It works on simple technology and not expensive.

3 PL & 4 PL: Indian firms have started using Third Party Logistics (3PL). Third party logistics providers typically specialized in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials. These companies offer services that can allow businesses to outsource part or the entire supply chain management function.  Many 3PL companies offer a wide range of services including; inbound freight, freight consolidation, warehousing, distribution, order fulfillment and outbound freight. Firms opt for 3PL so that they can operate without much baggage; they become leaner by reducing assets and allowing focus on core business processes.

Globally the growth of 3PL companies began back in the 1980’s when businesses began to look for new ways in which they could outsource logistics functions and concentrate on their core business. The increased awareness and usage of information technology due to revolution in IT services gave way to 3PL firms. One such firm which took the lead in 3PL revolution is Fedex.  Its overnight delivery services changed the logistics format for plentiful firms all over the world. It offered business operations the technique of just-in-time techniques which in turn allowed firms to save investments on warehouses, usage of space and reduce overall business cost. 

3PL industries originated in India after 1990.  The industry was pioneered by global logistics majors as a part of expanding these services to the Indian subsidiaries of multinational companies in automobile, electronics and FMCG sectors. Indian subsidiaries of multinational companies in these sectors took cue from their parent companies and began to outsource a share of their logistics functions to these specialist service providers. Though insignificant in the first few years, Indian 3PL industry is experiencing a rapid growth after year 2000. The number of participants in this industry had grown to be more than 400 by year 2005. The Indian 3PL industry can be divided into three distinct tiers – National Major 3PL companies with nationwide presence, Regional 3PL companies with strong presence in one or two regions, and Small Remote 3PL companies

4PL business is still at budding stage in India; they provide a wide range of value-added services that can range from business process analysis to hand work such as assembly, packaging and configuration besides the core activities of logistics.  4PL companies are hired by firms which engage services of 3PL.  The term “4PL” was actually coined by the consulting group Accenture. In fact, they also hold the trademark to the name 4PL. Accenture defines a 4PL in the following manner: “A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design build and run comprehensive supply chain solutions.”

In 4PL, logistics is controlled by a service provider that does not own the assets to carry out logistics activities but outsources to subcontractors, the 3PL. Some large Indian firms in various sectors have invested heavily on logistics whereas sectors such as cement, FMCG, electronics, consumer durables, automobiles, pharma, food processing and the colour & paint sectors are among the chosen sectors which rely heavily on 3PL & 4PL logistics. While multinational logistics firms such as SembCorp, Exel and BAX, have made way into Indian lands couple of Indian firms such as GATI and TVS Logistics are also slowly changing the way products and materials are distributed.

Globally most of the Fortune 500 companies have opted out hiring services of 4PL.  In India, IBM, Dell, Nike and Philips have handed over their logistics operations to 4PLs. Much of the 4PL service includes execution of activities directly or through 3PL service providers. The logistics activities and solutions have started covering compilations of orders, planning the dispatch, physical transportation, in-transit monitoring, confirmation of deliveries, payment to be made to the transporters plus providing MIS to the client and the entire gamut of physical distribution function.

Geographic multiplicity of India needs varied logistics expertise as each region has its own troubles. Logistics posses a main challenge in the growing Indian trade. Along with diverse geographic scenario h a diverse cultural and regional buyer behavior has made logistics operations complicated in India. The buyer behavior in each state varies from the other, coupled with the geographical diversity of each state. Each state requires a tailor-made logistics model. Today, we require multiple solutions logistics companies to suit the nationwide logistics needs. Hope the administration is hearing.

India faces infrastructure limitations which in turn challenges the logistic company’s work also. The congested roadways and heaving ports are resulting in significant delay in movement of goods, affect the performance of 3PL service providers; similarly, lack of sufficient warehousing and specialized storage facilities beyond major cities of the country result in 3PL service providers to restrain from offering warehousing services across the country, hence resulting in their failure to become the complete logistics service providers for clients. Perhaps, allowing these firms to construct their own warehousing facilities in strategic geographic locations and specific regions, could address this problem. If this strategy is adopted by the government then such geographic locations could be designated has warehousing hubs. Over and above, complex tax structures and corruption coupled with erratic bureaucratic control are some other hassles faced by logistics service providers in providing the best of logistics solutions for their clients.

Increased Use of Supply Chain Consulting

Inventory is usually an extremely important aspect of operational costs for many companies and must be managed with the most cost-efficient method possible in order to see profits. Firms today face rough challenges such as whether the firm has supply chain visibility; this structural issue includes the complexity of the product, the nature of the technology the firm uses and at what degree the brand loses its uniqueness and faces challenge of commoditization at each point in the supply network. The second challenge being how much visibility is good visibility; firms are cautious about their supply chain details as these details are of strategic importance. The information can be misused to sabotage a firm’s business plans, and its existence itself. The third challenge being how does a firm behave when it confronts risk?  Firms need to juggle with market changes, new product launches and specific distribution for them, handling marketing channels with a difference for new products and existing channels for older products with a different treatment, sourcing, new acquisitions, credit availability, protecting intellectual property, R&D and its results, shipment security, maintaining cordial relations with suppliers and distributors etc. Supply chains must periodically be assessed and redesigned in response to market changes. In addition, supply chain risks must be identified and quantified.

Firms depend heavily on supply chain consultants these days. The greatest skill of a supply chain consultant is normally the ability to immediately assess inventory costs and put plans in motion to reduce their impact. Supply chain experts typically try to match an inventory management approach that meets the company’s market, industry, customers and its business philosophy. They provide companies with the tools needed to lower their month-to-month carrying charges of inventory. A supply chain consultant may have a degree in logistics or supply chain management or may simply have enough years of experience within logistics and management to be considered an expert in the field. I see a great future for careers in supply chain as managing supply chain professionally is need of the hour!