Supply Chain Optimization & Challenges in the Indian Market

Supply Chain Optimization & Challenges in the Indian Market

By: Hima Parvataneni, CEO, Navata Supply Chain Solutions

Hima is a dynamic professional who embarked on a journey of knowledge and expertise with the completion of her Master of Science degree at BITS Pilani in 2010, followed by further education at Duke University.

Her journey as a leader in logistics and supply chain management began with Navata Road Transport, a company established by her grandfather in 1982. Today as Director of NSCS, she continues to lead the charge in driving innovation at Navata Road Transport.

In an interview with Women Entrepreneur India magazine, Hima shares valuable insights into the paramount significance of supply chain efficiency and technology integration within the context of the complex Indian market. She emphasizes that business leaders should take a comprehensive approach to optimize the supply chain and boost profitability.

How does an efficient supply chain impact the overall performance of the companies operating in India?

The impact of an efficient supply chain on the overall performance of companies operating in India is nothing short of profound. In the Indian context, supply chain costs represent a substantial 10-12% of a company's revenue, a figure slightly exceeding the global average of 8%. However, the significance transcends mere financial metrics; it extends to the pivotal realm of shifting consumer behavior.

Today's Indian consumers are endowed with an array of choices, from traditional brick-and-mortar retail establishments to the vast expanse of e-commerce. In this landscape, brands must be agile, ever-present precisely where and when their customers desire them.

In response to this surging demand, supply chains have evolved into intricate and sophisticated networks. Brands now find themselves in fierce competition, with the efficiency of their supply chains emerging as a potent competitive edge. Hence, adopting a comprehensive perspective on supply chain optimization is not just advisable; it's a strategic imperative. Such an approach guarantees the swift and cost-effective delivery of products to consumers. In essence, within the Indian market, an efficient supply chain stands as a linchpin for a company's fiscal well-being and its competitive stature.

What are the key challenges that companies face in managing their supply chain operations in India?

  • The seismic shift driven by e-commerce has led consumers to demand swift deliveries, from next-day to near-instant, across B2B and B2C transactions. This challenges the conventional view of supply chains as cost centers, prompting businesses to embrace a holistic approach.
  • As customers transition from physical stores to online shopping, seamless integration of online sales channels is imperative to prevent stockouts and meet demands cost-effectively. Supply chains have grown more complex with diverse operational models, necessitating the integration of digital systems for real-time visibility.
  • The growth of Tier 2 and Tier 3 towns presents both challenges and opportunities. Companies must devise effective strategies to efficiently reach and serve these emerging rural consumers.

What role does technology such as blockchain and IOT play, in improving supply chain transparency and efficiency in India?

In the landscape of Indian supply chain Management, various challenges abound. Yet, technology, including IoT, blockchain, and real-time tracking solutions, plays a transformative role in addressing these hurdles. Real-time visibility issues, particularly concerning inventory management, have been a persistent concern. However, technology has emerged as a valuable ally in this battle.

IoT, SIM-based tracking, and satellite tracking have proven to be effective tools in providing real-time insights. Moreover, emerging control tower services harness the data-rich environment of the supply chain. However, the linchpin to this technological transformation remains data quality. The integration of customer and vendor systems via APIs is vital, forming the bedrock of sound decision-making, as clean and reliable data is the wellspring of effective decisions.

This integration extends across various facets, encompassing transport management, ERP systems, and warehouse operations. Here, the twin forces of AI and ML drive innovation, serving as the cornerstone for infusing data and intelligence. AI and ML find pivotal roles in diverse areas, including route optimization, connectivity management, and warehouse automation. The integration of robotics further amplifies optimization prospects, spanning across industries. Notably, post-GST, the burgeoning warehouse infrastructure makes robotics and automation integration particularly promising for enhancing efficiency. In summation, technology is reshaping the landscape of Indian supply chain management, mitigating challenges, reinforcing decision-making, and ultimately enhancing overall efficiency. This trajectory bodes well for the future of supply chain operations in India.

What measures can be implemented to enhance supply chain flexibility and responsiveness when operating in a highly volatile market?

To fortify supply chain flexibility and responsiveness in a volatile market, consider the following strategic measures:

Strategic Perspective: Shift the lens through which you view your supply chain. Regard the entire supply chain as a competitive asset rather than merely a functional necessity. Evaluate the entire value chain, fostering transparency and resilience, as opposed to local-level optimizations within transportation and warehousing.

Data Integration: Integrate end-to-end systems to facilitate a seamless flow of clean and accurate data, spanning from customers to vendors. This integrated data ecosystem empowers intelligent decision-making and facilitates the optimization of costs.

Collaboration with Reliable Partners: On the physical front, collaborate with organized players, such as 4PL or 3PL providers, to enhance the reliability of your supply chain.

In the context of India's logistics market, characterized by a multitude of small and often unorganized companies, a rigorous evaluation of vendor trustworthiness and reliability is indispensable. This assessment serves as the linchpin for infusing flexibility and resilience into your supply chain.

How do business leaders plan to optimize the supply chain to reduce costs and increase profitability while maintaining product quality?

In their quest to optimize the supply chain for cost reduction and increased profitability while maintaining product quality, business leaders take a strategic approach based on key principles:

Gap Identification Over Hasty Adoption: Leaders prioritize identifying weaknesses instead of hastily adopting technology. They focus on a clear technology supply chain strategy, emphasizing accurate data acquisition and system integration.

Comprehensive Assessment: A typical FMCG company with 20 warehouses and numerous last-mile vendors undergoes a comprehensive evaluation, with integration as the central challenge to cut costs.

Beyond Transportation Costs: Business leaders understand that transportation expenses are not always the primary cost. They optimize warehouse consolidation, partner selection, and modern trade channels. Crafting an omnichannel strategy, identifying optimal warehouse locations, and defining efficient delivery processes are critical. Real-time cost monitoring is essential, aided by AI and IoT technologies.

The Four Pillars: Success hinges on four key areas:

  • End-to-end Integration: Streamlining processes from raw material procurement to product delivery.
  • Reliable Physical Logistics: Ensuring a dependable logistics network.
  • Clean Data: Focusing on accurate data.
  • Smart Decision-Making: Leveraging data for informed decisions.

Enhancing supply chain flexibility within a volatile market demands a comprehensive approach that transcends the boundaries of the digital and physical realms. The central focus should remain on vendor reliability, a cornerstone to weather the challenges of an ever-changing landscape.