NAME: SMS ID: BATCH: NAME OF THE CENTER: NAME OF THE CASE STUDY: SECTOR OF FOCUS:

CHETANA JAIN 103935 PGCBM15 HYDERABAD- BANJARA HILLS GATI CARGO LOGISTICS AND SUPPLY CHAIN MANAGEMENT

NAME OF THE FACULTY:

Dr.T.A.S. VIJAY RAGHAVAN

Caring for our customers precious objects with Domino Discipline, we promise to stay Ahead in reach in service quality, wide network, technology, automation and in being high caliber Gatiites and responsible business partners.

India is being touted as the land of opportunity for logistics service providers all over the world. India has one of the worlds largest road networks, with a total length of 3.3 million kilometers. But much of this network does not meet Western standards. For instance, a truck takes five to six days to cover the 2,061-kilometer-long route between Bangalore and Delhi. The government is indeed trying to introduce counter measures and shift freight transports from the roads to the rails.

Features of Indian Logistics Industry

A number of small-integrated players Transportation costs account for nearly 40% of production costs Logistics costs around 13% of GDP, compared to 8% in the US. Growth in Indian economy is the major driving factor for the Demand in logistics industry. Chemicals, metals, FMCG, cement and textiles have been identified as the top five contributors to logistics revenues.

In this scenario Gati Logistics has proved to be a pioneer in the Indian Logistics Industry.

Introduction:
Gati Limited is a pioneer and leader in the Express Distribution and Supply Chain Solutions in India. Gati has consistently explored various ways to bring premium value to the customer, always setting benchmarks in quality of service and customer satisfaction. The revolutionary approach adopted by Gati helped launch many path-breaking initiatives in the logistics segment and many were the firsts for the Indian market. In a span of 20 years, Gati has consistently explored various ways to bring premium value to the customer, always setting benchmarks in quality of service and customer satisfaction. Having started as a cargo management company in 1989, Gati has grown into an organization with more than 3500 employees and a turnover of Rs 576 Crore covering 603 out of 611 districts in India.Gati has over 4000 vehicles on road, fleet of refrigerated trucks, container vessels and world class mechantronic warehousing facilities across India. Be it flexible point-to-point distribution solutions or complex end-to-end integrated logistics solutions or supply chain management, Gati does it all with great effectiveness and reliability, and enjoys the trust of a large customer base. Gati's shipping division, Gati Coast to Coast based at Chennai, with two decades of experience in the industry has many firsts to its credit: first in operating direct service to Yangon; first in operating a direct container service from Ranong Port, Thailand; and the first in operating direct container service from Penang, Malaysia. Gati Coast to Coast today has a tonnage of 43,581 DWT and a fleet strength of six vessels Gati's business model is well aligned with the customers need, which is why the core businesses have grown to meet the evolving needs of the customer, and this has resulted in consolidation of services and in the development of core and critical infrastructure, thus propelling Gati to the forefront in the logistics segment.

Vision and Mission of Gati

Be a globally preferred provider of India-centric supply chain services and solutions, and a leader in the Asia Pacific region. Delight customers with quality service by setting new trends through innovation and technology . Be the most preferred organization for all stakeholders. Be a responsible corporate citizen with unwavering commitment to environmental protection and conservation They are based on a desire to achieve sustainable heights in business and encompass a set of customer sensitive corporate values on attitude, behavior, action and delivery.

Gati Team
2750 Trained Professionals 1200 Gati Associates 500 Vendors 1200 Trained Handlers 1500 Trained Drivers Elegant customization Sensitive streamlining Domino discipline Ahead in reach GATIs commitment is to be a type of business which is different from others and to play a distinctive role in the marketplace.

Gati values

Gati at a glance
A leader in Express Distribution and Supply Chain Management Covering 603 out of 611 districts in India, ensuring unmatched coverage 1128 vehicles on road, fleet of refrigerated trucks, container vessels and world class mechantronic warehousing facilities across India. Seamless connectivity across multi-modal networks -air, road, ocean and rail Leveraging an extensive technology backbone that allows to track the shipments Online A dedicated workforce of 2678 high caliber Gati'ites Real-time delivery information on shipment 24x7x365 centralized call center Strong market presence in the Asia pacific region and SAARC countries with offices in Singapore,Bhutan,China,Dubai,Hong Kong,Thailand,Nepal and Sri Lanka.

About Gati
Gati is characterized by its: o Speed o Reliability o Discipline

Highlights of Gati
A pioneer and a leader in Express Distribution & Supply Chain Solutions, Gati has reinvented itself once again! Youthful, trendy and market driven, Gati is ready to take up new challenges. Gatis first of its kind offers and services have created benchmarks in the industry. The new mechantronic Express Distribution Centres have revolutionised logistics and distribution systems across the country. Gatis Domino Discipline has revolutionised the way Gati works and has aligned everyone in Gati towards one goal.

Concerns of GATI LTD

The key issues include. Customer Satisfaction. Ability to give right service at right time. Product /service Presentation. Traffic Building. Layout of the services. Keeping Pace With Technology.

Express (Surface)
Today, Gati has become the face of Retail Express Cargo. Providing quality service and value for money. Over the years Gati has gained expertise in handling various industry verticalshealthcare/clothing/white goods/ electronics/engineering/IT/Telecom/high-value/ cargo, etc. Gati has more than 2,000 vehicles at its disposal which cover 3,20,000 kms. per day.

Priority (Air)
Gati Priority is the result of an exclusive tie-up with Indian Airlines, the largest airline network in India. strategic alliance with Indian Airlines Assured space on IA flights 24-72 hour Service Flexible Pickup & Delivery Options Containers & Pallets for Safety & Security Same day service to select destinations. Multimode network - Air & Surface

International
Gati has now extended its horizons in the Asia-Pacific & SAARC countries. Gati has opened offices in Singapore, Hong Kong, China, Sri Lanka, Nepal and Myanmar to strategically focus on India-centric business Freight Forwarding in Air & Sea shipment. Strategic tip-up with Global player. Coverage of more than 200 countries. More than 500 pick-up point in India. Custom Clearance Services. Door to Door, Port to Port Services.

Zipp
Express Courier Services. All Metro with committed AMdelivery. Web Base Track n Trace facility. Mass Mailing Solution. Pre-Paid envelop. Air Parcel Services. Holiday delivery It provides your own choice of price, and Transit time options

GATI SAVER
An affordable surface product especially designed for your non-commercial packages. It makes easy to send non-commercial personal / corporate gifts, news magazines, catalogues, directories, study materials & brochures across India. Flat rate of Rs. 89 per package (up to 4 kgs)

Coast to Coast
Gati Coast to Coast (CTC) is Gati's shipping division. Set up way back in 1986, the CTC vision was to become the preferred service provider for all sea bound cargo in the Bay of Bengal, Andaman Islands and Malacca Straits. In the two decades of its existence, Gati CTC has followed this vision with diligence and determination and has emerged as a complete solutions provider for the Indian seas. 4 vessels providing liner service between Chennai- Andaman islands - Chennai & Chennai- Yangon- Chennai.

Gati Transport Solutions

Focused on high volume and price sensitive customer It is a product based on Part Truck Load & Full Truck Load. It is a direct pick-up and delivery product. Primarily devised to cater the needs of low capacity running routes Distance based pricing On-line tracking on www.gati.com Minimum weight slab of 1-ton

Supply chain Management at Gati Gati an analyst, consultant and SCM partner rolled into one
The focus is on integrated logistics solutions. Gati's transport infrastructure, IT systems, cutting - edge technology solutions and an intensive knowledge of India allows it to tailor its products to meet every customers' unique needs. Gati offers a wide range of options and does not waver in its focus on quality, reliability and speed.

Gati logistics package

This ready - to - use package comes with an instant distribution network and a wide system of storage locations and distribution channels. It is ideal for clients looking to distribute goods from multiple locations and those with changing distribution needs. For an SME or an MNC entering the Indian market, Gati Logistics is the right choice.

The unique features of this package are: Made ready' distribution channel
Standardization at all locations Inventory location close to your customer Entry into new markets without a large capital investment Shelf Space at over 200 locations

Integrated logistics
Gati provides customized solutions by integrating all the four stages of your business procurement, production, distribution, after sales service and reverse logistics.

Effective SCM has the following benefits

Reduces transportation management time and costs Increases profit margins and overall profitability Integrates transportation procurement, planning and execution Improves on - time deliveries and customer service Enables global supply visibility and maximum efficiency for competitive advantage Strengthens relationships with suppliers and carriers Enables the movement of goods across modes and around the globe

The Gati approach: Process flow

A systematic and effective four - stage approach towards the logistics requirements of clients. Gati studies their needs and designs customized solutions for all its clients. The four stages involved are depicted as follows

Coverage in a month
Carries 20,000 tonnes of Express cargo Carries 1.2 million packages Carries 300,000 Shipments Carries 700 tonnes of Priority cargo Covers 3 times the distance of all National Highways.

Warehousing Gati warehousing logistics solutions made to order

Logistics and supply chain management are an integral part of Gatis businesses. A sharp and steady focus on these key functions has helped Gati gain a competitive edge over the rest of the market. In recent times Indian industry has begun to acknowledge the strategic importance of logistics and warehousing functions to their businesses. And Gati's expertise and experience in this area is being harnessed by many companies. Gati offers its services as a 3PL or a third party logistics provider. A 3PL provider allows a company to: Concentrate on core competencies Create greater competitive flexibility and release working capital Get lean and agile Exploit the better know - how and scale efficiencies of logistics companies

Gati Supply Chain-Integrated Logistics

Gatia 3PL Expert Delivers cost effective,highquality services that add value and drive growth Provides end to end integrated logistics solutions Optimizes performance and productivity of business solutions deliver high level of efficiency Working principle of GatiSC-IL is based on unique D3 Model. D3 methodology that delivers a truly customized solution

Working principle of D3-model

DESIGN - In depth understanding of industry vertical,client business,operational intricacies and business requirements. Subsequently strategic thought is applied to devise a solution that seamlessly aligns with the client's objectives DRIVE - The Company has good understanding of the Indian Logistics with technology-driven approach including state -of -the -art infrastructure, to facilitate a
solution that will drive growth.

DELIVER - Post design and development, we focus on delivering operational excellence across the entire value chain, maintaining a supply chain solution that is continuously monitored for performance and productivity, opportunity identification and continuous improvement

Warehouse management system

Manage inventory in real - time. Gati's web-based warehouse management system provides both functionality and flexibility for customers to manage warehouse operations. The web - based WMS can be updated online thus allowing customers a real - time picture of their inventory. The WMS gives precise, detailed, real - time information about every aspect of customer operations.

The WMS application has the functionality to take care of multi - company / multi location capabilities. And, the multi - warehouse system has been designed so that every warehouse can write its own rules. The central focus is the powerful inventory control and management system making the management of diverse inventory holdings less complex and more organised. The web - based WMS has resulted in: Improved inventory accuracy Decrease in order processing time Improved customer service levels Elimination of put away and picking errors Less returns Reduced shipping errors Capacity utilisation

Gati Warehousing Solutions - State-of-the-art Warehouses

Two million sq. ft. of mechantronic warehousing facilities across all major cities in India Web-based Warehouses Management System Modern Storage Systems and Material Handling Equipment Delivering high levels of operating efficiency

In the past of couple of years Gati has introduced various IT solutions to support its growth and deliver customer value. A new data center in its head office in Secunderabad; implementation of workflow solution in the areas of employee information system, performance management system, leave management system, computer-based testing; and the use of business intelligence (BI) are some of the initiatives taken by the company during this period.

Taking the BI route

BI was implemented a couple of months ago to speed up the process of decisionmaking and the data analysis capabilities of the senior management. The company decided to adopt a BI and data warehouse solution from Oracle. Gati uses homegrown ERP software called the Gati enterprise management system (GEMS), which is a Web-based system running on a centralized architecture. GEMS runs on Oracles database and application server. The software takes care of the companys presales to sales, customer service, accounts, tracking and many other functional areas. GEMS is also integrated with the call center in Nagpur to ensure that complaints are addressed within a fixed period of time. Gatis network plays a crucial role in integrating key applications like GEMS, CRM and supports other applications like warehouse management system, centralized mail server and an interactive customer portal.

The network connects over 400 locations across the country. These locations were distributed using 11 major concentration points and close to 120 locations connected to these points. Gati has extensive wide area networks that connect through terrestrial links, RF links, broadband and a host of other links.At any given point of time there are thousand concurrent users working on the core applications alone. To divide the increased load and make the systems faster, all major locations have been provided with an alternate backup data link to the head office data center using RF technology, thereby increasing the availability of the locations for load balancing of network traffic and serve as an alternate in case of terrestrial link failures. The main data center is based out of the head office and is completely redundant. The company also has a tier-3 disaster recovery (DR) on a third party site at the Tidel Park in Chennai. In tier-3 DR, data is electronically transmitted to the site and it eliminates physical transportation of data and the off-site storage warehouse. In addition, Gati also has Mechantronic express distribution centers that not only use the latest technology to track, store and handle goods, but offer various value-added facilities like online warehouse management systems, inventory management and control systems, billing and collections, flexible hiring and storage facilities, and material handling equipment. Gati also provides solutions to companies that do not have their own distribution networks. The service includes order booking/fulfillment, inventory management, 24x7x365 days accessibility, reverse logistics, design of customized solutions, and optimization of costs through multimodal integration.

On the right path

Gati has already launched a vehicle tracking system for its 100 vehicles and has plans to roll out the solution for the remaining vehicles as well. The vehicle tracking system gives real-time information using GPS/GPRS technology. The system has the facility for the driver to have a hands-free voice communication with the central monitoring cell and vice- versa. The company also has plans to invest in setting up express distribution centers and in re-engineering their technology and network in the next three years.

Capabilities
Covering 3.4 kms per day 3 million packages delivered per month 46,000 tonns delivered per month

Value Addition by Gati

Project Management approach for all warehousing project. Team of Engineers to design & build warehouse as per your requirement.

Creating State of Art Warehouse with APL Racking & MHE at all location across the country. Availability of additional warehouse space on shared basis as per need basis in all India location. Strong Financial strength to invest in capital infrastructure.

GATI Commitment

Value Added Services

FOD (Freight-on-delivery) COD (Cash-on-delivery) DOD (Draft / Cheque-on-delivery) Inbound Rate Agreement: Ensures hassle free convenient supplies from your vendors. Holiday & Sunday Pick-up/Delivery Octroi Clearing Facility: Octroi clearance on behalf of customers Tamper-proof packing: Special bags for safe handling of high value cargo

Investment Analysis
Gati is a dominant player in the surface cargo business in India with a strong distribution network and delivery capability to reach 594 of Indias 602 districts. Gati is based on the view that the market has no fully valued the margin strength of its core express business and the potential growth from its freighter and logistics segments.

Gati is currently undergoing a shift in its business mix away from its legacy surface express business (>50% of 2007 sales). We expect the higher-margin freighter and logistics businesses to grow at a CAGR of 57% and 23% over FY2008-FY2010 (which would constitute 24% of FY2010E sales compared with 17% of FY2008 sales). We estimate that the business mix changes, along with the recent network reengineering process, will enable Gati to improve EBIT margins by 200 bp over FY2008EFY2010E. The company plans to invest US$100 mn (50% of current sales) over the next two years in capacity expansion to meet growing demand. With funding already closed, we believe the company is well placed relative to its peers to gain from incremental demand in the space. The acquisition of Kausar India in December 2007 gives Gati exposure to the highgrowth/high-margin cold-chain logistics business (99 existing refrigerated trucks, FY2007 EBITDA margin of 19.3% for Kausar vs 7.6% for Gati).

Revenue Generation Express distribution and supply chain (ED&SC)

This is Gatis core business division, accounting for about 69% of its revenues. This division comprises surface cargo movement (express), logistics and supply chain management (including warehousing), priority (air), international services, freighter and couriers, and trucking solutions, amongst others. Although Gati manages a fleet of more than 2,000 trucks, it owns only about 200 of them. For the remaining trucks, Gati enters into contractual relationships with vendors, assuring these vendors minimum level of business at prenegotiated rates. This arrangement enables the company to expand its fleet at a short notice, while reducing the burden of maintaining and managing a large fleet of trucks.

Trucking solutions
Gati provides value-added, door-to-door transport, and delivery of time-definite shipments including documents, parcels, and merchandise goods to 594 districts in India.

An efficient supply chain management can thus emerge as the backbone of an organized retail chain.
Gati, with its massive expansion plans of Rs4,500mn, towards doubling its warehousing space, expansion of shipping fleet, increasing the owned trucks under operation, and upgrading its IT infrastructure, is likely to emerge as a preferred 3PL player in the coming years. The companys future growth is also likely to be supported by its recent foray in transport refrigeration.

Expansion to tap growth opportunities

As part of its reengineering project, Gati initiated its expansion and modernization programme in June 2005. To be executed over a four-year period, the programme is expected to cost Rs4,500mn. This would be invested in the following manner: The company would invest Rs3,000mn for expanding the warehousing space, doubling it from 1mn sq. ft to 2mn sq. ft; about 0.5mn sq. ft of the same has been developed till date. About Rs1,000mn of the investment would be made towards increasing shipping operations (through purchase of additional ships/replacing existing ones); till date, about Rs440mn has already been spent on acquiring one ship in January 2008, thereby taking the fleet size to four ships. An investment of Rs300mn would be made towards acquiring trucks; the company plans to scale up its fleet of owned trucks by 150, thereby taking the total to 350 by June 2009. The remaining Rs200mn would be invested towards enhancing IT infrastructure. GATI Limited, a pioneer in the logistics sector in India, announced the signing of a comprehensive Memorandum of Understanding (MoU) with China Railway Express International Logistics Company Ltd (CREIL), a market leader in China for rail and road cargo and package delivery. Gati in India has delivery capability in 594 out of 602 districts in India and China Railway Express International Logistics (CREIL) has presence in 500 Cities in all 31 provinces of China. This MoU would result into end-to-end distributions solutions from anywhere in India to everywhere in China and vice versa . The two companies will cooperate in the development of freight forwarding, express courier and logistics service Gati in India has a large fleet of 2000+ vehicles and CREIL had 3500+ vehicles covering even the remotest corner of respective country Gati today offers 1.0 million sq ft of warehousing space with a plan to double up in next 3 years, and CREIL has 2.0 million sq ft of warehousing space in China. Therefore bringing a perfect synergy in the dedicated arrangement.

Gati Financials
Express Distribution & Supply Chain Break Up FY09

13% of GDP is spent on logistics sector By FY 2015 size of the sector would be approx USD 385bn* Market Share of organized logistics player to double to approx 12% by 2015 i.e. USD 46 bn* Integrated logistics service providers with wide network will have edge over other players VAT implementation, investment of Rs. 8600 bn in infrastructure Businesses seeking 3PL services will further add to the growth in the segment

Investment Highlights
Emerging as a single window logistics solutions provider Re-engineering Cutting edge technology Strong customer profile Foray into air cargo segment 2mnSq.ft.ofwarehousingspace,postexpansion Wide distribution network Integrated3PLsolutionproviderwithSCM Logistics solutions provider across various industries Increasing pie of international and logistics business

Growth Drivers
Becoming an Integrated Logistics Service Provider (ILSP) Regional focus on Intra-city & Intra-zone Unmatched Information Technology (IT) Contribution from subsidiaries to increase

Conclusions
Gati as a logistics and cargo company has been a pioneer in the Industry registering unprecedented growth in the logistics Industry, expanding its Business arms across boundaries. It has an unparallel commitment to service, customer satisfaction which have made the company as one of the key players of this Industry. In addition to the present practices being implemented Gati logistics can consider the following aspects for further growth and scale greater heights.

Vendor Management
Identify & partner with competent vendors to extend the best service experience for the customers.

Responsible & integrated vendor management system.

Continuously monitor the performance of the vendors

Vehicle routing
Provide a cost effective delivery continuously reaching on newer & alternative routes. Evaluation & modification of the route plans to enable a disciplined & quality delivery. Deploying newer route plans, ahead our competitors to ensure timely & quality delivery for enabling customers to build better relations with their end

Monitoring arrival & delivery service levels

Understand customer needs & monitor service level to provide a fool proof delivery plan. Create responsible teams of service providers & vendors for creating technology driven service levels. 24/7/365 service level monitoring system.

Customer Problems resolution

Understand customer problem to his business & social requirements. Try to resolve the issue before the stipulated time & reduce customers business loss. Communicate regularly to the customer.

Gati should look out for good locations which will suit their business purpose & purchase land, vehicles at affordable cost which will be profitable for the organization in future & alert about the contract status of all the rental premises. Always be proactive in timely rent payments & settle issues, regularly check the rent agreements & make renewals on time Maintaining the vehicles & company assets, if any problems in the vehicles / company assets then immediate action to repairs Organize & co-ordinate for the events.

Strategic Moves
Renewed Focus on the Core Business Gati Surface Express Aggressive Focus on SCM Contracts Focus on Gati Coast to Coast Exploiting the Cold Chain Business Focus on Widening Reach Focus on Cash Management and Receivables Focus on Cost Reduction: