Changes in GST could create complete re engineering opportunitiesIndiaretailnews
Geodis is Europe's fourth biggest logistics operator; a Group of global dimension; delivering added value logistics solutions for part or all of the supply chain. Pres
IRN: Can you tell us a little bit about Geodis and its services? How long have you been in India?
Rene: We are an end-to-end supply chain solutions company. We first set up shop in India in 1998 through a joint venture with a local provider. Since then we have increased our stake in the venture to attain full ownership. Once we learnt about the local market, we decided to goit alonewith the permission of our JV partner. In the past 9 months we have rapidly expanded with 6 offices and 250 employees in 14 locations. Our products are based on local know-how. We do not believe in a one-size fits all approach and design solutions as per our customers' requirements.
IRN: How important is Retail to you as an industry sector?
Rajiv: We follow a vertical market approach to the supply chain. Sectors like pharmaceuticals and retail are very important to us as they are growing quickly in India. We hope to bring our success stories from Europe, Asia and the Americas to the Indian retail industry. While every problem is different, our approach of combining our international best practices with local insight helps us solve our customers' problems. We bring a holistic approach to the supply chain.
Mathieu: While we are an asset lean company, we are not bound by a certain philosophy.In cases wherewe find that there are no able partners to provide supply chain assets to our clients, we provide them ourselves. This is the case in some specialized supply chains where quality is extremely important, such as pharmaceuticals and fresh goods. Our investments are in technology, know-how and the physical assets that bring value to our group and our customers.
IRN: What are your challenges in India?
Mathieu: The gap between infrastructure and therapid growthof the middle class is leading to both opportunities and challenges. Expectations are high with penetration of TV, internet, etc. There are challenges in infrastructure andtaxation. These are gaps that need to be bridged. The solutions in India have to be flexible and low cost.
IRN: How does Geodis plan to address these challenges?
Mathieu: There is no set recipe. It all begins with listening to our customers. We have to look at how things are handled today - that is always the starting point - and see how we can improve things from there. Best practices are important but they have to capitalize on what's already out there. Labour intensive logistics is not bad if it can be controlled and monitored and is at a low cost. Technology is not always the answer - sometimes it can add unnecessary cost. The important thing is that one has to be flexible - one size does not fit all. In terms of our competition, there are 2 kinds of players. There are local competitors who know the market and there are international players who have the capital, the IT tools and the global network. We believe our differentiator is that we combine both aspects. We don't want to go in blind-folded; we utilize our base of experience, but it all begins with listening to our customers.
Rene: Let me ask you this, what do your readers think about the proposed changes in GST?
IRN: What we are hearing is that everyone agrees that simplification of process and bureaucracy is a good thing - there's unanimity on that. However what the exact rate should be is a subject of much debate.
Rene: I agree - I think it could potentially throw up complete re-engineering opportunities. There might be a cost benefit in having fewer central warehouses as opposed to in each state as it is today. Or perhaps the fragmented model at low cost will continue to be the way - but it will throw up several interesting possibilities. Real estate costs might dictate warehouses in remote areas and eventually the costs will balance out.
Mathieu: Uniformization could help streamline processes. However, one change might be that consumers might pay slightly more for quality and reliability.
IRN: But do you think that in fresh produce atleast, the reduction of wastage because of better supply chain management will translate to cost benefits for the end consumer?
Mathieu: Traditionally fresh produce is bought by consumers from the local market. If supply chain benefits translate to reduced wastage, it will also mean an increased supply and potential issues for the retailer in terms of managing freshness at the store. A rotten tomato at the farm could instead get translated into a rotten tomato at the store. The entire cold chain needs to be optimized to ensure low costs and high quality. When it's the cold chain, we are talking aboutfrozen foods which are below zero, zero to three, three to five degrees; trucks can be compartmentalized to have 3 zones to give flexibility in cold chain transportation. All these changes will take time. Retailers and service providers both have to grow and meet customer needs.
Rene: In retail of food and daily non-food - typically done at hypermarkets and convenience stores - the supply chain requirements are very different. This requires continuous feeds. Different solutions are required for different types of retail. Also, Indian consumers are changing in terms of their shopping behaviour - instead of the occasional ordering, more and more consumers will start planning their weekly or monthly shopping trips.
Mathieu: What we have noticed in other Asian markets like China and South Korea is that retailers like Carrefour, Walmart and Tesco that have provided consumers with the right offer at the right price in a clean environment with efficient service have caused a quick transition in consumer behaviour towards organized retail. One thing is certain - change will be fast. Retailers will be forced to adapt to consumer needs and service providers like us will help them do that quickly. We can provide traceability in the supply chain that will become critical for retailers.
IRN: Can you give an example of an innovation or best practice that you have provided your clients?
Rajiv: An example of one of our clients is a global leader in the automotive business. We along with TNT helped optimize their supply chain, by reducing the number of warehouses, unlocking hidden cash and providing visibility from source to store. We rationalized the multiple providers they were using and helped streamline the supply chain. What was innovative about our collaboration was the speed and efficiency with which we interfaced their system with our own while proving a speedy efficient service at a minimum cost. Another concept that we are bringing to our clients in India is sustainability, which will become important in India very soon.
Mathieu: Part of the consumer's judgement of retailers is going to bebased on factors such assustainability. The retailers will be forced to address such issues. Geodis can help by providing solutions that pollute less and still transport goods quickly and efficiently.
Rene: In about 5 years time, it is not far-fetched to imagine that the Indian government may tax those who use polluting modes of transport as opposed to ones that don't.
