Mibytes feb 2014

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Information about Mibytes feb 2014
Business & Mgmt

Published on February 28, 2014

Author: mibytes



Mi’bytes is a monthly news letter of the MIB family of Jamia MIllia Islamia, Central University. It is the intellectual output consists of business articles, interviews of the corporate personalities, experiences in the corporate field, quotes and many more. It gives rich dividends of knowledge and information. This newsletter carries an eclectic mix of business related topics and exposure of the corporate world. It is the step from the students of MIB that have transverse another inch in their triumph. Mi’bytes gives an enriching experience and helps the students in overall learning and contributing articles for it

February 2014 Volume 3, Issue 2 Page 1 Masters of International Business Centre for Management Studies Jamia Millia Islamia University MI’BYTES BUSINESS LETTER Logistics – Two faces of the same coin Inside this issue: Logistics-Two faces of the same coin 1 Corporate speak 2 Quick bytes 3 Quote for the Month 4 Logistics is quite an old concept; it has become very efficient only after the wave of 1990s globalization. The implied meaning of Logistics refers to the management of the flow of resources between the point of origin and the point of consumption at right condition material, at the right place, at the right time and at the very lowest cost. Industry-size The compounded annual cost for logistics in India is estimated to be around 14% of the GDP, and out of this USD 140 billion is logistics cost i.e.; almost 99% accounts to the unorganized sector (such as owners of few trucks, affiliated to a broker or a transport company, freight forwarders, small warehouse operators, customs brokers, etc.), and slightly more than 1%, i.e. USD 1.5 billion, is contributed by the organized sector. So, it can be easily analyzed that the logistics industry in India is in a nascent stage. However, the industry is growing at fast pace and if India can cut down its logistics cost from 14% to 9% of the GDP (i.e. level in the US), savings a handsome amount of USD 50 billion will be realized at the current GDP level, making Indian commodities more competitive in the global market. Moreover, growth in the logistics sector implies improvement in service delivery and customer satisfaction enhancing growth of Indian exports and potential for creation of job opportunities. Competitive dynamics and other issues Logistics is a low-margin, high-cost business which is indeed in requirement of economies of scale and six sigma. Apart from the non-uniform tax struct ur e, Indian LSPs (logistics service providers) have to pay numerous other octroi (a duty levied in some countries on various goods entering a town or city) and taxes, and face multiple check posts and police harassment on routes. There is lack of awareness and trust among the Indian shippers with regard to outsourcing logistics to 3PL and 4PL parties and freight forwarders in India face stiff competition from multinational forwarders for international freight movement. Poor physical infrastructure and communication barriers are another deterrent to attracting investments in the logistics sector and bringing an urge for digitalization for logistics sector. Low penetration of IT and lack of proper communications infrastructure also result in delays, and lack of visibility and real-time tracking ability, although introduction of SAP in supply chain management has allotted a lot of relief against this. Service tax levied on logistics service fees (currently 12.36% with educational cess) may make outsourcing costly and outweigh the possible benefits. Management graduates do not consider logistics as a prime job.

Page 2 About Cargill India Cargill was founded in 1865 by William W. Cargill when he bought a grain flat house in Conover, Iowa. Cargill’s operations in India started in 1987. Cargill employ more than 2,000 employees working in offices and plants across the country and have a network of warehouses and depots. Cargill provides food, agriculture, financial and industrial products and services to the world. Cargill has 142,000 employees in 67 countries who are committed to feeding the world in a responsible way, reducing environmental impact and improving the communities where we live and work. “4P’s are getting much diffused now” Volume 3, Issue 2 CORPORATE SPEAK Mr. Aseem Soni Director-Consumer Pack Vertical Cargill India Private Limited Ques1: In context of Indian consumer market, what are the emerging trends (In terms of Price, Quality and Consumption pattern)? Ans1: Let me give you a little more holistic answer to this question instead of breaking the answer into price, quality and consumption because to a large extent they are linked to each other. There has been a slowdown in the Indian economy which means the churn of goods and services has slowed down. On the other hand, lending to this scenario is the fact that our inflation in the country has crossed 10%, which is high. A combination of both has meant that the consumer has got a lesser disposable income than in the past. So what happens when a consumer has got a lesser disposable income, they re-adjust their household budget. Readjustment of household budgets means you have to make some choices. If I was planning to buy a house i will probably delay that decision. I will also probably trade down. Trading down can happen across categories so what it means is that instead of buying expensive or premium products, I may buy the regular variant. Companies are also readjusting to offer the consumer more relevant products. Further, the consumption is slowing down and the consumer is becoming a little more discerning seeking more value by trading down or sideways.Keeping in mind the present scenario, consumer instead of buying a little up-scaled product is settling to buy a mass or popular product in the economy segment. Ques2: In today’s competitive world apart from combination of 4P’S of marketing, where does customer retention stands in contributing to profits of an organization? Ans2: I think you have to realize this, that the 4P’s are getting much diffused now. They are becoming less and less relevant with every passing decade. This decade is about being able to address a very heterogeneous market, what this means is that your customer is present at various platforms today. There used to be times when communication, brand building and retention used to be very easy. For example: In the time when Doordarshan used to be the only channel companies would advertise their product/brand and it will become a national brand but that is no longer possible. In the present scenario getting to the consumer is getting more complex, more challenging and more expensive. I would say, on one hand, retention is easy because if you have a market share it is unlikely that a competitor can snatch it away from you overnight because the cost of reaching your target group will be very high. On the other hand, you have to always assume that consumer can always compare your product with other product in the market and can shift to other brands or products, specially if you are not able to cater to the consumers’ needs with your current product. Ques3: India being the largest importer of edible oils what are the major steps government can take to become self-reliant/sufficient? “Activities that we do to retain our brand share is to obviously retain our consumer” Ans3: The government has taken limited steps. India is deficit in edible oils as about 70% of all the edible oils are imported. So the government first objective is to make sure that the population gets the edible oil. They have to make it a little bit of a free market kind of scenario where they have to encourage people to go and buy from anywhere where the edible oil is cheapest in the world. The government has to provide a fair degree of attention to the local industry as there is a vibrant local edible oil industry of two kinds, first one is that starts from the seed and ends in the bottle and the second one is where all this is crude in nature and gets refined. The government keeps on intervening at regular intervals. Ques4: How do you maintain your Brand share as consumers are ready to shift as others brands are there to satisfy their needs? Ans4: That’s very simple, the activities that we do to retain our brand share is to obviously retain our consumer. So our consumer has to be with us. Let me give you an example: you have to offer the consumer the best value for money, it’s a fundamental point. If you are selling a product today and you suddenly find that your cost is reduced you have to pass on the benefit to the consumer because believe me if you don’t, your competitor will, and your Cont….On Page 3

Volume 3, issue 2 Page 3 Cont...From Page 2 consumer could go away from you. The other thing is to keep your innovations alive and give your consumer some choices. Recently, we blended our basic sunflower oil with olive oil and offered it to our consumer at a price which the consumer is willing to pay. So what I am saying is that sometimes you have to keep yourself alive to the situation what your consumer wants and therefore be able to service the consumer need accordingly, not necessarily through your core offering. QUICK BYTES Major Commodity Exchanges 1. CBOT (Chicago Board Of Trade): commenced in the year 1848. Futures and options contracts on corn, wheat, soybean, ethanol, oats and rough rice, soy oil and soy meal. 2. LME (London Metal Exchange): Commenced in the year 1920. Deals in copper, primary aluminium, nickel, lead, tin, Zinc and Aluminium Alloy. 3. ICE (Intercontinental Exchange): Commenced in the year 2000. ICE futures offers the benchmark IPE Brent crude and IPE gas oil. Trades natural gas, electricity and emission contracts as well. Ques5:If you fail to appropriately manage your sales team, it might result in losses so what is the best way to manage a sales team? Ans5: You need right people, people who are hungry, competent, passionate to make a difference and who have pride in what they are sell with a portfolio that they are selling. You then have to align your plans to them. Gone are the days that you stood up and instruct or direct your team. Today, you need to align with them your plans, what you want to do, you have to understand it and appreciate it, contribute to that plan, empower them to take decisions on the fields, expect results from them and monitor them, review their performances, give them feedback. So, this is the game all the time, it's a dynamic game specially if you are looking for a large sales team force, different people will be at different levels of this so called management flow. Ques6: Consumers are becoming more health conscious these days, so how are you positioning your products now? Ans6: If you talk about Cargill, then I think we are yet to start working on that in a meaningful way. We have got largely 3 or 4 brands in our portfolio and the strongest brand that we have is Gemini, it is a brand that stands for Quality. There is a potential to offer or sort off link or position one of our brands in our portfolio in the health and wellness segments which is the next big thing. But, you know when health and wellness comes to the edible oil, it is a little ironical state because oil per say is not healthy but you need it for cooking. An oil is an oil, so you have to be careful in what you are consuming. Our Endeavour is to offer the best product. But to be able to take a strong health and wellness platform for edible oils; you should be able to differentiate your brand from the rest of the brands in the market place. But today, if you ask me, not a single brand in the edible oil segment except say Saffola from Marico (which is also very debatable) is positioned sharply in the health and wellness segment. So, it's a very tricky thing, but that's work in progress for us. Ques7: What is more important for you as Director Sales, a quality product or excellent customer services? Ans7: This is not the decade of making choices between quality and customer service. So, I will take an example of 'Kinley Water Bottle', you go to a railway station will you get this bottle or brand? Probably not. You will get a local brand there. So, that sort off partly answers your question, you have a wonderful product but it's not available at the right time when they want it, so my customer service goes for a toss. Alternatively, I can have a wonderful customer service but I can't meet up with the quality that I delivered earlier, it might result in loss of customers. Apart from this, there has to be a value for money that you have to add to these two things. Value doesn't mean cheap, value means, you can also make your consumers trade-up because consumer feels there is more value. Coming back to the same biscuit example- Parle G consumer can be made to buy a Britannia Milkbikies (Britannia Milkbikies is more expensive than a Parle G) but consumer finds probably more value in Britannia Milkbikies than a Parle G. So you can always trade-up and get consumer pay more but you have to give your consumer far more value in return. So, value cost equation therefore becomes more meaningful and attractive for her. Ques8: Despite the fact that rural markets are a huge attraction to marketers, what all are the major challenges that a company may face? Ans8: What will make a consumer in rural market to buy a product. There are 3 things in this. One is complete knowledge about your product, what it delivers, what value it offers. Secondly, it's accessibility of the products. Finally and equally important, the consumer should be able to afford your product. I think as long as an organization ensures all 3 things, it's a hit, but it does seems easier said than done. It's a nightmare to make your product Cont...On Page 4 “Value doesn't mean cheap, value means, you can also make your consumers tradeup ” “3 things to be kept in mind while dealing with rural consumer: Knowledge about product, Accessibility of the product and Affordability”

Page 4 Masters of International Business, Centre for Management Studies, Jamia Millia Islamia E-mail:,, 9650430820,8285817199 Quote For The Month “I don’t believe in taking right decisions. I take decisions and then make them right” Ratan Tata Cont...From Page 3 reach the hinterland in the country because you can't go there. You will be dependent on the wholesale network and what is pushed through the wholesale network, is what is accepted for which there is a demand in the market. So, you have to communicate with rural consumers, which is not cheap. Then you need to have a product in terms of pitching at the right price because of affordability, it has to be sized right, packaged right because it needs to travel distances. So, it's very complicated, that is why most companies, don't have a direct rural delivery system. Whichever brands are sold in rural today, are either local or they have a history of 5-8 decades of continuous work being in that direction. They have set their distribution systems, marketed their products through different channels like sampling, hard promotions, van promotions all that over a period of time, that is how they have driven their roots today. But it's a tough thing Ques9: What will be your message/advice to international business students at Jamia Millia Islamia? EDITOR-IN-CHIEF: Ms. Sunayana Kumar STUDENT EDITORS: Harsh Wardhan Rathour Michael Akbar Habib Ullah Siddiqui Suban Khalique Ajam INTERVIEW BY: Ifrah Khan Suban Khalique Ajam Ans9: All that I can say is that invest in your careers with a very mature mindset. Don’t be in a hurry to keep changing jobs for money. Join larger or older organizations that have got systems or processes in place and grow with them. The early time is critical in molding your knowledge about how the industry functions. So it’s important that you pick up the right habits and right habits are developed by working in the right company. Cont...From Page 1 Logistics – Two faces of the same coin There is lack of skilled and knowledgeable manpower in the logistics sector. Recommendation  Since government bodies play a vital role in this sector hence there is an urge to harmonize and streamline the process in order to reduce the stoppages and touch points of freight movements so that the movement can be swift.  Since the cargo carrying capacity via roads is limited hence the movement of bulk commodities can be partially channelized by some appropriate modes such as water or railways.  Uniformity in Benchmarks is indeed very necessary in shipping, warehousing, storage and other transportation equipment so that this can enhance the modernization and provide technicality to this particular industry.   Clearance activities should be carried out away from the sea and airports to avoid congestion. Six Sigma methodologies - If we apply this to logistics processes, it can optimize the processes of a company to perfection while decreasing variation and improving the extended supply chain. Shipping and logistics companies incorporating Six Sigma into their culture reports gradual and dramatic improvements in reliability while also cutting out excess dollars cost from their supply chains. By—Harsh Wardhan Rathour 2nd Year MIB, JMI For Previous Editions Pleases Visit

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