Country Roads, Tech Innovations & Smart Logistics — Will Move India as a Global Best in Supply Chain Management
In 2018, India was ranked 44th in the LPI (Logistics Performance Index) from 54th position in 2014 and 35th in 2016. A measure through which the World Bank ranks countries based on their logistics performance.
In conversation with — Vineet Agarwal — Managing Director — Transport Corporation of India and President ASSOCHAM. Talking about his views towards the boundaries of the present supply chain system and what should be corrected to fit the current scenario.
A report of The Economic Times says, according to the Institute of Supply Chain Management, 39% of the companies have experienced a downfall of 22% in target revenues due to the severe impact of the pandemic on the supply chain.
Covid-19 impact on supply chains unmasked major cracks in the supply chain industry, which resulted in huge losses like disrupted supply chains, downfall in businesses, disruption in productivity, etc. We learned that there aren’t inefficiencies in the Supply Chain as a whole; sectoral inefficiencies are creeping into supply chains, which can be remedied by bringing in simple and well-thought innovations.
What Are The Areas To Work On?
- A swift switch over to an alternative mode of meeting customer needs is one aspect of resilient supply chains.
Taking a simple example, Mr. Vineet cited: talking about pen nibs — If supplier “A” isn’t able to supply, there should be a backup source “B”. A quick alternative! This helps in avoiding the supply chain from getting disrupted and is a crucial aspect of building resilience.
“Resilience is built based on the depth of the Supply Chain.”
He advised having a buffer stock in the company to avoid stopping the production. A buffer stock could ease the situation for the company. It’s always a better option to go for more inventory rather than stopping production in an uncertain and volatile environment. This can increase productivity and give the required result.
2. Innovation, Visibility, and going Omni-Channel is the need of the hour!
A company needs to keep changing the supply chain, according to Mr. Agarwal. A dynamic supply chain would help to respond to the rapidly changing customer needs. Being a pioneer in this field for quite some time, Mr Agarwal stressed that companies usually preferred a single-channel structure in the pre-pandemic days. They were either focused on online or offline distribution. But during the lockdown, we saw behavioural changes.
The pandemic has forced people to move to the omnichannel mode more rapidly. Some companies are selling their products directly online now rather than selling them through other eCommerce sites or retail stores.
Being dynamic to your customer’s needs has taken the centre stage as well. Companies should have the nimbleness to shift from online to offline or offline to online. Therefore, it’s almost impossible to survive without an innovative supply chain management system to respond dynamically to customer preferences.
3. Customer satisfaction should be the primary focus
“A company should focus on what they do best with a deeper focus on service.”, said Mr. Agarwal. A company should focus more on the service rather than production, marketing, supply, or logistics.
It all boils down to customer satisfaction — Consumer needs are rapidly changing. The methodology of keeping up with these changes in the Supply Chain should be in sync with the consumer demand to increase customer satisfaction.
4. Identifying the most affected sector and improve efficiency
From ASSOCHAM’ perspective: MSME’s are struggling more than anyone.
On the impact of the second wave of the COVID-19 pandemic on the economy — As we saw during the first wave as well, the larger companies were able to come out of it much faster. We are seeing that MSMEs are facing demand cuts, increased raw material prices and delayed receivables.
Inadequate supply chain infrastructure, high levels of intermediaries, lack of supply chain visibility etc are some of the inefficiencies. The solution lies in simple and well-thought innovations. As a key area of operations, the overall space of the Supply Chain process is fairly efficient with good practices, processes and systems.
In the grand scheme of things, ‘restructuring the supply chains’ can reduce risk factors in the post-pandemic world that has seen a sea change. Efforts made will not only lead to building resilient supply chains, but it’ll also improve India’s overall logistics performance and reduce logistics costs.
The pandemic did not only slow down the logistics sector and disrupt the supply chains, but it also presented the country with the opportunity to identify the issues, work on them and emerge victorious.