Multi Model Logistic Park (MMLP) and Economic Development

Dr. Mukul Chandra Bora

(The writer is State Project Administrator, State Project Implementation Unit-North East, Union Ministry of Education, Centre for Educational Technology, IIT Guwahati. He can be reached at mukul1968@gmail.com

Since time immemorial, human being has been in trade and commerce in different ways in the world to sell and purchase products required for livelihood. There have been drastic changes in the science of warehousing, transportation and supply of products in the last few decades. In the present day of competitive business world, the new warehousing techniques are becoming obsolete by the time the infrastructure is being arranged to implement the new ideas and that is why the warehousing industry nowadays should strive to be more efficient and effective than the other competitors and must implement with most sophisticated technologies in order to stay in the competition. Warehousing is basically performs the function of storing goods between the time they are manufactured and the time they are delivered to the customer. In the post-second world war period, the general trend for the supplier has been to store the goods in order to meet the demand in the market which is always fluctuating. As the delivery time is very essential for the businesses as a marketing technique and the idea of putting shorter lead times rather than reducing the price in order to attract the customers and this is one of the main reasons for the rapid growth of the concept of warehousing globally.

The traditional warehousing methods are getting obsolete since the last decade of the 20th century with the introduction of some of the efficient techniques such as Just in Time (JIT), introduction of Warehouse Management System (WMS) as well as introduction of automation and control systems, deployment of goods identification techniques like Radio-Frequency Identification (RFID), voice picking etc. These new developments specially designed to enhance the return on investment of the businesses by optimizing the inventory levels and help in reducing the overall warehousing costs. The concept of JIT is based on delivering the product directly from the supplier to the retail outlet and shelf the products in the retail store eliminating the concept of warehousing which is now becoming more prominent in the businesses because there is a drastic reduction in the costs of the businesses by eliminating the warehouse thus eliminating the inventory holding costs. The recent developments in the warehousing technology led to the development of new warehousing concept called a "Retail Warehouse" in which the floor space is used for warehousing as well as the retail store.

Despite the emerging new technologies in e-commerce, supply chain integration, quick response, just-in-time delivery and efficient consumer response that connect the manufacturing with the end customers, businesses are still struggling to eliminate the concept of a warehouse. In spite of having drastic developments and latest sophisticated technologies in the field of warehousing, there is always a speculation for the organizations of which strategy should be adapted in order to gain maximum efficiency and at the same time reduce the costs involved in warehousing.

Logistics involve the integration of information, transportation, and inventory, warehousing, material-handling, and packaging. In other words as per Jonsson Mattson, the term "Logistics is defined as the planning, organization, and control of all activities in the material flow, from raw material until final consumption and reverse flows of the manufactured product, with the aim of satisfying the customer's and other interest party's needs and wishes i.e., to provide a good customer service, low cost, low tied-up capital and small environmental consequences". There are another definition of which is known as The Seven R's, i.e., right product in the right quantity, in the right quality, in the right place, at the right time, to the right customer and doing this at the right cost. In most of the cases logistics is seen as an operative way of transporting of materials from one point to another or producing service its credibility depends on how good is the system which leads to this kind of logistics and it encompass the operative responsibilities, which include administration, operation and purchase and constructive duties as well as detailed design.

"Supply Chain Management is also one of the terms used in the organizational sector which encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In short "Supply chain management is defined as the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole".

"Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption to meet customer's requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers. Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology."

Multi Modal Logistics Park (MMLP) is defined as a multi-modal freight handling facility with a minimum area of 100 acres comprising mechanized warehouses, specialized storage solutions such as cold storage, facilities for mechanized material handling and inter-modal transfers container terminals, bulk / break-bulk cargo terminals. Multimodal logistics parks are expected to provide the key services like Freight aggregation and distribution, Multimodal freight transportation, ICD, Storage and Warehousing, Value added services etc. The Multi Model Logistic Park is a complement to planned economic corridors to be developed throughout India will help India transition from a "point-to-point" model to a "hub-and-spoke" model. They aim to serve as centres for freight aggregation and distribution, multimodal transportation, storage and warehousing, and value added services, including Customs services with bonded storage yards. The MMLPs will be strategically located throughout India and consider rail and road connectivity, as well as inland waterway connectivity to ports, to decongest the cities and reduce pollution in the country. Proposed locations include Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Gujarat, Assam, Mizoram, Madhya Pradesh, Orissa, and Haryana.

The present logistics cost in India accounts for 13-17% of the Gross Domestic Product (GDP) which is almost double (6-9%) that of logistics cost to GDP ratio in developed countries like the US, Hong Kong and France and is mainly due to lack of efficient intermodal and multimodal transport systems. Moreover, warehousing which approximately accounts for 25% of the logistics cost has also been facing major challenges and added to the logistics cost borne by the end users and other stakeholders.

Logistics cost in India accounts for 13-17% of the Gross Domestic Product (GDP) which is nearly double (6-9%) the logistics cost to GDP ratio in developed countries such as the US, Hong Kong and France. Much of the higher cost could be attributed to absence of efficient intermodal and multimodal transport systems.

The logistics value chain comprises three units – transportation, warehousing and administration (Source: Logistics – Tech Avendus 2016). Transportation involves the end–to–end movement of freight from the manufacturer/retailer to the customer. This transfer can span across borders and across different modes of transport. Warehousing is the intermediate storage of goods that happens during a product's journey from the factory to the consumer. Warehouses today take different forms – fulfillment centres, distribution centres, return centres, and even showrooms. Administration is supply chain management. Logistics entails a lot of coordination and integration, which is made efficient through supply chain management. This chapter comprehensively discusses the global best practices in the logistics sector on the whole and in the warehousing component in particular. Logistics is an essential part of the economy in any country, enabling the movement of resources along supply chains to consumption centres. Freight logistics—comprising transport, warehousing, and value-added services for transit by road, rail, inland water, sea, and air-driven trade and is a catalyst for economic growth.

India has made significant progress in developing logistics capacity in recent years. The country jumped from 54th in 2014 to 35th in 2016 in the World Bank's Logistics Performance Index, considered a benchmark for national performance on this issue. The implementation of the Goods and Services Tax earlier this year is expected to further boost logistics efficiency. The logistics sector is poised to grow by roughly 1.2 times the level of national GDP growth until 2032, by which time it is expected to generate $360 billion in value-add, up from $115 billion now.

The Government of India has taken up a program to develop Multi-Modal Logistics Parks, or MMLPs and is a part of Logistics Efficiency Enhancement Programme which is aimed at reducing logistics costs; improve freight aggregation, distribution, storage, and warehousing; and create various value-added services, including labeling, packaging, tagging, and crating. By providing a variety of services in a single location, MMLPs enable firms to produce more and deliver faster to customers and will leads to more savings on time and money to the end users. The development of roads, railways, and other available modes of transportation must be improved for smooth and uninterrupted linkages among adjacent parks, industrial clusters, and consumption centres and the cutting-edge information technology will play an important role for MMLPs to work effectively. Transforming India's logistics landscape will help to realize the country's enormous economic potential and it need a collaborative effort to define a clear, long-term, and sustainable vision encompassing initiatives that are proactive rather than reactive which further requires a logistics planning approach that considers various modes of transportation cutting across state boundaries, and balances the slew of infrastructure investments with appropriate policy and regulatory reform measures.

In short the Multi Model Logistic Park (MMLP) will be a critical infrastructures toward the substantial reduction in the logistic cost together the benefits of (i) excellent transport links of rail, road and air, (ii) Rapid custom clearance facilities, (iii) round the clock services, (iv) one window services, (v) Enhanced security systems, (vi) availability of more options to the users (vi) value-added services and the last not the list ease of collecting GST and hence more revenue to the Government Exchequer for development project and developed India. The MMLP at Jogighopa in Assam will make it possible to make more business with the South East Asian countries which in turn bring more direct and indirect opportunities to the people of Assam in particular and the entire NE in general. But it must be remembered that as the entire world is moving towards the Block Chain Technology for the supply Chain Management and hence the skill and knowledge requirements for this MMLP will have to be acquired soon by the youths of our state to make them employable. This MMLP will become an opportunity in the agro-based manufacturing sector as the most of the SEA countries used to import lot of food items from other countries which is more commonly grown in the NE India including Assam.