Greater and more intense competition between global
value chains are leading to a substantial shift in the expectations from supply
chains. India's complex operational challenges and increasing expectations make
the job of a supply chain professional extremely difficult. In this article, we
shall try to analyze the Indian scenario and provide some suggestions to chart
the best way possible to create robust supply chains. Finally, we would
conclude with a concise look at the initiatives being taken by the government,
the industry and allied sectors to augment the supply chain infrastructure in
India.
Fig
1: The competition today is between value chains
The
competition today is primarily between value chains. This makes it imperative
to collaborate within the organization across following three levels,
- Functional areas
- Value chain
- Beyond the value chain
With organizations being
more diverse than ever, it is important to follow a tailored approach rather
than a one size fits all approach. This differentiated approach will enable
organizations to take care of different market and product needs.
Supply chain managers must be ambidextrous, able
to see the bigger picture while also focusing on the details. In this regard,
the single demand forecast for the entire organization can be the chief enabler
with total cost optimization for capacity planning and scenario analysis for
risk assessment. To take care of all stakeholders in the value chain from
customers to vendors, supply chain professionals proactively need to apply pull
replenishment strategies. This will invariably involve a solid information
infrastructure, regular inventory calibration and removal of artificial demand
distortions.
The
supply chains are becoming increasingly complex due to
- Broader product portfolios
- Shorter product life cycles
- Increasing customer expectations
We further look at the real-time
problems faced by supply chain professionals and the unique characteristics in
the Indian context. In India, the biggest bottleneck is the lack of proper logistics’
infrastructure. A lot more can be accomplished if there is better
infrastructure and the ability to scale up to get products to far flung areas,
especially small towns and villages. There is a huge opportunity once
infrastructure bottlenecks are removed. The country has the potential to emerge
as a supply chain centre of excellence for the world. The corporations need to
build larger distribution centers in the interiors to consolidate access. The
use of larger, efficient and appropriate vehicles is equally important. Another
issue is the cost of movement in India due to long routes.
I We compare the Indian
scenario with the United States of America, the highway network in the US enables
inter-state commerce system. It allows long-distance travel efficiently. In the
US, for instance, a barge system for non time sensitive goods like copper or
steel are moved in large quantities at low cost. Similarly, India has a huge road structure but
the same is not integrated to provide a strategic advantage. But if we can
eliminate barriers and the congestion, and create a road or rail system allowing
long-distance travel, then it helps in getting foreign investments in
manufacturing. Retailers and Supply Chain Management companies would develop
infrastructure and distribution centers. This will lead to consolidation and
scaling up of distribution at lower costs.
The cold supply chain in
India is almost non-existent.The wastage of perishables that happens because
there is no proper infrastructure for temperature control and refrigeration of
goods is substantial. We have an to look at water, rail and road systems and
connect them with ports.
Fig 2: The cold chain logistics
Now, we shall provide an
overview of the initiatives presently underway to improve the supply chain
system in India.
The Dedicated Freight
Corridor Corporation of India Limited (DFCCIL) was registered as a company
under the Companies Act 1956 in 2006. This company under Ministry of Railways
was conceived and formed to undertake planning & development, mobilisation
of financial resources and construction, maintenance and operation of the
Dedicated Freight Corridors. The construction of the Western Dedicated Freight
Corridor from Dadri to Nava Sheva (total length 1483km) and the Eastern
Dedicated Freight Corridor from Ludhiana to Dankuni (total length 1839km) is
already underway. The construction of East-West Dedicated Freight Corridor ,
the North-South Dedicated Freight Corridor, the East Coast Dedicated Freight
Corridor and the South-West Dedicated Freight Corridor is in the planning
stage.
The mission of this major
infrastructure push spearheaded by the government is to build a corridor with
appropriate technology that enables Indian railways to regain its market share
of freight transport by creating additional capacity, to set up Multi-modal logistic parks along the DFC to provide complete transport solution to
customers and to support the government's initiatives toward ecological
sustainability by encouraging users to adopt railways as the most environment
friendly mode for their transport requirements. This would occur in tandem with
the industrial corridors to be setup in India.
An industrial corridor is a package of
infrastructure spending allocated to a specific geographical area, with the
intent to stimulate industrial development. An industrial corridor aims to
crease an area with a cluster of manufacturing or other industry. Naturally,
such corridors are often created in areas that have pre-existing
infrastructure, such as ports, highways and railroads. The vision is to have a
holistic network of high quality infrastructure, connectivity via all modes of
transport accompanied by industrial clusters. These modalities are arranged
such that an "arterial" modality, such as a highway or railroad,
receives "feeder" roads or railways. Concerns when creating corridors
including correctly assessing demand and viability, transport options for goods
and workers, land values, and economic incentives for companies. Examples include the
Delhi Mumbai Industrial Corridor Project and Chennai Bangalore Industrial Corridor.
Fig
3: The proposed Dedicated Freight Corridors
All the major steps taken
by government to improve infrastructure will ensure smooth transportation of
goods with less bottlenecks. That will allow India to be a global player in
field of supply chain management. It will also help in getting investment in manufacturing.
The policy reforms are being overhauled through introduction of initiatives like
Make in India, Skill India and digital India.
About the Author:
The article is written by Gulshan Prakash. He is PGP first year student at Indian Institute of Management Raipur.
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