The Indian Economy is estimated to grow at 7.2 per cent during the current fiscal according to the latest RBI data and is on track to become a $ 5 trillion economy by 2026, making it the third largest economy in the world. The supply chain plays a foundation to achieving these goals and is an integral part of India’s economic and business growth.
The logistics sector in the country incurs a cost of approximately 14 percent to the country's Gross Domestic Product (GDP) as compared to the global average of eight percent. The primary reason for this is because the industry is highly defragmented and involves a highly complex mechanism with multiple players at different levels. This creates what is known as a competitiveness gap of $180 billion a year.
This gap needs to be re-addressed on war footing for the logistics sector to pioneer the nation’s aspiration of becoming a $5 trillion economy.
The Gati Shakti program, launched last year for multimodal connectivity gives some hope and is a step forward in the right direction. However, the long-running National Transport Policy (NLP) needs to be implemented urgently to alleviate supply chain constraints and accelerate the development of an integrated biodiversity plan. The NLP is expected to improve uninterrupted supply of goods across the country and promote business facilitation for more players across the sector.
It will also strengthen the warehouse sector by improving the quality of storage facilities including specialized warehouses, and increase the capacity by identifying quality and efficiency.
The major game-changer in this shift towards reducing logistic cost will be the emerging technological advancements in supply chain and procurement such as the use of artificial intelligence, neural networks, and machine learning. The technology 4.0 revolution is now helping businesses move forward to more digital purchasing activities in terms of usage, e-tenders, relationship management, and strict quality monitoring & delivery performance among other things.
Technology is the key to achieving a better output and save time as well as cost of logistics. The industry is completely data driven and not adapting to this rapid change will only create an unrecoverable impact on businesses, irrespective of the sector. At Cosmo Films, we have always been on the forefront to adapting new technologies and inventions and have implemented strategies to change the way we define and manage our supply chain.
However, at the same time, from an industry point of view, the full impact of big data on the supply chain is blocked by two major challenges.
First, there is a lack of skills. Managers of supply chain systems — even those with a high level of technical expertise — have little or no knowledge of data analysis techniques used by data scientists. As a result, they often lack the vision to see what might happen with large amounts of data.
Second (and perhaps more importantly), many companies do not have a systematic process of testing, evaluating and capturing large data opportunities in their supply chains. Big supply chain statistics use data and quantitative methods to improve decision-making across all operations of the supply chain.
At Cosmo Films, we have been focusing on two aspects.
First, expand the database for analysis beyond the usual internal data managed in Enterprise Resource Planning (ERP) and supply chain management systems.
Second, we apply powerful mathematical methods to both new and existing data sources. This creates new information that helps to improve supply chain decisions, from the development of advanced operations, to strategic decisions, such as the selection of appropriate supply chain operating models. This has provided us with the potential to truly redefine the planning process and make real-time decisions.
The pandemic has changed the picture and many of the vendors/business partners have either been completely eliminated or are still recovering for the lockdowns. Moreover, ongoing trade wars, economic reforms, and influential social changes have also affected the stability of the supply chain.
As we begin 2022, there are a number of procurement activities that must be prioritized to secure the flow of material from around the world. From developing a new generation of suppliers to reducing cost and optimize profits, technology will be the bridge between the Pre-covid-19 world and the post pandemic new world order in the supply chain sector. All businesses will look for some stability in this regard on both sides of the operations and business strategy and focus on technological advancements to combat risk and uncertainty.
All said and done, it's not just about using new technologies. The use of these technologies has to fit in to a clear strategy of how the entire supply chain will be managed. Companies will have a large amount of data generated and this will surely create a challenge for the leaders going forward.
Lastly, we need to look at whether there are enough leaders in this profession. Do we need more training in this area? What lesson do they need to learn? This is going to be a long journey and we need to explore what is needed when it comes to Supply chain and procurement leadership.
