DISSERTATION REPORT

On

TRAINING AND SKILL DEVELOPMENT IN SUPPLY CHAIN

AND LOGISTIC

Submitted in partial fulfillment of the requirement for qualifying

SUBMITTED BY UNDER GUIDANCE OF

SANDEEP SINGH THAPA

FACULTY OF COMMERCE

DAV (PG) COLLEGE DEHRADUN

UTTARAKHAND

INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI

NEW DELHI – 110068

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 TABLE OF CONTENT
TITLE

Title Page
Certificate of Originality
Preface
Acknowledgement
Table of Contents
Chapter 1: Introduction
Chapter 2: Company Profile
Chapter 3: Research Objectives & Hypothesis
Chapter 5: Research Methodology
Chapter 6: Data Analysis
Chapter 7 Findings and Conclusion
BIBLIOGRAPHY

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 EXECUTIVE SUMMARY

Efficient supply chains are critical to economic development, trade integration and competitiveness.
Logistics services are typically provided by a private logis- tics company to a retail or industrial firm.
The quality and efficiency of these services heavily depend on economy-wide features, including
government inter- ventions, which are typically referred to as logistics performance, following the
World Bank Logistics Performance Index (LPI). Countries experience large differences in their
logistics performance, and lower quality of service nega- tively impacts production and international
trade.
Public interventions and private public dialogue play an important role in enhancing performance and
in establishing sustainable supply chain connections both internationally and domestically.
Government policies include the soft and hard infrastructure of trade and commerce, trade facilitation
initiatives, and regu- lation. Government and international agencies have traditionally paid more
attention to infrastructure and trade facilitation than to fostering the develop- ment of quality services
and a skilled workforce.
Logistics at the operational level is a labor-intensive industry with many blue collar workers (e.g.,
truck drivers, warehouse operators) and administrative clerks. How well these employees are
qualified, trained and retained is a major factor of logistics performance. Yet this factor is often
overlooked or taken for granted. It depends not only on HR policies of specific companies but also
on national initiatives to educate and train for occupations in the sector. This report attempts at
filling this gap in the knowledge of skills and competencies, and solu- tions to upgrade them. It
expands observations made in the World Bank’s 2016 LPI report.

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 CHAPTER-1
INTRODUCTION

Anecdotal evidence suggests that an increase in productivity resulting from targeted training can
yield a return on investment of more than 30%. Unfortunately studies definitively demonstrating
these returns on training investments are rare. This can create issues for managers seeking
budgetary approvals to invest in upskilling staff as they are unable to point to case studies to justify
their training expenses. Within the transport and logistics industry the declining fiscal outlook in
recent years has led to a reigning in of spending.

In the past it may have been sufficient for business owners, managers and human resource
professionals to spend money on training on faith and intuition alone under the assumption that it
directly related to increased productivity and profits. This however is no longer the case. Project
administrators have a renewed focus on 'Return on Investments' (ROI) and due to the lack of
Australian models and case studies that inform the benefits of training, it is becoming increasingly
difficult to justify training expenditure.

As a result many companies, including Transport and Logistics companies may not be aware of the
significant increase in their bottom line that can occur if they identify and pursue the highly
profitable training opportunities that exist.

Through the SA Freight Council's Skills and Careers Management Team investigations it can be
concluded that a company's bottom line is generally improved through training with positive
impacts being demonstrated in the following areas:

 Safety;

 Profitability / Productivity;

 Morale / Increased Employee Motivation;

 Customer Satisfaction;

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  Market Share; and

 Company Reputation and Profile.

The few Australian studies that have investigated the return on training investment to an enterprise
have universally promoted the positive benefits and highlighted that the financial rewards
outweigh, often significantly, the associated costs of training. However, specific details of the
physical monetary benefits are not generally provided.

Nonetheless, Doucouliagos and Sgro (2000, p.1) established that "...on the basis of the literature, it
can be concluded that significant returns can be expected and these are independent of industries,
ownership, structure and nature of business operations."

Taking this statement as a given, where there is no available information on the ROI of training to a
Transport and Logistics specific enterprise, evidence of positive impacts on the operations similar
to those undertaken in the Transport and Logistics industry may be utilised.

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 TRAINING AND SKILL DEVELOPMENT

Nature and Scale of Logistics Training

Where skills are lacking in the existing workforce, the obvious answer is to increase the level of
training. The survey responses indicate that the majority of firms across all regions rely on a
mixture of internal and external training (figure 5.1). There is one particular difference between
regions, though. Companies in developing countries rely twice as heavily on internal training (17
percent vs. 9 percent) compared to their counterparts in the developed world. Often, however, this
internal training is simple “on-the-job-training,” meaning that new employees receive quick,
superficial advice from more expe- rienced peers. Certainly, the supply of external trainers and
agencies is greater in the developed world than in developing markets. Nevertheless, there are a sig-
nificant and expanding training capabilities in less developed countries. CILT has a strong presence
and membership network in Sub-Saharan Africa and South- East Asia. CSCMP has been active in
Latin America for decades. Even smaller, Western-based training agencies have expanded into low
and middle income countries. MGCM for example, a French training agency, designs training
courses specifically for Tunisia.
While many companies engage in logistics training activities, survey partici- pants and interviewees
from developing regions emphasized that they are dis- satisfied with the hours allocated and the
quality and the variety of logistics training courses offered by employers (figures 5.2 and 5.3).
Almost twice as many respondents from developed countries agreed that they receive a sufficient
amount of training time (25 percent vs. 14 percent) and that the training topics vary sufficiently (25
percent vs. 12 percent). Surveyed statistics rely on personal perception and the word “sufficient” is,
therefore, quite subjective. However, the numerical data was backed up by the comments of the
interviewed experts. According to several anecdotes, “training hours” for warehouse staff in
developing countries sometimes consist of simple instructions by the supervisor on how to drive a
forklift or where to store and retrieve goods.
Stakeholders in Training and Skills Development

Numerous stakeholders are involved in the development, monitoring and certification of logistics
skills. The majority of the interviewees highlighted the importance of joint efforts by stakeholder
groups. Companies, govern- ments, logistics associations and academia must collaborate to
identify and exchange best practice in skill development. In less mature logistics markets, they
must work together to develop a logistics training capability that can equip the employees
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on the different occupational levels with the neces- sary range of skills. Each stakeholder group
can perform a different—but complementary—role.
Companies: Our expert panels agreed that the main responsibility for training and developing
logistics staff lies in the hands of employers. Companies—both multi-national and local—should
have an intrinsic motivation to develop their workforce at all levels. Well-educated, trained
employees will pay back the investment in the form of higher levels of productivity and
performance. Academic studies have found evidence that high levels of SCM competence and
knowledge lead to sustained competitive advantage (Hult et al. 2006; Ellinger et al. 2012).
Companies must decide which employees need to be enrolled in training programs, particularly
those designed for logistics staff at the operational, admin- istrative and supervisory levels. Figure
5.5 indicates the relative importance of subject areas for training as rated by respondents to the
online survey from devel- oped and developing economies. Almost all the topics received
significantly greater support from developing country respondents. While this is a positive finding,
it requires careful interpretation.
One possible reason for the lower average percentages assigned to core logis- tics subjects, such as
inventory management, transportation, and warehouse management, by respondents from developed
regions is that they expect many of their graduate-level recruits from specialist logistics degree
courses to be famil- iar with these topics. It is also possibly due to a higher degree of specialization
in developed countries, resulting in respondents prioritizing training in the core activity of their
business, such as transport or warehousing. In developing mar- kets, there is greater variation in the
average importance ratings of the subject areas: softer skills like foreign languages, legal issues and
supply chain security receive very low scores. The responses from developed countries were much
more balanced, suggesting greater recognition of the contribution that these softer skills can make.
Logistics associations: Many countries now have professional associa- tions for logistics. The
three largest ones, CILT (United Kingdom), CSCMP (United States) and BVL (Germany), have a
multi-national presence and a critical role to play in the development, assessment and
certification of professional standards in logistics and SCM worldwide. In Europe, many of the
national associations, including CILT and BVL, are affiliated to the European Logistics
Association (ELA), which co-ordinates professional development efforts on a continental level
and represents logistics in gov- ernmental and industry forums. International and national
logistics associa- tions offer training programs and qualifications that they deliver through
multiple channels. The major associations have a large, diverse membership base which is kept
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updated on developments in the field and training initia- tives through conferences, webinars and
newsletters.
Several lower-income countries such as Oman, Jordan, Argentina, Peru and

Uruguay have national logistics associations.1 Efforts have been made by the World Bank and
International Finance Corporation to set up a Logistics Association in the Arab Republic of Egypt,
a country in which there is no established locus for institutional responsibility for logistics. Among
other activities, this association would have organized logistics training courses. Unfortunately the
initiative was unsuccessful due to a lack of funding.

Higher education: Colleges, universities and vocational schools provide the foundation for future
logistics leadership. These institutions are responsible for the education of logistics managers at the
upper end of the educational hierarchy. Over the last few decades, many universities have launched
specialist bachelor and master programs in logistics and SCM and/or incorporated logistics/SCM
modules into other, more general management-focused curricula. Some of this university and
college level provision has been funded by governments in recog- nition of logistics’ role as an
essential enabler of economic growth and wealth (Korn 2013). However, as indicated by our survey
results, higher educational programs across all regions have not been producing enough young
logistics pro- fessionals to meet market demand. According to our interviewees, this is not the only
concern. They have suggested that, particularly in developing regions, not only the quantity but also
the quality of the academic logistics education is sub-optimal. The interviewees emphasized that in
some countries, such as Thailand and Brazil, the number of people holding a logistics degree is
adequate on paper, but unfortunately, graduates do not possess the skills or the knowledge required
in practice. As a consequence, positions are held by unqualified staff or left vacant despite the large
number of applicants.
Holcomb, Krul, and Thomas (2015) and many interviewees argued that
academia and industry must collaborate more closely to ensure that the next generation of
logistics/SCM graduates is equipped with the skill sets required by practice. Unfortunately, the
content taught in colleges and universities in devel- oping economies is often outdated.
Interviewees noted that some regional col- leges in China and Thailand still use teaching materials
from the 1980s in their lectures today. The lecturing styles in these countries were also criticized for
often relying solely on traditional lecture-style instruction. More modern didactic approaches are

8
required to imbue students with important practical skills such as communication, teamwork,
presentation, project management and negotia- tion. The criticism of course content and delivery
was not confined to developing economies, however. A recent survey of supply chain professionals
—mainly in the developed world—revealed that they also find it difficult to recruit graduates from
universities who have the skill sets required in practice (Logistics Management 2011). The 2014
SCM World Survey of chief supply chain officers concluded that:

1.3.6Training & Career Development

Employers indicate that technical development courses are essential for supply chain
personnel to stay current. The most common means of employee development are on -the-job
training and external courses. For the most part, employees indicate that they are satisfied with the
training they have received and that it has met their needs. Generally, effective training
investments, greater than the Canadian average, are made across the sector; however, investment in
smaller organizations is less than optimal. The most common forms of support provided to
employees are tuition reimbursement, time off for external courses and the provision of in-house
training. Work/study programs for supply chain employees are not widely used; however, all types
are employed to some degree. Internal training tends to be focused on technical supply chain and
logistics development, interpersonal and people management skills (e.g., supervisory skills, team
building, negotiations, leadership and coaching) and health and safety.

Reverse logistics is an issue that has received growing attention, above all other issues, in the last
decade, given the confluence of several situations. On the other hand there is a verifiable concern
about environmental matters and sustainable development. In this sense, there are several legal
regulations that have been passed in a number of countries, Germany being the pioneers with
retrieving packaging and electronic devices regulations and Netherlands (with its stringent
automobiles laws) however, the effect has quickly spread out all over Europe, USA, Japan and
India were among others. India is a new member in this club and it‟s focusing on reverse logistics
in SME‟s. Because in India there is another reason to use reverse logistics in SMEs due to
economic reasons and its contribution by means of the returned products, companies stand the
possibility of recovering either constituent material (which no longer needs to be purchased in the
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same quantities) or added-value. Whether the savings comes only from materials purchasing costs
or from materials, labor and overhead costs respectively, firm may are increasingly interested in
being efficiently involved in market competition to shrink the margins more and more.

SMEs have the special importance to the transition countries (like India) for number of reasons.
Firstly, they are able to provide economic benefits beyond the boundary of the individual enterprise
in terms of experimentation, learning and adaptability. These characteristics are especially
important in economies undergoing radical transformation such as occurred in the formerly
centrally planned countries. Secondly, in most transition countries, the SME sector was largely
neglected and even discriminated against in the early transition period with emphasis placed on the
rapid privatization of large scale enterprises and not the development of the SME sector. This has
arguably resulted in less resources and attention being paid to the needs of SME development.

Supply chain management techniques

Supply chain performance is impacted by several factors beginning with the plant
location decision. Locating fixed facilities throughout the supply chain network is an important
decision problem that gives form, structure, and shape to the entire supply chain system. Location
decisions\ involve determining the number, location, and size of the facilities used. These facilities
include such nodal points in the network as plants, ports, vendors, warehouses, retail outlets, and
service centers- points in the supply network where goods temporarily stop on their way to the final
customers (Ballou 2004 and Chopra and Meindl 2001). Bhatnagar and Sohal (2005) asserted that
there is a significant relationship between qualitative plant location factors such as labour,
infrastructure, business environment, political stability, proximity to markets, proximity to
suppliers, key competitors’ location, supply chain uncertainty and broad manufacturing practices,
and the operational competitiveness of supply chains as measured by quality, flexibility, inventory
turnover and responsiveness. Cigolini et al (2004) introduced a set of SCM techniques. For
example, “Design for SCM”, a technique that aims to improve upon the traditional manufacturing
oriented methods of product design (e.g., design for manufacturing, assembly, cost, etc), and
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combines standardisation of parts and subassemblies, modular design, item variety postponement,
etc., for decreasing variance in consumption of materials over time, and increases the
responsiveness of the chain to varying demand. Upendram et al (2004) noted that the key element
in supply chain design in Indian conditions is leveraging the tax laws and incentive structures
available.

A strategy increasingly adopted by discrete manufacturers is developing common

architectures across products, to simplify product design and compress development time and
costs. Best practice organizations use outsourcing effectively to balance between cost/service level
management and the strategic interests (e.g., Upendram et al (2004), which enable companies to
focus on the critical success factors (Prahalad and Hamel 1990 and Kannan and Tan 2006).
Outsourcing offers a new alternative to achieving competitive advantage by allowing firms to focus
on producing the goods and services comprising their core business (Gunasekaran and Ngai 2004).
Outsourcing decisions that do not take into account the long-term implications tend to cost the
supply chain more than it bargained for, in terms of total cost of ownership (Vanteddu et al 2006).
The most important strategic reasons for shippers to outsource warehousing, transport or other
logistics activities are: to reduce costs or amount of capital invested, to improve the service or
quality improvement, the need for strategic flexibility, and a focus on core competencies (van
Laarhoven et al (2000). In the face of a competitive global market, organizations have downsized,
focused on core competencies, and attempted to achieve competitive advantage by more effectively
managing purchasing activities and relationships with supplier (Farley 1997 and Wisner and Tan
2000).

Postponement is emerging as an important strategy in SCM. Delaying the final labeling,

assembly or packaging until the last moment is known as the principle of postponement (Mohanty
and Deshmukh 2004). The objective of postponement is to minimize the risk of carrying finished
product inventory at various points in the supply chain by delaying product differentiation to the
latest possible moment before customer purchase (Jharkharia and Shankar 2004). Li et al (2005)
considered postponement as a separate construct in their study. Another strategy increasingly
adopted by manufacturers is developing common platforms across different product lines, which is
essentially developing common architecture across product structures, to simplify product design
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and compress development time and costs (Upendram et al 2004). The author suggested
unbundling of activities to better leverage the company’s tangible and intangible assets that are
underutilized. Cigolini et al (2004) pointed out that, organizations companies resort to “Retailing
system design’, a technique, wherein organizations focus their product mix on a specific market

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 CHAPTER-2
REVIEW OF LITERATURE

Logistics Capabilities

Studies have acknowledged the importance of logistics capabilities in imparting the firm with
competitive advantage (Daugherty et al., 1998; Bowersox et al., 1999; Lynch et al., 2000; Zhao et
al, 2001; Mentzer et al., 2004; Esper et al, 2007; Gligor and Holcomb, 2012). Logistics capabilities
are those specialized skills, attributes and knowledge within a firm that helps a firm to manage its
logistics activities (for e.g. transportation and distribution of raw materials and finished goods)
efficiently and effectively (Morash et al, 1996; Mentzer et al., 2004; Gligor and Holcomb, 2012).
Although the terms, logistics and supply chain have been used interchangeably; the current study
distinguished between the two and posited logistics as an integral part of supply chain management
(Mentzer et al, 2004; Gligor and Holcomb, 2012). Further, most of the studies in this area have
adopted different classifications of logistics capabilities (e.g. Mentzer et al., 2004; Stank et al.,
2005; Esper et al., 2007 etc.).

Logistics capabilities do influence the way a firm operates in the market. Lynch et al. (2000)
investigated the effect of logistics capabilities and strategy on firm performance. Capabilities are
the skills and knowledge that enable firms to make use of their assets. Logistics capabilities are
capabilities that essentially support the logistics functions of the firms to be executed properly.
The study conceptualized strategy as either cost leadership or differentiation. The study proposed
that corporate strategy is most effective when pursued with resources/capabilities that “fit”.
Logistics capabilities were further subdivided into process capabilities and value-added service
capabilities. Specifically, the study proposed that (1) process capabilities are positively linked to a
cost leadership strategy (2) value-added service capabilities are positively linked to a
differentiation strategy (3) process capabilities are positively linked to a differentiation strategy
(4) value-added service capabilities are positively linked to a cost leadership strategy (5) cost
leadership strategy is positively linked to firm performance (6) differentiation strategy is
positively linked to firm performance (7) cost leadership results in higher firm performance
compared to a differentiation strategy (8) relationship between process capabilities and cost
leadership strategy is stronger than the relationship between value-added service capabilities and

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differentiation strategy(9)process capabilities are positively linked to firm performance (10)
value-added service capabilities are positively linked to firm performance (11) the relationship
between process capabilities and performance via cost leadership; and that between value-added
service capability and performance via differentiation strategy will be stronger than that between
process capabilities and performance via a differentiation strategy. The study used an expert panel
to ascertain the logistics capabilities that were most likely to be cost leadership oriented and
differentiation oriented. The capabilities constructs used by the study were partly based on a set of
32 performance capability measures obtained from a Michigan State University Research. The
study collected data from CEOs and vice presidents of logistics for grocery firms in United States
and Canada. The initial list was reduced to firms whose primary business (more than 50%)
was in the retail grocery industry. 480 questionnaires were mailed; 77 completed responses were
received. Sample profile showed majority of the informants belonging to senior management
level. The informants had an average of 27 years experience in the grocery industry and on
average reported 20 years with their present company. The study used confirmatory factor
analysis for evaluating the reliability and validity of the measurement instrument. Further,
structural equation modeling was employed for testing the proposed relationships. Findings reveal
that (1) process capabilities are positively linked with cost leadership strategy (2) value- added
service capabilities are positively linked with differentiation strategy (3) process capabilities are
positively linked with differentiation strategy (4) no significant relationship exists between value-
added service capabilities and a cost leadership strategy (5) cost leadership strategy is positively
linked with firm performance (6) differentiation strategy is positively linked with firm
performance (7) both cost leadership and differentiation strategies seemed equally capable of
resulting in a certain level of firm performance (8) the relationship between process capabilities
and cost leadership strategy is stronger than that between value-added service and differentiation
strategy (9) process capabilities are not significantly linked with firm performance (10) value-
added service capabilities are not significantly linked with firm performance (11) firms that match
their strategies with their capabilities perform better than those who do not. Therefore firms
should concentrate on aligning their strategy with their capabilities for improved performance.
Further, firms should invest carefully for developing requisite capabilities for sustaining
competitive advantage.

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 CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY

3.1 NTRODUCTION

The present chapter begins with the identification of the origination of the
problem. The problem is defined subsequently, which is followed by listing the
objectives of the present study. A brief overview about the organization of the various
constructs from the perspective of the four entities is given. Thereafter, in the initial
sections, the theoretical elucidations in favour of the identified critical factors
influencing effective implementation of SCM, from the perspective of the OEM, are
explained. The factors that cover the aspects of SCM from the perspective of the
trading partners are explained in the subsequent sections. The later sections of this
chapter present the appropriate conceptual frameworks, hypothesized in the present
study, from the perspective of the four entities of the supply chain. The chapter ends
by describing the research methodology adopted in the present study.

The research gaps identified in this work have been addressed through a descriptive,
conclusive, and single cross-sectional research design. The research is based on
representative samples, and the data are subjected to quantitative analysis and
therefore a conclusive research (Malhotra, 2004). The study is descriptive in nature as
the perceptions of the respondents are collected about the level of implementation of
SCM in their organizations. It is a single cross sectional study as only one sample of
respondents is drawn from the target population, and information is obtained from this
sample only once.
The availability of hard evidence based on a rigorous research methodology
is mandatory for the development of reliable, valid and pragmatic diagnostic
instruments, which researchers can use for their study. Practitioners, for the evolution
and betterment of SCM programs, can effectively use such instruments and their
findings. Questionnaire survey has been widely acknowledged as an efficient tool for
assessing the perceptions of individual organizations on a particular subject.

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 In the absence of secondary data the validity of the instruments are
achieved by measuring the perceptions and experiences of SCM practitioners from
industries/ organizations. The survey method adopted in this work has been through
personal interview, snail mail and e-mail. The respondents were approached in their
office and interviewed. Those respondents who were approached through mail have
completed the questionnaire and returned the mail.

In order to empirically validate the SCM constructs identified from the

perspective of the four entities, survey instruments have been developed.

To develop the instruments, scales adopted by some of the authors were noted. For
example,

Tan et al (2002) used a five point Likert scale with ‘1’ (Low) and ‘5’ (High) to study
supply chain management and supplier evaluation practices.

Chen and Paulraj (2004b) developed a scale based on a seven-point Likert scale with
anchors ranging from strongly disagree (1) to strongly agree (7) in order to ensure
high statistical variability among the survey responses. The indicators of
performance measures were measured using seven point Likert scales with anchors
ranging from ‘‘decreased significantly’’ (1) to ‘‘increased significantly’’
Min and Mentzer (2004) developed a seven point Likert scale with each item anchored
by 1 (strongly disagree) and 7 (strongly agree).

Tracey et al (2004) used a five point Likert scale with 1 (Strongly Disagree), 2
(Inclined to disagree), 3 (Neither Agree or Disagree), 4 (Inclined to Agree) and 5
(Strongly Agree), with a N/A (Not Relevant/ Don’t Know) response also available for
each item.

Theodorakioglou et al (2006) used a five point likert scale with ‘1’ being very low and
‘5’ being very high. The authors added ‘0’ (Not at all) to the scale in order to prevent
occurrence of the central tendency error.

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 3.3 OBJECTIVES OF THE PRESENT STUDY

1. Review the nature (occupational level and geographical patterns) of the perceived
shortages of qualified logistics personnel around the world, particu- larly in
developing economies.
2. Review the current practices of training and skill development in developing regions
and suggest improvements based on best practice examples.
3. Review the recruitment and retention strategies for logistics companies that are
applicable around the globe. Potential challenges for human resources management
(HRM) in the logistics sector over the next five years are also discussed.
4. Provide guidance for public sector on helping upgrade the logistics workforce and
identify a set of actions that governmental agencies can take.

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 CHAPTER5
CONCLUSION AND RECOMMENDATION

5.1 CONCLUSION

The previous chapter discussed the findings of the study, and gives a picture of
whether this study supported previous studies or otherwise. Also, the previous chapter
has summarized the main points of the results and has shown how they address the
research questions. Finally, this chapter presents several important policy and practical
implications and recommendations, which are made based on the research findings.
This chapter also discusses the limitations in doing this research and has suggested the
some possible ingredients for future research.

This research explored the relationship between supply chain management practices,
supply chain integration and supply chain performance in electronics industry in
Malaysia. What constitutes effective and significant supply chain management
practices in the context of electronic industry in Malaysia and the existence of the
opportunity for firms to improve their supply chain performances have been
highlighted. This chapter concludes the entire research as it summarizes the research
process that encompasses the electronic manufacturing firms of Malaysia, hopefully
representing the developing economies.

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