3. The Relationship of Market Entry Strategy & Logistics in India All of the above Mix Import of unfinished product by freight forwarding to Finishing Centre, Customs Clearance, Delivery, Re-export by Freight Forwarding, Customs Clearance, Delivery Finishing of Product in India Import of raw materials by freight forwarding, Customs Clearance, Delivery to Manufacturing Facility, Warehousing, Distribution, Delivery, 3PL, 4PL Manufacture in India Freight Forwarding, Express Courier, Customs Clearance, Break-Bulk, Delivery, Fund Management, Customer Service, Order Taking, Warehousing, 3PL, 4PL Export direct to customer, distributor or reseller Types of Logistics Activities that are Outsourced Mode of Market Entry
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5. Networks of Relationships – Adaptable Model for Exporters Partner A Logistics Service Provider Partner B Importer Of Record (IOR) Partner C Distributor, Reseller or Customer Partner A, B or C can be Agent Exports Exports
6. Networks of Relationships – Adaptable Model for Exporters Channel of Distribution - Goods Channel of Distribution - Funds Mfr Logistics Partner IOR (Agent) Customer/ Reseller Mfr Logistics Partner IOR (Agent) Customer/ Reseller Govt. (Duties, Taxes) Profits ¥¥¥¥¥ (or Surplus after paying suppliers and taxes)
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10. Outsourcing Trends in India Added Value Returns / Services Transportation Procurement Express / Courier Customs Brokerage Warehousing Order Processing Inventory Management Invoicing Increasing Processing Content ( High Value Added ) Increasing Physical Delivery Content ( Low Value Added) ( Commodity Pricing ) Time Current Debates – 3PL Future Debates – 4 PL Predominantly Outsourced Source: MDI Study 2004
11. Outsourcing What are the major reasons for outsourcing of supply chain activities? Process Effectiveness 24% Lower Cost 27% Lack of Internal Capability 11% Investment Reasons 12% Strategic Reasons 26% Source: MDI Study 2004
12. India’s Economy & Logistics Cost India’s GDP is USD 691 billion and would touch USD 1.4 trillion in the next two decades (as per Goldman Sachs). Currently it is the 10 th largest economy India’s Logistics Spend is currently 13% compared to 8.7% of the US. Enough Scope to reduce the Logistics Spend which would require growth of Logistics Service Providers and improvement in Infrastructure!! Contribution to Work Force GDP Employment Agriculture 21% 60% Manufacturing 28% 17% Service 51% 23%
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