G.

L BAJAJ INSTITUTE OF MANAGEMENT & RESEARCH

GREATER NOIDA

MINOR PROJECT REPORT (PG 34) ON

A Study on gati kwe
Post Graduate Diploma in Management
Term 3
BATCH 2019-21

Submitted by Under the Guidance of

MANSI GUPTA Dr.Parul Yadav
ROLL NO- GM 19088 (Assistant professor)
 G.L BAJAJ INSTITUTE OF MANAGEMENT & RESEARCH
GREATER NOIDA,
UTTAR PRADESH

CERTIFICATE
This is to certify that Ms. MANSI GUPTA (GM19088)
PGDM 2019-21. Term 3, work exemplified in minor project
report (PG 34) onGATI KWE under my mentorship in G.L
BAJAJ INSTITUTE OF MANAGEMENT AND
RESEARCH , GREATER NOIDA(U.P).

Mentor Section incharge Faculty in

charge
Dr.Parul yadav Arvind bhatt Dr. Dileep
singh
(Assistant professor) (Assistant professor) (Professor)
 ACKNOWLEDGEMENT

The present report is an amalgamation of hard work and contribution of experience of

eminent personality.

First of all I would like to thank the supreme power, the Almighty GOD who is obviously
the one who has always directed me to work on the right path of my life. With his grace
this project could become a reality.

I am grateful and thankful to maam who provided me his valuable guidance to go through
this project and helped me incompleting the project successfully.

Than I am thankful to DR. PARUL YADAV under whose guidance also, I have been able to
complete this project very efficient and effectively for her guidance,regular counseling, keen
interest and constant encouragement.

S. CONTENTS PG.NO
NO
1. Chapter 1
COMPANY PROFILE

2. Chapter 2
PROBLEM STATEMENT
3.
Chapter 3
LITERATURE REVIEW

4. Chapter 4
RESEARCH METHOD

5. Chapter 5
DATA ANALYSIS AND FINDINGS

6. Chapter 6
RECOMMENDATION

7. Chapter 7
CONCLUSION

Executive Summary

Indian logistics industry is going through a transformation. With an expanding economy,

rising GDP and rising income levels of consumers there is an explosion of demand for
logistics services. The proposed Goods and Services Tax (GST) to be introduced from next
year, higher levels of FDI inflows and a greater expansion of domestic companies in the
coming years will lead to an unprecedented growth in demand for logistics services from
these companies to streamline their operations and supply chains.

With the entry of big foreign players like FedEx, UPS, DHL and TNT there will be a
consolidation in the market in the market in the form of Mergers and Acquisitions and joint
ventures. With the rise in demand for specialized and reliable logistics there will be an
increase in the market share of organized players who have scale and systems in place to
offer these services efficiently. Setting up of Free Trade and Warehousing Zones (FTWZs),
expansion of transportation infrastructure viz. road, rail, seaports and airports will lead to
greater efficiencies in logistics in the country.

Gati Ltd is a pioneer in Express Distribution and Supply Chain Solutions in India. It is in
service industry providing specialized and complex logistics services to customers from
different industry verticals. The objective of this report is to study the different distribution
channels of Gati in retail segment and identify the scope for promotion, branding and
expansion of the current distribution network.

The methodology followed to meet this objective is to study and understand the Indian
logistics industry by studying the industry trends and other aspects from several industry
related publications, business and operations of Gati by studying the company annual reports
and newsletters, internal operations and discussions with its employees and associates. This is
followed by a study of its distribution channels and that of its competitors to identify areas of
improvement.
A survey Gati kiosks and that of competitors has been conducted to study the services offered
at these outlets, functions performed by them, their engagement with the company and
identify the current modes of promotion at their locality.

The results of the survey show that where as Gati is the preferred player for cargo services
with little competition from other organized players but in courier services it lags due to
severe competition, less number of outlets, and lack of promotion to make it a well known
name and preferred player for this service.

The company should increase its visibility by establishing more outlets at prime locations and
promoting aggressively through sales force, sign boards and advertisements.
CHAPTER 1
Indian Logistics Industry

Background

The logistics sector in India has evolved over the past two decades from being a pure
transportation / warehousing functional service to provision of more value added offerings
like customs clearance, domestic / international freight forwarding, cross-docking, reverse
logistics, freight consolidation, warehousing of modern standards etc. India with a GDP of
about Rs 31,297 billion is estimated to spend 13 per cent of its GDP on logistics creating an
industry size of around Rs. 4,068 billion (approx. Rs 4 lakh crores). The industry generates
employment to 4.5 crore people in the country. The sector has been witnessing double-digit
y-o-y growth rate since 2002 and is expected to be more than USD 120 billion (approx Rs.5.4
lakh crores) by 2015.
India ranked 47th in the World Bank’s 2010 Logistics Performance Index (LPI) out of 115
countries that were assessed for their efficient logistics systems with a score of 3.12 out of a
possible 5.
While there has been a growing recognition in India of logistics as a strategic tool for
enterprise cost reduction and improvement of organizational efficiency on the flip side
however, the logistics sector is characterized by dominance of a disorganized market.
Transporters with fleets smaller than five trucks account for over two-thirds of the total trucks
owned and operated in India and make up 80% of revenues. The freight-forwarding segment
is also represented by thousands of small customs brokers and clearing & forwarding agents,
who cater to local cargo requirements. In order to reduce logistics costs and focus on core
competencies, Indian companies across verticals are now increasingly seeking and using the
services of third-party logistics service providers. Traditionally LSPs (Logistics Service
Providers) concentrated mainly on transportation and logistics as they form a major share in
logistics. However, in order to keep up with rising demands and customer expectations,
companies now also concentrate on value added services like packaging, custom clearance,
inventory management and labeling.

The major elements of logistics costs for Indian Industries include transportation,
warehousing, inventory management and other value added services such as packaging. The
figure on the right shows that transportation and inventories account for 35 % and 25 % of
logistics cost respectively, indicating their importance in logistics.

Challenges faced by Indian logistics sector

These are among the supply chain challenges outside companies can expect as they enter the
India market:

 Limited physical infrastructure. In India the national highways account for less than
2 percent of the total road network, but carry 40 percent of the traffic. This is one
reason the average speed in India is 20 miles per hour, compared to the West’s 60
miles per hour. The poor condition of roads translates directly to shorter vehicle
lifespan, which increases operating costs and reduces efficiency. Off the highways,
firms can only run trucks smaller than 20 feet. As of now, India invests less than 4
percent of its GDP in infrastructure, compared to China’s 9 percent.
 Over-burdened ports. India has a long coastline, but its port system isn’t well
utilized. Seventy percent of the seaborne trade is handled by 2 of its 12 major ports,
while 180 minor ports go virtually unutilized. As a result, turnaround time far lags
other global ports with vessels taking up to 3½ days to debark. Many of the secondary
ports have infrastructure problems that aren’t a quick fix. Even within its large ports,
India can’t support 6,000 TEU containerships, which make up 25 percent of today’s
shipping volume. In addition to constraining India’s growth in offshore production,
this makes it difficult for manufacturers hoping to import, rather than produce
products for Indian consumers.

 Non-existent warehouse standards. There is virtually no complex distribution center

set-up, no standards for suppliers, and little vendor compliance. Beyond that, firms
will find there is little vacant DC space available. Firms entering the country will have
to build this infrastructure, which will include supplying their own electricity, running
water, and road access.

 Disorganized trucking operations. Two-thirds of fleets have less than five vehicles,
making it difficult for shippers to manage the plethora of carriers required to handle
shipment volumes. Freight consolidators and brokers take a commission to provide
truck owners with consignments, and corruption is rampant. Also, inadequate
infrastructure causes equipment maintenance costs to be abnormally high. These
increasing costs and dwindling profits leave little opportunity for small fleet owners to
expand.

 Multiple tax structures at entry points of different states. Multiple tax rates at
different states, octroi and different documentation requirements at the entry
checkpoints of different states consumes time and increases complexity of trade
between states. This acts a big blockade for movement of goods between states.
Key Players

Indian logistics industry is a highly fragmented one with 99% of the market catered
by many small unorganized players and most of the remaining 1% catered by a large
number of organized players. So, one can see that the logistics industry in India is in a
nascent stage.
There are a large number of organized logistics service providers (LSPs) operating in
India operating in several modes viz road, rail, air and sea. Over the year each player
has developed competence in one or multiple modes, but none have achieved
economies of scale to operate cost effectively due to severe competition from
unorganized players.
Sales of some key players in Indian logistics industry (in crores)
 1400

1200

1000

800
2006-07
600
2007-08
400 2008-09
200

0
Aegis Gati Blue Sical TCI XPS Safex
Dart

Sales growth over the previous year (in %)

70
60
50
40
30 2008
20 2009

10
0
-10 Aegis Gati Blue Dart Sical TCI XPS Safex

-20

As can be seen above all the logistics companies have seen a decline in their sales growth
rates due to global recession followed by a slowdown in the domestic economy. Similarly the
net profits of these companies were impacted.

PAT of some key players in Indian logistics industry (in crores)

 100

80

60
2006-07
40 2007-08
2008-09
20

0
Aegis Gati Blue Dart Sical TCI
-20

Change in PAT over previous year (in %)

100

50

0
Aegis Gati Blue Dart Sical TCI 2008
-50
2009

-100

-150

-200

Though the industry was impacted by a slowdown in the last fiscal, it is going to
rebound in the coming year bolstered by a rebound in manufacturing and other
economic activities.
Gati Ltd
Company Background

Gati is a pioneer in Express Distribution and supply chain solutions in India. Gati started
operations in 1989 as a door-to-door cargo company. A division of Transport Corporation of
India (TCI), it was the result of Mr. Mahendra K Agarwal’s conscious decision after he
returned from the United States with a degree in management. When he joined TCI in 1980,
it was one of the top three transport companies in India. His aim was to rebuild an otherwise
successful TCI based on systems and processes and manage it professionally to meet implicit
and explicit consumer needs.
Based on customer’s feedback and interaction, Agarwal felt that, apart from moving cargo,
TCI could do something different which customers would value and appreciate. Thus Gati
was introduced in the market as a door-to-door cargo company with commitment on delivery
and money back guarantee. The name Gati was selected to reflect and represent speed with
direction.
Agarwal was aware that Gati was a late entrant to the generic cargo business. To make
progress, the business needed to be conducted with a different perspective. Gati was willing
to wait to generate surplus from the business. Agarwal chose time bound, point to point
delivery, premium priced cargo management service. With this offering, Gati introduced the
concept of express cargo in the Indian context.
VISION and MISSON statement

Be a globally preferred provider of India-centric supply chain services and solutions, and a
leader in the Asia Pacific region.
Delight customers with quality service by setting new trends through innovation and
technology.
Be the most preferred organization for all stakeholders.
Be a responsible corporate citizen with the unwavering commitment to environmental
protection and conservation.

Business:
Gati’s core business is Express Distribution and Supply Chain Solutions. It offers total end-
to-end logistics solutions to its customers.
Its two lines of business are
Capabilities

 Gati is India’s only multimodal logistics company, offering seamless connectivity

across air, road, ocean and rail.
 It is the India’s first logistics company to receive ISO 9001 certification
 Gati covers 603 of India’s 611 districts, a reach unmatched by any other player.
 It has a fleet of 4000 vehicles, 94 refrigerated trucks and 6 marine vessels to ensure
faster time to markets through well streamlined operations.
 Leverages an extensive technology backbone that allows tracking of shipments online
 Provides real-time delivery information on shipments
 Has over 2 million sq.ft. of best-in-class mechantronic warehousing space, spanning
the length and breadth of India
 Delivers a record 3 million packages weighing over 46,000 tons – every month
 Has a dedicated workforce of 2,850 well trained Gati’ites

Products/Services of Gati

Gati offers a host of products and services customised to meet the logistics requirements of
its customers. They are

•Gati Surface Express

•Gati Air Express

•AI Gati Courier

•Gati Art Express

•Gati Supply Chain–Integrated Logistics

•Gati Kausar – Cold chain logistics

•Gati Transport Solutions – Full Truck Load

•Gati Europe Express

•Gati Global Express

•Gati International–the global arm

•Gati Coast to Coast–the shipping division

•Gati Happiness – Gift services

•Gati Student Express

With its superior coverage, reach, facilities and capabilities Gati is all geared to provide the
best end-to-end logistics services to companies in different industry verticals. The company
has over the years has evolved from a desk-to-desk cargo company to a preferred 3PL.
Performance of the company

The company’s revenue has consistently grown at a CAGR of 12% from 2001-2009
increasing its share of logistics services in the country

Evolution of business mix

Business by divisions:
As can be seen from the below chart there has been shift in the company’s business mix over
the years from low margin express segment to high margin logistics and freight segment.
The trend to outsource logistics to 3PL will further improve the earnings of the company.
Increase in assets and a rise in capabilities

The company has continuously invested in assets to increase its capabilities to deliver the best
logistics solutions. The company is transforming its network into a hub and spoke model to
increase the reach and operational efficiency.
Major competitors

The company over the years has built an extensive capability over the years to take on
competition, both from domestic and international competitors operating in the country. But
the competitors are catching up. Since the market for reliable logistics services is increasing
new players are entering the market and the established players are consolidating.

Many large manufacturing and service units like Reliance, Mahindra & Mahindra, Future
Group have established their own in-house logistics divisions. Now these companies plan to
provide logistics services to other companies also.

The major competitors of Gati in Express Division are

 TNT
 Safexpress
 TCI XPS
 AFL
 Blue Dart
 CHAPTER 2
THE PROBLEM STATEMENT

The Problem:

According to Stern and El Ansary (1992), distribution channels are sets of interdependent
organizations involved in the process of making a product or service available for
consumption.

Gati Ltd is an Express Distribution and Supply Chain Solutions company providing logistics
solutions to its customers. Gati has a multi modal distribution network to reach its customers.
The different distribution channels are namely 1. Sales Force, 2. Gati Associates, 3. Kiosks,
4. Website and 5. Customer Care centre.

The company broadly has two types of customers depending on the nature of their
transactions with the company. They are Retail customers and Credit customers. Retail
customers are those who do single or irregular transactions with the company. These
customers deal in cash basis. There are other type of customers who are contractual
customers and provide regular business to the company. These customers are extended a
period of credit and provided the service according to the agreement.

OBJECTIVE OF STUDY

 To study the current distribution channels of Gati Ltd in retail segment

 To identify the competitors of the company in retail segment and its outlets
 To study the distribution channels of competitors
 To identify the modes of promotion for the company and its outlets
 CHAPTER 3
LITERATURE REVIEW
LITERATURE REVIEW
Traditionally, Delfmann et al. (2002) stated LSPs as “Companies which perform logistics
activities on behalf of others” whereas Huo et al. (2008) revised the definition by stating
LSPs as “a relationship between a shipper and a third party which, compared with the basic
services, has more customized offerings, encompasses a broad number of service functions
and is characterized by a long-term, more mutually beneficial relationship”. Persson and
Virum (2001) categorized LSPs strategically as third-party logistics operator, logistics
integrator and logistics agents on the basis of their available physical assets. Additionally,
Tezuka (2011) highlights the three characteristics of service provider as integrated, contract
and consulting service providers.
The popularity of logistics outsourcing arises from number of reasons. The role of
logistics service providers is very essential in conducting smooth flow of material and
information in both upstream and downstream of supply chain (Kumar et al., 2012).
Generally, Indian organizations outsource logistics activities to reduce cost, more focus on
core competencies, better service quality and time saving. Currently, transportation is
considered to be most crucial logistics activity which almost accounts for 50-60% followed
by warehousing which accounts for another 25-30% of the total market, which is further
followed by value added services and freight forwarding accounting for rest of the market as
shown in Figure 1.
Various authors analyzed 3PL businesses, their categorization, structure and services on the
basis of different types of industries they served (Marasco, 2008). Due to rise in recent
market requirements, LSPs need to restructure their process in order to fulfill the enhanced
customer expectations despite of so many challenges (Sahay and Mohan, 2006).

Figure 1 Distribution of logistics services in India

India being developing country; logistics sector is even not considered as an organized sector.
Apart from infrastructure and shortage of skilled manpower, coordination among all supply
chain stakeholders is an unavoidable barrier in delivering committed services (Bagchi and
Larsen, 2003).
The use of IT in logistics sector is rapidly increasing but it is largely limited to the big
size organizations. Chandra and Jain, 2009 have identified that the LSPs can adopt IT tools
rather than conventional and manual methods of operations to improve their decision-making
abilities across the entire supply chain and can reduce costs further. Javalgi and Todd (2004)
emphasized on the importance of e-services across boundaries and creating value in the
supply chains by reducing many other barriers. Restructuring of government policies on
taxation and regulations also makes working conditions adverse (Chandra and Jain, 2009). In
2013, More and Basu have also identified the challenges related to supply chain finance
which includes issues related to unpredictable cash‐flows, lack of automation in the payment
processes and lack of knowledge and training on supply chain.
So, there is need to identify and analyze the challenges faced by logistics service
providers in delivering desired quality to the end customers. Based on literature review and
experts’ opinion, various challenges are identified and discussed in detail below.
1. Infrastructural Bottlenecks: For economic development and urbanization, logistics
infrastructure is found to be critical enabler. Due to globalization, India is improving position
in world trade channeling upsurge in transport volume (Venkatesh et al., 2017). The Indian
government has already taken steps to expand and improve existing road and rail networks
and modernizing harbors and airports (Mitra, 2013). But expansion of logistics infrastructure
is not synchronized with the expected industry requirements. In developed countries, vehicles
move around 800-1000 km in a day whereas, In India, it runs only 250-300 km a day (Sanyal,
2006b). This creates the major problem of mismatching of transport capacities as required as
shown in Table 1. Pathetic condition of roads, poor connectivity, and high toll rates,
corruption on highways and hinterlands and inadequate air and seaport capacities are the
major infrastructural bottleneck (Sahay and Mohan, 2006)

Table 1 Core infrastructural

bottlenecks
Modes of Infrastructu Key
re Constraints
transport

 Bad
 Total road condition of
network- over roads
5,472,144  Low
kms average
(3,400,233
mi) in speed(30-
2015 40km/hr)
Road
 National  Low Daily
highways average
include distance
2% of Indian travelled (250
roads, they km)
handled 40%  Issues at
of check-
post and toll-
the traffic. post
 Total Track  Low service
Length-
119,630 guarantee
Kms (74,330  No
mi) dedicated
freight
in 2016 corridors
Railways  Low
connectivity
to industry
 No fixed
schedule for
departure/arri
val

Domestic/Inter
na  Only major
tional airports has
 Airport-
infrastructure
125 to
 5 main handle air
metros cargo
Airports account for  High
over Waiting
85% of total time
freight traffic  Poor
warehousing
infrastructure
 Ports-
212(Major  Heavy
12 & Minor
200) congestion at
 Capacity-
Major ports
ports at  Lack of
500mm good
MT and connectivity
Minor with
ports at
Ports 230mn roads
MT  Out-dated
equipment
and
technology
 Low port
capacities and
number of
berths

2. Lack of Efficient Technical System: GPS technology and tracking and tracing of
shipments are already available advanced IT tools which are in process and used by
shippers but there are around only 2% LSPs which follow these practices (Luisa et al.,
2013). The country is continuously upgrading its resources technically but adoption rate
is still very low. There is need to develop efficient technical systems and create
awareness about importance of IT adoption to all the stakeholders for better economic
development (Sauvage, 2003).
3. Inefficient Inspection Strategies: The customs and border authorities did not follow rigid
guidelines and policies for inspection are not properly defined (Mitra,
; Rajesh et al., 2011). Multiple handling at check-posts leads to delay and damages to
goods. Earlier, in India, the government levied various direct and indirect taxes on goods
which makes their movement difficult within and across countries but after
implementation of GST (Goods and Service Tax), things are expected to be better.
4. Lack of Government Support Policies: Logistics sector is not recognized as industry in
India despite of 14 percent contribution towards GDP (Luthra et al., 2011). However,
millions of employment opportunities are developed by this sector. Industries itself
consider logistics as backbone and key driver to their economic and industrial growth. The
governmental focus is still missing towards policy framework, development and
recognition of logistics business as an industry (Govindan et al., 2014).
5. Fragmented and Unorganized Sector: Logistics sector in India is considered to be highly
fragmented and unorganized business. It is an interplay of many small and large players
where more than 90% of LSPs are those who own less than 2 trucks and 95% are those
who own less than 5 trucks) impairs quality of services. (Mitra, 2006). Few large LSPs
usually serve well established and known organizations with comparatively available
resources than small players. On the other hand, small players ready to work for low
margin which creates unavoidable obstacles for large ones (Ding et al., 2012).
6. Conventional Ways of Operations: In developing country, there is very slow adoption of
automation due to unavailability and cost. The operations are majorly manual including
loading and unloading of goods, warehousing, use of pallets and connecting with entire
network (Mitra, 2006). More automation of operations can assist in creating nation-wide
broadband logistics IT network and can fasten up all processes resulting in better customer
satisfaction (Sharma et al., 2011).
7. Cost Implications: Logistics sector requires huge investment for resources like vehicles,
skilled manpower and warehouses etc. Logistics is a high cost and low-margin business
(Mitra, 2013). The untimely payment pattern by Indian shippers creates shortage of
adequate working capital for LSPs. Poor physical and communications infrastructure is
another deterrent to attracting investments in the logistics sector. High costs of operation
and delays involved in compliances with varying documentation requirements make the
business unattractive (More and Basu, 2013; Govindan et al., 2014).
8. Lack of appropriate performance metrics: No performance standards or benchmarks have
been defined by Indian government to regulate the logistics sector (Mitra, 2013).
Hundreds of logistics service providers resources are not up to mark and providing
services with inadequate resources. There is no appropriate performance metrics are
defined for establishment and selection of service provider (Rajesh et al., 2011). This can
be considered a big bottleneck which is affecting the logistics service.
Shortages of Skilled Workforce: In India, due to less importance to logistics sector, the
emphasis on specialized training, education and technical knowledge of employees in
logistics business is also missing (Govindan et al., 2014). Although this sector
contributes very high in GDP, but unavailability of skilled manpower for delivering
desired logistics services is a big barrier (Thai et al. 2011; Abdulrahman et al., 2014).
10. Less awareness towards sustainability measures: Unawareness of LSPs towards
sustainability is an important factor leads in low implementation of sustainable practices
(Abbasi and Nilsson, 2016; Colicchia et al., 2013). Very few LSPs in India shows
concern towards environment and use reusable and recyclable pallets, eco-friendly
vehicles and green processes in their operations. Still, there is need to create awareness
so that many more can start adopting sustainable practices and make optimum use of
available resources.
 CHAPTER 4
RESEARCH METHODS

Distribution channels of Gati in Retail segment

In a country like India with so many diversities no single distribution channels is perfect.
Companies have to adopt a multi modal distribution network keeping in view of the
factors like market potential, nature of the product, customer expectations, company
strategy, industry trends, etc to reach a maximum number of potential customers.
Gati has two types of customers – one who has a long term relationship and regular
transactions with Gati. These customers are contractual customers who are extended a
period of credit as per the agreement. Then there are customers who do a single
transaction or irregular transactions with Gati, these customers deal with Gati on cash
basis and the segment is called Retail Segment. They can be either individuals or
businesses.

Gati is in service industry providing complex logistics solutions to customers. Gati

follows a multi modal distribution network to reach both business and individual
customers. Here time and material safety are critical factors affecting the customer
satisfaction. So the company has to keep in mind these aspects while designing a
distribution channel.

The different Booking channels in the distribution network of Gati are as follows.

1. 2.

OU OU

Kiosk / Cafe
GA
 3.

OU

Booking/ Pickup

Sales Force GA

4.

Customer

Customer
Online Booking/

Enquiry

Company Website Sales Force

5.

Customer
 Customer Service Sales Force
centre

Elements of the distribution network

The several elements of Distribution network are as described below:

OU – Operating Unit (OU) is the company office/hub which administers all the operations in
the regions under it. It may also act a transit hub.

Franchise - A franchise is a channel partner appointed by the company to carryout the

operations of an OU where the company doesn’t have its own infrastructure or chooses to do
so depending on market conditions.

Kiosk – A kiosk is a channel partner whose main job is to operate an outlet where customers
can book their shipments to be carried by the company.

Café – A café is a company owned outlet where apart from booking services, other services
like Internet browsing, Printouts and Photocopying services are also offered.

GA – Gati Associate (GA) is a channel partner who owns a vehicle and maintains it as
prescribed by the company whose primary job is to liaise with the areas sales force, take
shipment orders from customers, do booking, pickup the material from customer’s door and
deliver it at the regional OU.
Sales Force – Sales Force consists of the personnel of the company whose key
responsibilities are Retention business development (RBD), New business development
(NBD), Channel partner development (CPD), Collections and Promotional activities in the
area under him.

The Approach:

The methodology followed to meet these objectives is to study and understand the Indian
logistics industry by studying the industry trends and other aspects from several industry
related publications, business and operations of Gati by studying the company annual reports
and newsletters, internal operations and discussions with its employees and associates. This is
followed by a study of its distribution channels and that of its competitors to identify areas of
improvement.

A survey Gati kiosks and that of competitors has been conducted to study the services offered
at these outlets, functions performed by them, their engagement with the company and
identify the current modes of promotion at their locality.
Transportation

Ever since the invention of wheel by mankind, there has been a revolution in the way people
travel, work and live. We have come a long way since then and there were many
technological developments, which made transportation convenient, comfortable and
affordable.
Transportation has converged the globe; it has brought people together, accelerated and
globalised trade and commerce. Transport or transportation is the movement of people and
goods from one location to another. It might seem to be a very simple task – just move a mass
from one place to another. But unfortunately it is not so. Just as I am writing this 130 flights
of the Indian national carrier Air India were cancelled due to an employee union strike with
customers straddled at several airports across the country for hours. Several airlines across
the world went bankrupt. Transportation is a very complex process which involves effective
management to carry out the entire process smoothly.
Transportation is the back bone of any economy. Though developments in the field of
Information Technology have significantly reduced the need for physical movement,
transportation still plays a major role in the movement of goods and people. Modes of
transport include air, rail, road, water, cable, pipeline, and space. The field can be divided
into infrastructure, vehicles, and operations.

Logistics
Logistics is the management of the flow of goods, information and other resources, including
energy and people, between the point of origin and the point of consumption in order to meet
the requirements of consumers. Logistics is a part of supply chain management (SCM).
The word “logistics” was first claimed to have been associated with the military in 1905 – as
a branch of war that pertains to the movement and the supply for armies.
Logistics involves the integration of information, transportation, inventory, warehousing,
material-handling, and packaging, and occasionally security. Logistics is a channel of the
supply chain which adds the value of time and place utility.

Range of Logistics Services

Supply Chain Management (SCM)

A supply chain is a set of organizations directly linked by one or more of the upstream and
downstream flows of products, services, finances, and information from a source to a
customer. Managing a supply chain is 'supply chain management'. In literature, logistics and
SCM are often used interchangeably, though there is a subtle difference between the two.
While SCM is more strategic in nature, logistics is more operations-oriented.
Supply Chain Management is 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.

The evolution of logistics and SCM in the 1990s can be traced back to “physical distribution
management” in the 1970s when there was no coordination among the various functions of an
organization, and each was committed to attain its own goal. This myopic approach then
transformed into “integrated logistic management” in the 1980s that called for the integration
of various functions to achieve a system-wide objective. SCM further widens this scope by
including the suppliers and customers into the organizational fold, and coordinating the flow
of materials and information from the procurement of raw materials to the consumption of
finished goods
.
OBJECTIVE OF RESEARCH

The objectives of SCM are to eliminate redundancies, and reduce cycle time and inventory so
as to provide better customer service at lower cost. The focus has shifted from the “share of
the market” paradigm to the “share of the customer” paradigm, wherein the goal is to create
“customer value” leading to increased corporate profitability, shareholder value, and
sustained competitive advantage in the long run. The successive stages of evolution of
logistics and SCM, the central characteristics of each stage, and the drivers of change are
shown below.
Global logistics industry:

Currently the annual logistics cost of the world is about USD 3.5 trillion. For any country, the
annual logistics cost varies between 9% and 20% of the GDP, the figure for the US being
about 9%.
The logistics industry is a very competitive one with a large number of international players
having presence in many countries. The service providers have a number of issues to address,
such as pricing pressures, high costs of operations and low returns on investments, hiring and
retaining talent, and pressure from clients to broaden the range of service offerings and
internationalize operations, demand for customized solutions and more value-added services,
besides infrastructure bottlenecks and government regulations.
The service providers have to continuously upgrade their networks and systems and equip
themselves with the latest technologies to carry out their complex operations and provide the
best logistics services to their customers. This involves huge capital expenditure and an
ongoing maintenance costs. Logistics companies the world over are increasingly investing in
technologies like Warehouse Management System (WMS), Enterprise Resources Planning
(ERP), Global Positioning System (GPS) and Radio Frequency Identification (RFID) to
provide the best logistics services increasing transparency and efficiency of supply chains of
their customers.
Globalization, consolidation, technology advancements and outsourcing have led to growth in
the logistics services market. The capabilities of logistics service providers are growing along
with the changing expectations of their clients. As the logistics services industry evolves,
competitors are moving away from asset-based commoditized services to more strategic,
information-based approaches.

3PL
Third-party logistics (3PL) refers to outsourcing transportation, warehousing and other
logistics related activities to a 3PL service provider that were originally performed in-house.
Third-party logistics (3PL) or logistics outsourcing is gaining importance as more and more
corporations across the world, unable to manage their complex supply chains, are outsourcing
logistics activities to the 3PL or logistics service providers. Globalisation has led to rapid rise
in the need for outsourcing logistics by companies looking for readymade distribution
channels to an entity with local expertise. Also the process of global sourcing by companies
and supply chains increasingly becoming global and complex has given impetus to the
growth of 3PL services.By outsourcing logistics activities, corporations are able to not only
concentrate on their core business operations, but also achieve cost-efficiency and improve
delivery performance and customer satisfaction.
Further evolving from outsourcing logistics to 3PL service providers companies are moving
towards 4PL and 5PL service providers to improve their logistics with minimum investments
and in a cost effective manner. This process of evolution helps companies to build efficient
supply chains, reach all the potential customers and achieve customer satisfaction leading to
improved business performance impacting both revenue and profit growth.
System dynamics of a 3PL provider
Channel Design

Earnings are shared with members of the distribution channels depending upon the function
performed by them in the channel, product, individual docket charges and rates applicable
after a ceiling on earnings of the member in a month.

Kiosk:
The main function of a kiosk is booking a shipment. A kiosk is paid depending on whether it
has its own connectivity with Gati, the kind of product offered and an upper and lower limit
on margins per docket.

GA:
The main function of a GA is providing connectivity i.e. carrying a shipment. A GA is paid
depending on whether it is booking/delivery, the kind of product offered, and ceiling on the
earnings in a month and an upper limit and lower limit on margins per docket.

Franchise:
The main function of a Franchise is operating an OU. A franchise is paid depending on
whether it is booking/delivery, the kind of product offered, and ceiling on the earnings in a
month and an upper limit and lower limit on margins per docket.

For a detailed channel design of different members refer to Appendix B

CHAPTER 5
ANALYSIS AND FINDINGS

Analysis of survey of Gati kiosks and competitor outlets

A survey of all the24 kiosks of Gati in Kolkata over a period of 20 days to find out the nature
of transactions done at these outlets, average sales per month, promotional activities carried
out at these outlet locations and their experience with company and its sales personnel.

Kiosk sales per month (in Rs)

9%

9%

<50000
39%
50000-100000
100000-200000
17%
300000-400000
400000-500000

26%

Average Courier and Cargo booking ratio at Kiosks

15%

Courier
Cargo

85%

From the above graph it is clear that kiosks are doing very low business in courier bookings.
Competitors in courier services

13%
24%

DTDC
Blue Dart
20%
First Flight
Overnite
Others
20%

23%

From the above graph it can be concluded that courier industry is a very competitive one with
a large number of competitors vying aggressively with their distribution network and price
for the small pie.

Competitors in Cargo services

14% 10%

Blue Dart
11% Gati
Safexpress
TNT
7% 37%
XPS
Others

21%

From the above graph it is clear that Gati has very little competition in cargo and express
distribution services and the company should focus on this segment.
Experience with company and its workforce

0%
17%

Very bad
Bad
46%
OK
Good
Very Good
37%

What should be done by the company to increase sales at kiosks?

32%

Promotion
47%
Improve services
Better support

21%
Distribution infrastructure of logistics companies in Kolkata

Courier companies

140

120

100

80

60

40

20

0
DTDC First Filight Overnite Gati Blue Dart

Cargo Companies

30

25

20

15

10

0
Blue Dart Gati Safexpress XPS AFL TNT

From the above two graphs it is amply clear that Gati has adequate market penetration as
compared to other companies in cargo business. So the company should focus on its cargo
business and expand its share of the pie.
Limitations

 This study is an exploratory research to find out what kind of services are offered by
the company outlets, who are their competitors in their locality and what kind of
promotion is carried out by these outlets.

 This considers only retail customers of the company who deal with company on cash
basis.

 The study is carried out at outlets in and around Kolkata only. The results of the study
are applicable to that location only and the results may vary significantly for other
locations due to different distribution networks of the company and its competitors
and different market conditions.
CHAPTER 6
Conclusions and recommendations

 The Indian logistics industry is going through a transformation. The sector will see an
unprecedented growth in the coming years with improved infrastructure and a
uniform tax structure. This will improve logistics performance and bring down overall
product cost making Indian products globally competitive.

 Gati has good distribution network for cargo business as compared to its competitors.
But when it comes to courier business it does not have the adequate reach to compete
with the other courier companies who have huge distribution infrastructure and
compete on low prices.

 From the survey of outlets, Gati (37%) is the preferred player in logistics services for
cargo business and Safexpress (21%) is its nearest competitor. But when it comes to
courier services it has many competitors like DTDC, Blue Dart and First Flight.

 Gati should expand its distribution network by setting up more outlets in prime
locations which will increase its revenues and also increases the brand visibility.

 Gati’s vehicles on road are a good mode of promotion, but it should step up its
promotion efforts by aggressively promoting its services through sign boards,
hoardings and media ads. It should support its outlets to promote the services of Gati
in their locality by providing adequate promotional material.
ANNEXURE

Questionnaire for Survey

1. Name
2. Address
3. Years with Gati Years in this industry
4. Nature of location
a) Commercial b) Academic c) Residential d) Institutional e) Industrial
f) Suburbs
5. Is the outlet company owned or outsourced?
a) Company Owned b) Outsourced
6. What are the products/services other than logistics being offered at the outlet?
7. What are the sales (from logistics) per month?
8. What is the Courier and Cargo business ratio?
9. What is the Cash and Credit business ratio?
10. What is the Domestic and International business ratio?
11. Is the booking done online or offline?

a) Online b) Offline

12. How many persons are employed in the outlet?

a) One b) Two c) Three or more

13. What are their qualifications? (Optional)

14. What is the booking timing?

15. What are your major functions?

a) Booking b) Pickup c) Storage d) Dispatch e) Delivery f) Other

16. Is the pickup and delivery done by self or the company?

a) Self b) Company c) Third Party

17. Who are your competitors in Courier business?

a) Blue Dart b) DTDC c) First Flight d) Overnite Express e) Professional f)

Others (specify) g) None
 18. Why do you think so?

19. Who are your competitors in Cargo business?

a) AFL b) Blue Dart c) Safexpress d) TNT e) XPS f) Others (specify)

g) None

20. Why do you think so?

21. What is the infrastructure and support being offered by the company?

22. How do you handle customer complaints?

23. Who do you communicate with?

a) Area sales person b) Service personnel c) Retail Manager

d) Service Manager e) Customer service executive f) Other

24. How do you communicate with the company?

a) Mobile b) e-mail c) Personal Visits d) Through Sales force

e) Through service personnel

25. What are the incentives being provided by the company?

26. What is your experience with the sales force and other employees of the company?

a) Very bad b) Bad c) OK d) Good e) Very good

27. What are the means (modes) of promotion in the area?

28. What should be done by the company to increase sales?

29. Any suggestions

Channel Margins

GA
  Ceiling 50000  
  Max/Dk 580  
 t
  Min/kt 15  
       
    Booking  
Expres % After
s Basis % Ceiling
  Paid 9 6
  TBB 7 6
  FOD 8 6
       
Priorit % After
y Basis % Ceiling
  Paid 8 6
  TBB 6 6
  FOD 7 6
       
    Delivery  
% After
    % Ceiling
70
    Paise/Kg 60 Paise/Kg

Franchise – connectivity
  Ceiling 70000  
Max/Dk
  t 1000  
  Min/kt 22.5  
       
    Booking  
Expres % After
s Basis % Ceiling
  Paid 13.5 8
  TBB 12 8
  FOD 10.5 8
       
Priorit % After
y Basis % Ceiling
  Paid 12 8
  TBB 10.5 8
  FOD 12 8
       
    Delivery  
% After
    % Ceiling
 70
    Paise/Kg 60 Paise/Kg

Franchise - Gati connectivity

  Ceiling 70000  
Max/D
  kt 1000  
  Min/kt 22.5  
       
    Booking  
Expre % After
ss Basis % Ceiling
  Paid 9 6
  TBB 7 6
  FOD 8 6
       
Priorit % After
y Basis % Ceiling
  Paid 8 6
  TBB 6 6
  FOD 7 6
       
    Delivery  
% After
    % Ceiling
70
Paise/K 60
    g Paise/Kg

Kiosk- connectivity
  Ceiling No Ceiling  
  Max/Dkt 1000  
  Min/kt 10  
       
    Booking  
Express Basis %  
  Paid 13.5  
  FOD 12  
       
Priority Basis %  
  Paid 9  
  FOD 9  
       
Zipp Basis %  
  Paid 22  
  FOD 22  

Kiosk- Gati connectivity

  Ceiling No Ceiling  
  Max/Dkt 1000  
  Min/kt 10  
       
    Booking  
Express Basis %  
  Paid 9  
  FOD 8  
       
Priority Basis %  
  Paid 6  
  FOD 6  
       
Zipp Basis %  
  Paid 17  
  FOD 17