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Management of Logistics: A Study of P&O Nedlloyd Logistics

What is Logistics?

Logistics is the process of planning, implementing, and controlling the efficient and effective and storage of goods, services and related information, from the point of origin to the point of consumption, with the purpose of conforming to customer requirements.

Logistics looks at fulfilling the need for total movement management, right from the point of material procurement to the location of finished product distribution. Logistics is basically concerned with the task of ensuring that products and services available easily to customers at those destinations where they desire. Logistics, therefore, involves the scientific and systematic integration of information, transportation, inventory, warehousing, material handling and packaging.

Importance of Logistics

Logistics Management deals with the coordination of resources in an organisation. Optimum allocation of organisational resources is called for with the aim of getting maximum returns at a reduced cost. It focuses on the organisation as a whole and not on an individual units and departments, while deciding on the allocation of resources. In countries like India, several resources are scarce. Logistics Management helps in the efficient use and deployment of these scarce resources.
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Management of Logistics: A Study of P&O Nedlloyd Logistics

The cost of Logistics Management is found to be high by certain industries. Because of this high cost, they are reluctant to implement logistics management. But it adequate attention is paid to logistics, cost reduction can be effected in various departments. This is because logistics suggests the use of efficient means of transport, locating areas where cheaper materials are available, determining the correct quantities to be despatched to market areas so that there is no scarcity or surplus felt in those areas.

In this project, we will study how P&O Nedlloyd Logistics helps companies in effective utilisation of their resources.

Management of Logistics: A Study of P&O Nedlloyd Logistics

AN INTRODUCTION TO P&O NEDLLOYD

P&O Nedlloyd Container Line, one of the premier global shipping lines and international logistics provider, is a joint 50:50 joint venture between Peninsular and Oriental Steam Navigation Company and Royal Nedlloyd NV. It was started in December 1996. P&O Nedlloyd is the world's third largest container shipping company by capacity operating with 166 vessels, totalling 782,977 TEUs (Twenty-foot Equivalent Units i.e. containers). P&O Nedlloyd's global liner network offers 80 service routes and providing connections to 239 main ports. Our product is a worldwide, port-to-port or door-to-door service using the most extensive global network in the industry. P&O Nedlloyd has over 70 established trade lanes and provides connections to more than 250 main ports serving 120 countries worldwide. These elements, combined with well- developed feeder lines, extensive inland transport capabilities and first - rate port facilities, from the base of our product. Such amenities are essential for those wishing to compete internationally in today's container shipping market. What distinguishes P&O Nedlloyd's product from its competitors is the personal touch provided by our experienced and dedicated staff. This is the heart of our product.

The P&O Nedlloyd product relies on essential hardware and software. Our essential hardware consists of the ships and containers we use to deliver our

Management of Logistics: A Study of P&O Nedlloyd Logistics

product. However quantity is only half the picture. High quality equipment is not only important because of the cost savings it provides, but also because it results in better-protected cargo and a more reliable product. P&O Nedlloyd's aim is to be an industry leader in terms of experience, capability and results. Our strategy is to follow up opportunities to build on economies of scale, putting the emphasis now on smart operations; product enhancement and IT based improvements. The company is head quartered in London and Rotterdam. Since its formation in December 1996, P&O Nedlloyd has increased its volume by over 40 per cent and continues to build solidly for the future. In 2002, P&O Nedlloyd's turnover was US$4.7 billion. These elements, combined with well-developed feeder lines, extensive inland transport capabilities and first-rate port facilities, form the base of the product.

Management of Logistics: A Study of P&O Nedlloyd Logistics

Partnership of Equals P&O Nedlloyd was created in late 1996 by the merger of two already large, container-shipping lines, P&O Containers and Nedlloyd. This was a radical but apparently successful response to chronic over-capacity in the world's container shipping markets. Unusually, the new company was set up as true partnership of equals, in which P&O and Royal Nedlloyd both held a 50 per cent share. This year there seems to have been some uncertainty over its future ownership, with the Dutch partner expressing keenness to see a separate stock market listing for the business; but day-to-day operations remain unaffected. The company now claims to be the second-largest player in its market. It had 136 managed container ships at the last count, plus many more available through alliances, and its freight container strength was 700,000 TEU (the term stands for "twenty-foot equivalent unit"). Its staff strength was 8,000, and its turnover was $4.1 billion. In terms of global reach, the combined operation claims to serve almost every country (140 in all) on every continent. It has 500 of its own offices, plus many more agencies, and services 70 trade "lanes". Royal Nedlloyd used to have wide-ranging interests in a range of road freight operations, but in latter years has disposed of most of them. P&O, by contrast, still wholly-owns P&O Trans European, whose brands include Ferrymasters, as well as controlling a market-leading group of ferry operating companies linking

Management of Logistics: A Study of P&O Nedlloyd Logistics

various British ports with Ireland and the Continent.

HISTORY OF THE ORGANISATION P&O Nedlloyd has rapidly developed its own identity, but it does have distinguished antecedents. The founding companies of P&O Nedlloyd have a long and pioneering past; their beginnings go far back into the early 19th Century and the very early days of the steam ship, when they initiated trading links between North Europe and the Mediterranean/Balkan region. 19th Century In 1837 the Peninsular Steam Navigation Company as it was then known signed its first commercial contract for carrying mail by sea between England, Portugal and Spain. By 1842 services extended to India carrying passengers and other goods as well as mail. In 1845 P&O added port calls at Singapore and Hong Kong to their Network. In 1856 the Koninkllijke Nederlandsche Stoomboot-Maatschappij (KNSM) was launched by a group of enterprising Dutch men largely in response to the shipping shortages caused by the Crimean War. Alongside KNSM two other Dutch companies Stoomvaart Maatschappij Nederland (SMN) and Koninklijke Rotterdamsche Lloyd (KRL) were formed to carry passengers and mail between North Europe and Indonesia. 20th Century At the turn of the Century SMN and KRL extended their services into the Far East and KNSM into South America. In 1908 they founded the Nederlandsche
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Management of Logistics: A Study of P&O Nedlloyd Logistics

Scheepvaart Unie (NSU), aimed at co-operating where mutually beneficial. By the beginning of the 20th Century P&O had developed into the premier UK shipping company with interests in passenger and cargo shipping mainly on eastern routes focused on India, East Asia, parts of Africa and Australia & New Zealand. Through a process of mergers and acquisitions their fleet expanded to nearly 500 vessels in the 1920s. In the 1920's the NSU created a new company the Vereenigde Nederlandsche Scheepvaart Maatschappij (VNS) to reflect the growth in the new deep-sea operations in the Far East and new trading links between Europe, Middle East and South East Asia.

In

total

the

P&O

and

NLL

fleet

numbered

950

vessels.

Following the end of the Second World War, both companies responded rapidly to the growth in World Trade in the 1950's and 60's. The changing environment led to further inter company rationalisation. In the 1960's P&O were founder members of Overseas Containers Ltd (OCL). OCL developed the concept of door-to-door operations and launched the World's first panamax containerships. In 1970 various Dutch shipping companies joined forces in order to be prepared for the start of containerisation and the 'new' Nederlandsche Scheepvaart Unie was formed. In 1977 this was renamed the Royal Nedlloyd Group, Nedlloyd Lines being the ocean shipping arm. In 1985 OCL became P&O Containers. Throughout the 1980's and 90's both P&O Containers and Nedlloyd Lines steadily expanded and broadened their route networks to include new and rapidly growing Atlantic and
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Pacific

Trades.

Management of Logistics: A Study of P&O Nedlloyd Logistics

Royal Nedlloyd continued to re-examine its structure to focus its efforts on core markets and expand into logistics. In the process they pioneered many new initiatives such as the Hub & Spoke approach with mainline/feeder operations that remain a mainstay of the business today.

Prior to the merger P&O Containers and Nedlloyd Lines co-operated on several ventures including the Transatlantic Vessel Sharing Agreement, the European Rail Shuttle and North Sea Ferries. As our history has shown partnerships have come naturally to both companies in an industry that for years has brought people of different cultures and backgrounds together in the spirit of mutually beneficial trade. This spirit of co-operation was crystallised in the first cross border merger of two premier container-shipping companies.

P&O Nedlloyd is now building upon the history of success shared by P&O and Royal Nedlloyd with new and innovative services to customers. In 1998 P&O Nedlloyd introduced some of the largest container ships in the Industry, the 'Southampton Class' that are deployed on the Europe/Asia Trades. Since then, P&O Nedlloyd has continued to make investments in network and service enhancements. P&O Nedlloyd's fleet will continue to be renewed and strengthened by the delivery of new ships. Now the company is involved in substantial development of E-Commerce products such as track and trace facilities, integrated website booking and electronic Bill of Lading systems.

Management of Logistics: A Study of P&O Nedlloyd Logistics

COMPANY PROFILE P&O Nedlloyd Container Line Limited was formed in December 1996, as a 50:50 joint venture of P&O and Royal Nedlloyd, representing the liner shipping interests of the two companies. It is one of the three largest container carriers world-wide, with routes connecting all parts of the globe and a yearly turnover of around US$ 4.5 billion. P&O Nedlloyd has over 70 established trade lanes and provides connections to more than 250 main ports serving 120 countries worldwide. P&O Nedlloyd's fleet numbers 148 owned and chartered vessels, and the company has a container fleet of some 700,000 owned and leased TEUs which together move over 3 million TEU per year. These elements, combined with well-developed feeder lines, extensive inland transport capabilities and first-rate port facilities, form the base of our product. P&O Nedlloyd is committed to a comprehensive programme of eCommerce product development in order to provide a high-quality service to those of our customers who choose to conduct business with us in this way. Our strategic aim is to enable our customers to do business with us entirely by electronic means throughout all the processes of the shipment cycle, from schedule enquiry and booking right through to payment of freight and other charges.

Management of Logistics: A Study of P&O Nedlloyd Logistics

E-enabling the container fleet - P&O Nedlloyd advances on many fronts


Customers of P&O Nedlloyd, the world's second-largest container shipping line, were due to be able to start making freight bookings online through its Web site. It is just one of a series of e-commerce developments by the group. Already one can find out about its sailing schedules online. A shipper can also track his cargoes and print bills of lading. Further, one is able to benefit from more advanced tracking and tracing, under which it s possible to receive automatic email alerts at critical points in the voyage. Eventually it will also be possible to settle invoices online, although that's still in development. And if using some of the company's value-added services (stock management, vendor management and so on), there is a sophisticated online monitoring service available to, and it is about to gain some greatly improved functionality. To the outside world, this all comes under the general heading "E-Commerce". To P&O Nedlloyd, however, it has meant developing a whole range of solutions some bespoke, some bought in, some shared with other organisations. Patrick Burrows, general manager for marketing systems in the business systems division, calls it a "quiet revolution", and adds: "Shipping lines have probably not been very forthright in promoting what they're doing in this field."

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Management of Logistics: A Study of P&O Nedlloyd Logistics

In some cases, he implies, this may be because they have been slow to develop in the e-commerce sector. He has an intriguing comparative chart, which shows that some lines still have virtually no Internet capability. Perhaps predictably, P&O Nedlloyd is well advanced in all the key measures charted. One of the main tasks for the organisation has been keeping its e-commerce initiatives coordinated and synchronised, and ensuring that they follow a logical implementation timetable. Sometimes this can be tricky; for example, the company has already had to divide its support between two different approaches to giving its customers Internet access. Sophisticated range What the division offers is a range of fairly sophisticated logistics services, including for instance warehousing, purchase-order management, consignment tracking and some land-based distribution services. In essence, it aims to bring the benefits of outsourced domestic distribution to the global arena. A typical instance of this would be managing procurement, storage and call-off processes in the Far East for a customer importing goods into Britain. Essentially, Log-Net allows P&O to create, receive and publish information which their customers can view over the Internet. Its capabilities include tracking of purchase orders, shipments and containers (customers can drill down to the point of seeing what's inside a specific container). It helps customers with timescale planning and critical path analysis, and they can work out transport costs per unit.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

The system is being offered as an additional service to customers, says Neil Vanderhook, business systems manager for the value-added services division. Views can be tailored to individual customers, and functions can be turned on or off as required. Reports can be configured to customer requirements and output in more than a dozen formats. Although using the Web to display information, the current version of Log-Net is not purely a Web-based product. It is a Powerbuilder application linking to a Sybase database, and data is fed to the Internet via a WebTrack application server. P&O Nedlloyd does not rely purely on the Internet for its own global access to the system; it distributes data over its existing corporate wide-area network, which links its main management hubs together. Internally, the company is a supporter of the Citrix client-server model, which makes use of relatively modestly configured PCs as "dumb terminals". However, the company is currently beta-testing a new, fully Web-enabled incarnation of Log-Net, which can be set up as a customer-configurable Web portal. Unlike the existing read-only version, this will be truly interactive. It will be multi-lingual and WAP-enabled, and suppliers will be able to place bookings directly online. Elsewhere in the organisation, P&O Nedlloyd is already quietly getting on with becoming e-enabled. For instance, it has its own intranet, P&ONL World, which keeps the widely-dispersed group informed on a wide range of corporate issues. Features include interactive training, shipping news and timetables,

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Management of Logistics: A Study of P&O Nedlloyd Logistics

communications links and vessel positioning. The site looks well-designed and professional, and would pass at a glance for quite a lively public Web site. Its main public site, www.ponl.com, has been through a series of upgrades and redesigns, and also gives a good account of itself. The group has also started to explore the opportunities presented by eprocurement. It has already taken in share in Oceanconnect.com, a maritime procurement portal, and has run an auction for marine parts.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

P&O Nedlloyd launches P&O Logistics


P&O Nedlloyd has consolidated its portfolio of Value Added Services into a new division called P&O Logistics. The new division is an adjunct to the liner shipping business and started operations on July 1st, 2002. Since 1999 'Value Added Services' has described a range of products offered worldwide by specialists within the P&O Nedlloyd organisation. This diverse suit of services ranges from simple Customs clearance to complex supply chain solutions that include warehousing and distribution. P&O Nedlloyd Logistics will continue to provide and develop these services but with greater autonomy and customer focus. P&O Nedlloyd Logistics places a coherent divisional structure around the existing specialist activities. The distinction between logistics activities and the core shipping business enables P&O Nedlloyd Logistics to design optimal solutions for customers using a wide range of suppliers including the neutral use of ocean freight carriers. P&O Nedlloyd Logistics also provides a vehicle to enable the continued development of the logistics business through both organic growth and acquisition where true synergy benefits can be gained. P&O Nedlloyd has developed a specialist logistics focus on the Retail, Fast Moving Consumer Goods, Industrial and Chemicals market sectors. This commitment will continue to develop and deepen under P&O Nedlloyd Logistics. With a strong background in worldwide maritime logistics the division

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Management of Logistics: A Study of P&O Nedlloyd Logistics

concentrates on maritime intensive supply chains, linking all the other transport modes and creating value by integrating primary overseas sourcing with secondary delivery & distribution. P&O Nedlloyd Logistics provides a full range of specialist international supply chain management services. Our worldwide organisation gives customers the ability to source and distribute products globally. Leading names in Retail, Fast Moving Consumer Goods, Industrial and Chemical sectors are all supported by our best in class systems and dedicated staff. P&O Nedlloyd Logistics concentrates on maritime intensive supply chains, integrating primary sourcing with secondary delivery and distribution, providing visibility and adding value for our customers.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

SERVICES THAT P&O NEDLLOYD LOGISTICS CATERS TO:


Supply chain Management P&O Nedlloyd Logistics forms collaborative partnerships with customers to build best in class international supply chains. Through the wide skill base and practical knowledge of the P&O Nedlloyd Logistics specialists our customers are offered solutions that best suit their individual requirements. We design, re-engineer and manage all the essential elements of integrated supply chains. Our aim is competitive advantage for our customers. P&O Nedlloyd Logistics focuses on maritime intensive supply chains in the Retail, FMCG/Foodstuffs, Industrial and Chemical sectors that deliver:

Partnership - developing a collaborative approach Visibility - ensuring control through knowledge Velocity - increasing efficiency and compressing lead times Agility - creating flexibility and responsiveness

P&O Nedlloyd continuously improves and enhances supply chain solutions long after initial implementation and this requires a depth of understanding that can only be achieved through close and genuine collaboration with customers. Our global reach and network of offices means we have experts on the ground all over the world assisting and monitoring the flow of goods from vendors to DCs, through CFS and all the way into destination warehouses. We give control and the ability to source and sell products globally.
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Management of Logistics: A Study of P&O Nedlloyd Logistics

Our supply chain solutions are modular in design, allowing rapid implementation and tailoring to customer requirements. They are provided using specialist IT systems and managed subcontractors, including ocean carriers other than P&O Nedlloyd. We provide a world of experience in international supply chains. Warehousing and distribution P&O Nedlloyd Logistics can provide warehousing and distribution as an extension of a customer's ocean freight shipment process. Recognising customers may need to hold stock closer to market or prior to shipment we can make arrangements to meet specific requirements including shipments routed via other carriers. These services include:

Selection of optimum warehouse location Customs bonded facilities Controlled delivery ex port to warehouse Receipt & Storage Cross docking / Transloading Order Picking Value Adding Functions (labelling, cartoning, re-packaging) Despatch Commercial Distribution

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Waste Disposal

These warehousing and distribution functions can also be performed as part of more complex Supply Chain Solutions.

Project Management P&O Nedlloyd Logistics provides fully integrated project management solutions by land, sea and air for the carriage of:

Heavy lift cargoes Abnormal loads Turnkey projects Commercial construction projects

Source-to-site management is routine for P&O Nedlloyd Logistics ensuring a seamless and efficient process. Customers have the advantage of one point of entry for managing the entire project process and complete pipeline visibility.

We have direct access to a comprehensive portfolio of world-wide containership services. In addition, we can charter in specialist ships and aircraft to meet the needs of your particular project.

Cost effective solutions are achieved through combining the considerable buying power and the technical skills (such as "FF&E" - Fixtures, Fittings and Equipment expertise) of P&O Nedlloyd Logistics.
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Management of Logistics: A Study of P&O Nedlloyd Logistics

Our network of global offices, specialist experience and equipment, allows P&O Nedlloyd Logistics to fulfil projects with confidence and to your complete satisfaction.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

SECTORS CATERED TO BY P&O NEDLLOYD LOGISTICS


Retail Leading retailers throughout the world use P&O Nedlloyd Logistics to design, optimise and support the management of their integrated supply chains. Through our proven systems and practical experience we enable our customers to obtain a competitive advantage in their sector of the retail market. Working at purchase order or item level we liaise directly with vendors to track and monitor the status of individual orders, ensuring visibility of goods across the globe and timely delivery. Visibility of orders is presented by giving access to our sophisticated logistics management platform, LOG-NET, via the web or through integrated information provision to customer systems. Our origin consolidation capabilities allow the consolidation of orders into full container loads, including multi-country consolidation - which enables goods to be collected from a variety of countries and consolidated into the same container for onward shipment - giving our customers the option of more frequent orders of smaller quantities. This service is extended to garments on hangers (GOH) consolidation which safeguards the arrival of garments at destination, avoiding reprocessing and enabling the garments to go straight to stores. Our consolidation capabilities include skills in planning and loading containers using the bar system, string system and combined GOH and flat pack.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

P&O Nedlloyd Logistics world-wide network allows our customers to be flexible in their sourcing patterns as we provide retail supply chain solutions from worldwide locations. With continuous improvement we design, manage and optimise retail supply chains.

FMCG / Foodstuffs International trade in Fast Moving Consumer Goods and Foodstuffs is an area of particular specialisation for P&O Nedlloyd Logistics. Our considerable international presence in the new world wine trade has expanded to include many other commodities retailed through supermarkets and handled by the world's major FMCG companies. Our diverse portfolio of services and our ability to implement world class supply chain solutions means that we can significantly increase the visibility and control of our customers supply chains. Through our web enabled systems and knowledgeable staff we are able to provide a range of services that can be picked to suit the particular requirements of the customer, from cargo handling to complete supply chain redesign. Working with the many participants in this trade, whether they are suppliers, producers, distributors, importers, supermarkets or retail outlets, we provide international logistics solutions to our customers making their supply chains work harder and with greater control.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Industrial & Chemical P&O Nedlloyd Logistics provides imaginative international logistics solutions for leading companies in the industrial and chemical sectors. Our worldwide network of offices and expertise fulfil the requirements of companies manufacturing for the global market. Apart from linking all the continents, we also integrate order management, tracking systems, freight management, regional warehousing and distribution along with all the other activities required for servicing international markets. Through our logistics management systems we give you visibility and control of your orders from production to delivery. Our floating warehouse concepts are part of an innovative approach that minimises your inventories whilst improving product availability on a global scale. We work in collaboration with producers, suppliers and end customers to build optimal supply chains using the practical experience of our organization.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

HUBS INFORMATION CENTRES OF PONLogistics


P&O Nedlloyd's global business is IT-enabled and totally dependent upon it. It has several global software applications, accessible from any of its business offices. The Company had 7 'hubs', or 'data centres' spread over US, Europe, Asia and Australia; which had been operating and supporting these applications. These hubs also provided a wide range of regional applications, which were either derivatives of the core global systems, or services, which had been developed to suit the business needs of a particular region. Over past few years, for business as well as technical reasons, PONL moved away from the decentralized multi-hub strategy to a centralized single hub strategy. Presently, there are two hubs where all there IT operations are concentrated; the European Hub at London and Asia Pacific hub at Sydney. The European Hub is responsible for ensuring the availability of systems and Global support to P&O Nedlloyd businesses 24 hours a day, 365 days per year. Activities earlier done by London hub are carried out from Pune, remotely through a communications links. The London hub would continue to house the hardware to provide the support for its IT-enabled operations.

Pune has two divisions: ISSC - Shared Services Centre, Operations are spread between Pune & Chennai. BSD - Business Support Division

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Management of Logistics: A Study of P&O Nedlloyd Logistics

BSD comprises of 4 IT centres: GASC - Global Application Support Centre OOC - Offshore Operations Centre GSMC - Global Services Management Centre BTS - Business Testing Support

OOC supports P&O Nedlloyd data centre hosted in London. This data centre is amongst the top 500 data centres in the world in terms of size and complexity. The technology is state of the art, supporting high-end mission critical systems. We have approximately 150 Production Oracle databases ranging in size from 100 MB to 150 gigabytes (GB) and totaling to about 15 TB. On top of this, there are over 200 other databases in use for Test, Integration Test, System Test or User Trial environments. The objectives of setting up an Offshore Operations Centre (from the viewpoint of P & O Nedlloyd) were: Introduce a single hub strategy by moving away from the decentralized multi-instance. Provide 24 * 7 support for all tasks. Provide performance and capacity management for the considerable sized global applications. Improve unit costs.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Further improve Service Levels by moving procedural activities to the OOC.

Following functions are conducted in the OOC 1. Data Base Administration 2. Unix Administration 3. Service Management 4. Operations Management 5. AS 400 ADMINISTRATION

The Business Systems Division (BSD) has been recently restructured, combining two separate Divisions (Information Technology and Business Systems Divisions). The organization development activities in the project life cycle have been consolidated into a 'Development Group'; the corresponding 'ongoing' service delivery and support activities have been consolidated into a 'Service Delivery Group'. Procedures and processes have been established for the hand-over of responsibility from the Development Group to the Service Delivery group when set criteria are met. The revised organization chart for BSD will be issued shortly.

As part of re-organization, BSD have set up Business Processes and Support organization, operating within the Service Delivery Group. This organization will

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Management of Logistics: A Study of P&O Nedlloyd Logistics

have primary responsibility for Business Testing and support (BTS) and the maintenance of Corporate Reference Data and codes.

All PONL business systems testing and support activities for global applications would be consolidated into one business unit within BSD, namely BTS. Whilst the overall objective is to improve the effectiveness and efficiency of these activities, one of our major objectives is to reduce the cost of providing these services. This is to be achieved by a combination of introducing best practice standards for all our activities and the centralization of activities in Pune. The overall coverage of the activities will be achieved by both our London and Pune operations. However, the challenge of this position is firstly to achieve our initial priorities and then to plan for transfer of further responsibilities and activities from London. We have formed a team to progress the establishment of a business systems testing and support facility in Pune for: The development and release testing of applications; The business process and application support of applications

Driven by its mission to achieve sustained profitability combined with high customer service, P&O Nedlloyd has launched "smart operations" based on super efficient back-office systems. Towards this end, it as established a worldclass Offshore Center - Indian Shared Services Center (ISSC) - at Pune &

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Chennai. ISSC s primary task is to undertake & consolidate all back office functions for the company's worldwide operations on a 365 X 24 X 7 footing.

Objectives: ISSC basically performs back-office functions for the business and its paramount objectives are:

Locate functions in the most cost-effective location: transfer must be invisible to the front end.

Gain efficiencies by consolidation of functions from several offices to one. Process refinement & improvement.

Working in ISSC

Back office operations for PONL global. Work is 24 x7x 365 days Weekly offs, after every five days (initially), not necessarily on Saturday/Sunday. Public Holidays are linked with overseas holidays, not necessarily specific to Indian holidays Sophisticated & high-tech environments/platforms, & state of the art infrastructure

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Scope of ISSC

The PONL-ISSC project was initiated in the month of April 2001. The functions that have hither to been transferred include Data Management Operations Support Logistics Finance Export Documentation Import Documentation Dangerous Cargo

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THE ROAD TO SOUTH ASIA

Offices located at all major South Asian Ports. Above Offices Control Various Ports & ICDs.

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SOUTH ASIA ORGANISATION

Pierre Menezes, Regional Manager, South Asia

Radhika Butail, SAM LOGNET/ Data Integrity

Shekhar Kotian SAM Operations

Sandeep Nair SAM FOS/ Products (LCL/Air)

Finance Hoshi Zaroliwalla South Asia Finance

TBA SAM Operations/Products (Warehousing & Distribution)

Adolph Colaco Manager, Business Dev., India

Fayyaz Khundkar Manager Bangladesh

Capt. K. Rizvi Manager Pakistan

Nigel Fernando Manager Sri Lanka

Shekhar Kotian Manager Services/Operations India

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LOCATIONS WITHIN INDIA

The Main Gateways in India are at: Old Bombay Seaport Mulund CFS Nhava Sheva, Jawaharlal Nehru Port Trust

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P&O NEDLLOYD: CAPABILITIES IN INDIA

1.

Buyers Consolidation: This refers to consolidation of goods for a single buyer, from a number of suppliers, in order to fill the entire container load.

2.

LCL: or Less than Container Load. The exporter does not have enough cargo to fill the entire container, he is thus only charged for the amount of space he utilises. In this method, the freight charges definitely increases, however, total cost of shipping goods reduces as the exporter pays only for the amount of space utilised by him. Thus, in this case, a number of LCL shipments are clubbed together and shipped on the same container.

3.

LCL Overflow: When a number of LCL shipments are clubbed together, the excess goods, which do not fit on the container, are known as LCL Overflow.

4.

Consolidation: It is also known as Third Party Logistics. This is the process whereby the shipping company itself, consolidates cargo from a number of exporters, onto one container, to one particular destination.

5.

Consignment Handling: Handling of the goods from the time they are received from the exporter, to the time they are properly and safely shipped.

6. Purchase Order / Vendor Management

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7.

Direct Shipment (Ocean/Air): All the shipments of goods and materials come directly from the suppliers to the retail stores. The path / route which each shipment has to take is specified. The duty of the supply chain manager in this case is only to decide on the quantity of goods that have to be sent to the retail store and then, depending on the type and quantity of goods, he has to decide on the mode of transport. P&O Nedlloyd only makes use of Ocean and Air for Direct Shipments. Direct shipment intermediate warehouses, and its operation and coordination is simple.

8.

Customs Clearance: The process of collecting documents from the exporters, getting the shipping bills passed by the customs, receiving goods in the port, getting them examined and out of charge by the customs to load in the containers is known as customs clearance.

9.

Local Collection & Distribution: This includes collection of goods from the factory premises and transporting them to the port of loading, and then loading the goods onto the ship or airplane, as the case maybe. This also includes distribution of products to the local retailers, within the country.

Warehousing and distribution: P&O Nedlloyd Logistics can provide warehousing and distribution as an extension of a customer's ocean freight shipment process. Recognising customers may need to hold stock closer to market or prior to shipment we can make arrangements to meet specific requirements including shipments routed via other carriers. These services include: Selection of optimum warehouse location

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Customs bonded facilities Controlled delivery ex port to warehouse Receipt & Storage Cross docking / Transloading Order Picking Value Adding Functions (labelling, cartoning, re-packaging) Despatch Commercial Distribution Waste Disposal

These warehousing and distribution functions can also be performed as part of more complex Supply Chain Solutions.
10.

Project Handling: P&O Nedlloyd undertakes the handling of projects such as Heavy Lift Cargoes, Abnormal Loads, Turnkey Projects, Communication Construction Projects.

11.

Packaging Solutions: Packaging controls costs of customer service, inventory control and handling costs. P&O Nedlloyd makes use of two types of packaging, namely, Consumer Packaging & Industrial Packaging.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Consumer packaging focuses on customer convenience, market appeal, retail shelf utilization, and product protection. In consumer packaging, emphasis is more on marketing.

Industrial packaging empasises more on logistics. Industrial products are normally grouped into cartons, bags, bins or barrels for handling efficiency.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

NORTH INDIA
There are a number of Inland Container Depots (ICDs) in the northern part of the country. These ICD s are located at the following places:

Jodhpur Moradabad Delhi Ludhiana Jaipur Kanpur

Delhi has one of the largest ICD in the country, namely, ICD Tughlakabad (ICD TKD) that has an annual throughput of 2,00,000 TEUs. The time taken in transit to ICD TKD from Nhava Sheva in Mumbai is 48 hours by rail, and approximately 6 days by road.

COMMODITIES

Delhi specialises in Garments, Handicrafts, Stones, Rice and Carpets. Jaipur & Jodhpur specialise in Polyfilms, Footwear, Furniture, Handicrafts & Artware, Guargum.

Moradabad specialises in Brass. Kanpur in leather footwear and saddlery. Ludhiana in bicycle parts, knitted garments, cotton yarn and acrylic yarn. Panipat in cotton piece goods and floor coverings.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

WEST INDIA The locations of the Inland Container Depots in West India are as follows:

Mumbai Pune Marmugoa Kandla Ahmedabad Indore Nagpur

Mumbai is the commercial capital of India and the regional headquarter for the Middle East, South Asia and Africa region for P&O Nedlloyd. At Nhava Sheva, Mumbai, P&O Nedlloyd owns a warehouse by the name of Gateway Distriparks Ltd., where the company stores all the goods to be loaded onto containers to be shipped. Pune is the back-office for all operations. Activities earlier done by the London Hub are now carried out by the Pune back-office.

COMMODITIES

Mumbai specialises in garments, textiles, yarn etc. Ahmedabad in Dyes, chemicals, denim and yarn. Kandla in Guargum, rice, seafood and granite. Pune in automotive products, machinery and pharmaceuticals.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

SOUTH INDIA Inland container depots (ICDs) are present at each of the following locations:

Bangalore Mangalore Cochin Tuticorin Coimbatore Tirupur Chennai Hyderabad Vishakapatnam

Chennai is the controlling hub of all the operations in South India.

COMMODITIES

Chennai specialises in tires, granite, leather goods, tobacco and shoes. Bangalore in coffee, gherkins and mushrooms. Tirupur in knitted garments and hosiery. Cochin in seafood, cashews, coir and spices. Hyderabad in pharmaceuticals and granite. Coimbatore in tea, machinery, mushrooms and garments. Tuticorin in garnet sand, knit garments and dried flowers.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

EAST INDIA & NEPAL East India and Nepal house the Inland Container Depots in the following places:

Haldia Kolkata Biratnagar Birganj Kathmandu

The two main ports in East India are Haldia and Kolkata. Of the two, Haldia is more preferred. All cargo from Nepal moves to Kolkata and Haldia through Birgunj or Biratnagar.

COMMODITIES

Kolkata specialises in Jute, cast iron goods and manhole covers. Nepal specialises in carpets, garments, handicrafts (exports), woolen garments, cosmetics, acrylic, FMCGs (imports).

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Management of Logistics: A Study of P&O Nedlloyd Logistics

BANGLADESH P&O Nedlloyd has owned offices at Dhaka, Khulna and Chittagong. Bangladesh has two major seaports, Mongla and Chittagong. P&O Nedlloyd ICDs are present at Dhaka, Chittagong and Mongla. The ICD in Dhaka at Kamalpur is connected to Chittagong by rail.

The commodities that Bangladesh specialises in are readymade garments, jute goods, frozen shrimps and handicrafts.

P&O Nedlloyd offers the following services in Bangladesh:


Buyers Consolidation. LCL LCL Overflow. Consolidation. Purchase Orders and Vendor Management. Direct Shipment (Ocean).

P&O Nedlloyd makes available a 4500 sq. ft. warehouse which is on lease from KNT, and a 7000 sq. ft. warehouse on rent from Iqbal Enterprises.

By providing the above-mentioned services and facilities, P&O Nedlloyd ensures the satisfaction of their customers.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

SRI LANKA Colombo is one of the hubs in the South Asia region, for P&O Nedlloyd. P&O Nedlloyd has an owned office at Colombo, which is in Joint Venture with John Keels Group. Sri Lanka specialises in garments and accessories, luggage, fashion items, tents, tea, fibre activated carbon. The services that P&O Nedlloyd offers in Sri Lanka are:

Buyers Consolidation LCL LCL Overflow Consolidation Consignment Handling Purchase Order / Vendor Management Direct Shipment (Ocean) Direct Shipment (Air) Customs Clearance Local Collection & Distribution Warehousing & Distribution

Other than these services, P&O Nedlloyd owns a Container Freight Station called TRANSWARE LOGISTICS (PVT.) LTD. This station has a 40,000 SQ.FT. , Fully bonded warehouse, with In-House Customs and BOI Verifications. It houses a 24 x 7 Operations and Security system. The station carries out MCC Operations, GCH operations, a QA Centre, and Bar-Code Scanning.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

PAKISTAN

P&O Nedlloyd has Inland Container Depots (ICDs) in each of the following locations:

Rawalpindi Peshawar Sialkot Faisalabad Lahore Multan

Lahore is the most important ICD in Pakistan. It is a dry port. Two trains operate weekly to and from Karachi. Lahore caters to road hauls.

The commodities that Pakistan specialises in are:


Lahore in Garments and Yarn. Faisalabad in Textile & Cotton Piece goods. Sialkot in Sports Goods. Multan in Cotton Yarn & Fabric. Rawalpindi in Textiles. Peshawar in Handicrafts.

P&O Nedlloyd in Pakistan offers the following services:

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Management of Logistics: A Study of P&O Nedlloyd Logistics

Buyers Consolidation LCL LCL Overflow Consolidation Purchase Orders / Vendor Management Direct Shipment (Ocean)

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Management of Logistics: A Study of P&O Nedlloyd Logistics

CASE EXAMPLE P&ONEDLLOYD LOGISTICS & CUMMINS.


Earlier this year, P&O Nedlloyd Logistics and Cummins came together to begin a business venture. To go ahead with this venture, P&O Nedlloyd Logistics created the following supply chain, in order to meet the needs of their new customers, Cummins. Customer

Managing Organisation Ocean / Air Freight Freight Management Local Collection & Distribution Consignment Handling/ Processing Consolidation Storage & Warehousing Customs Clearance Purchase Order / Vendor Management

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Management of Logistics: A Study of P&O Nedlloyd Logistics

P&O Nedlloyd Logistics also formulated a Product Strategy that it had to offer to Cummins. The product offering was such:

Air / Ocean Cargo: PONL Ocean Shipment (base level product) Tracking Documentation Direct Shipment

Consolidation:

Phased Deliveries Distribution & Haulage DIT (Delays In Transit) Sequenced Deliveries.

Consignment Handling: Shrink Wrapping Palletization Carton labeling Re-Pack Pick & Pack Cargo Digital Pictures

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Management of Logistics: A Study of P&O Nedlloyd Logistics

P.O. / Vendor Management: Cursory Quality and Control Inspection P.O. Track and Trace P.O. Management Vendor Management Postponement

Customs Clearance: Air / Ocean Freight Clearance for imports and exports.

Local Collection & Distribution: Haulage Consolidation (Ocean Cargo) De Control FCL Overflow Handling (LCL) MCC (Multi Country Consolidation) Consolidation (Air)

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Management of Logistics: A Study of P&O Nedlloyd Logistics

For its local collection and distribution, the goods would be collected from the factory premises and transported by road or rail to the port of loading. Once received at the port of loading, the goods could either be stored in the P&O Nedlloyd Logistics warehouse, or packed into containers straightaway. Next, the goods are loaded either onto ships or airplanes where they are discharged to their final location. On receipt of the goods at the Port of Destination, P&O Nedlloyd makes arrangements for the goods to be distributed either by rail or by road to retailers across the country.

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Management of Logistics: A Study of P&O Nedlloyd Logistics

FUTURE OF LOGISTICS
The movement of goods from point of manufacture to the end user relies upon the four basic transport modes: road, rail, water and air. Each mode has evolved independently of the others, and each has its roots embedded in its own particular social and industrial history. The four sectors have become industries in their own right with their own infrastructure, cultures, jargon and identity. It is, therefore, not surprising that these industries road haulage, the railways, shipping and aviation are often seen taking robust positions to lobby for, and protect, their particular interests. Today, however, there is a greater awareness of the benefits of integrating one transport mode with another: this has resulted in providers of one type of distribution service moving across into what was the traditional domain of others. Since 1997, there have been radical changes in the way freight transport and distribution is organised. Today, the principles of logistics are applied to the distribution industry to achieve savings and efficiencies. These changes have come about as a result of competitive market forces, through political, economic and social pressures, and as a result of technological advances. Another important influence has been the evolution of supply-chain management (SCM), which has forced managers to optimise the flow of goods by employing more efficient logistical practices. The future holds many further developments as the business of freight logistics evolves and as greater economies and efficiencies are achieved. The sector is, therefore, at a dynamic and exciting stage in its evolution, presenting both risk

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and opportunity for those involved. The report explains the evolving relationship between the supply chain and the business of freight logistics. It reports on the way in which the different transport modes serve that market, how they compete and integrate with one another and how their respective infrastructures are also developing. Other influences are also at work. To stay ahead, companies are continuously rethinking their strategies, acquiring and merging with others, and forming alliances with customers in ways that would have been unimaginable a decade ago. The globalisation of both the production and retailing of goods has had the effect of internationalising the freight-logistics business. Today's logistics providers must build both a global network of their own offices or partner companies, and an effective communication system for the flow of data and information. Software that facilitates the control of goods in transit and delivers savings and efficiencies within the supply chain is now available. Security has also taken on a new significance as managers question perceived wisdoms concerning cargo safety and the interruption of the supply chain by acts of terror or theft of cargo. Finally, the problems of pollution and congestion are increasingly influencing the way in which goods are transported and distributed. Regulation and legislation will increasingly dictate these issues, but there are also real savings to be made by adopting a more sustainable approach to distribution. Both service providers and users are scrutinising their logistics policies with a view to achieving such

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Management of Logistics: A Study of P&O Nedlloyd Logistics

gains, whether through better utilisation of existing arrangements or by the more radical solution of modal shift. We expect both the movement towards consolidation amongst logistics providers and the integration of logistics providers' services into the activities of their customers' supply chains to continue. SCM itself will advance as inefficiencies are squeezed out of the system. Internet-based IT, such as the evolving freight portals, will also contribute to greater efficiencies. In addition, both EU and national transport policy, responding to social and environmental imperatives, will offer incentives and impose stricter controls to set the business of freight logistics on a more sustainable course.

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