Page 208 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 9: Warehousing

is based on the perception or belief that local warehouses (and presumably local inventory) can Notes
be more responsive to customer needs and offer quicker delivery than more distant warehouses.
As a result, it is also thought that a local warehouse will enhance market share and potentially
increase profitability. While the market presence factor is a frequently discussed strategy, little
solid research exists to confirm its actual benefit impact.


Caselet Future Starts Third-party Logistics with Hitachi, Nestle

lan for 50% revenue from outside Future Group in three years. Future Logistics
Solutions, an arm of Kishore Biyani’s Future Group, has forayed into third-party
Plogistics (3 PL) operations by signing leading electronic and fast moving consumer
goods (FMCG) players such as Hitachi and Nestle.

Future Logistics was hitherto catering to the logistics needs of more than 1,100 outlets of
the group in the country. However, over three years, the company is expected to earn half
its revenues from outside the group, as it is in talks with over 15 companies, said sources.
The company is expected to post revenues of ` 300 crore in the current financial year and
plans to triple its income in the next three years with multi-model transportation,
international logistics, reverse logistics and brand distribution services, the sources said.
A third-party logistics provider helps manufacturers with part or all of their operations
such as transportation, distribution and warehousing. The 3 PL space in the country grew
from a ` 4,500-crore industry in 2005 to around ` 10,000 crore in 2009. The entire Indian
logistics market is now expected to be around ` 5 lakh crore, with the share of organised
players around 6 per cent. This organised segment is expected to grow at 25–30 per cent
yearly in the next couple of years.
When asked, Anshuman Singh, chief executive officer of Future Logistics, confirmed the
company has started 3 PL but declined to comment on the clients. “There is a huge
opportunity in the space, as there are no end-to-end third party logistics players here. We
want to build an entire consumption-led logistics company to take care of all segments of
consumption,’’ he said.
Recently, Fung Capital, the private equity arm of the Hong Kong-based Li & Fung Group,
bought a 25 per cent stake in Future Logistics for ` 150 crore ($30 million), valuing the
company at ` 600 crore.
According to sources, Future Logistics also plans to start brand distribution services in the
country in the next six to eight months, where it will buy merchandise from international
and domestic brands and supply it to retailers. The company is expected to manage the
logistics needs of the Future Group when the latter starts supplying its private labels in
fashion, food and apparel products to other retailers and stores in the country.

Future Logistics has a fleet of 600 vehicles, with warehousing space of over three million
sq ft. It plans to have total warehousing space of 7.5 million sq ft by 2010–11.
Source: www.business-standard.com

Self Assessment

Fill in the blanks:

1. …………………… benefits of warehousing materialise when overall logistical costs are
directly reduced by utilizing one or more facilities.

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