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IT - trends in logistics companiesSachin Baxi

ET Intelligence Group

August 18, 2006

There are changes afoot in the IT usage of logistics companies. IT is really the lifeblood of supply chains and

even for a small sized firm, the requirements can be daunting; for larger size national and international

players, the challenge is magnified many fold. Many Indian logistics companies are beginning to step up their

scale and size, bringing with it changes in IT. These changes range from higher spends on technology to

training.

ETIGs survey of select leading supply chain service providers shows that they have started moving to a

higher share of pre-programmed software than before. The main reason is that beyond a certain size, in-

house programming becomes too much for staff to handle without significantly expanding staff numbers and

skill level and both can be expensive. Packaged software also comes with support and upgrades. Says Vineet

Agarwal, executive director, Transport Corporation of India (TCI), All our software packages have been

developed in house. However, in the next 3 years, we think more than 50% of the software will be

packaged/outsourced. Says Anil Syal, VP-marketing, Safexpress, Almost all the work is initiated by the

business team and hence it is beneficial to see the application getting developed nearby. Plus our team now

knows our business inside out and we save lot of time by getting the job done in-house. However, he adds,

The percentage of in-house work in percentage terms is reducing with more and more advanced applications

coming in. We still lead the show even if the application is developed outside. A lot of times it becomes easier

to buy the box rather than develop oneself. Gati has also developed its ERP in-house. All these are checking

out integration with ERPs like SAP and Oracle as well.

Theres another view as well. Pradipt Varshney, marketing head, Speedage, at the moment sees no need to

go for packaged software, though. Akash Bansal, head logistics, Om Logistics, also echoes a similar view,

100% of our ERP is developed in house. We have a fully equipped IT team for the same and have no plans

of outsourcing any module of this ERP.

Linux is another software that companies are aware of, but not many use actively. Agarwal of TCI says,

We currently have a limited usage of Linux and are looking at further implementation in Regions Syal of

Safexpress adds, We have linux applications in our company operating, more strategic than anything else

actually. Speedage and Gati have no Linux, while the only company to be a leader in using Linux remains

Om Logistics.Says Bansal of Om Logistics, We have been operating with linux as operating system since

last 4 years now.We did this transition from windows to Linux in just 6 months through out the country.

Bansal says the company cut its IT software development costs radically even as the business developed.

The other change happening is that overall skill levels are beginning to increase. Agarwal of TCI says, We

have an IT Executive/ Officer at all our Regional offices as well as Controlling offices (more than 150). They

are supported by the IT team (around 25 members)in the head office. We do seek an MCA/ BE but if the

person has relevant job exposure, a lesser qualification will suffice and will be placed acco rdingly. Internally

we conduct regular training programs to educate the new joiners on the company systems and requirements.

Apart from that, we also send our IT teams for higher training in courses necessary for future software and

hardware developments. Syal has a team of 25 engineers and 100 computer operators with who have B

Tech or MCA qualifications. Specialized qualification is necessary for development team like J2EE, VB, etc.

Most of these are young guns with 2-4 years experience. Our project manager has over 5 years and our VP

IT has more than 25 years experience.

TCI and Safex estimate a spend of Rs crore just on tracking technology; Om Logistics at around Rs 15-18

crore over the past three years, while Gati spends several crore on warehousing. This money is partly going

for equipment, but a lot of it is also going for trainin g and talent.

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