A Compound Annual Growth Rate (CAGR) of 9.5%, as per its latest Five Year Plan, puts the Indian economy on the list of some of the fastest growing economies in the world. The country’s GDP ranks 13th on a global scale. Compare these statistics to the fact that when it comes to performance on the global trade logistics platform, India ranks a dismal 46th and we know there is a missing link in a plan that otherwise is quite promising. Further probing reveals that organizations across the country suffer losses of up to $65 billion a year due to underperforming supply chains. Is this loss bearable for an economy that is only just finding its foothold on the part to growth?
In comparison to the 8.5% loss in GDP that the United States registers in supply chain costs, India spends as much as 13%. So why are these high investments not doing the job right? The manufacturing industry will gain on several fronts if only the supply chain was managed more efficiently. With the growth and innovation in the Supply Chain Management (SCM) segment, manufacturers in India have the opportunity to propel themselves into a future where supply chain challenges are not an area of concern anymore.
Several factors have contributed to the lack of strength and efficiency of the supply chain in India and each problem has to be addressed in detail in order to find a complete solution. The following factors affect both inbound as well as the outbound supply chain, thus hampering economic growth.
1. Infrastructure: A weak infrastructure that just does not seem to keep pace with the manufacturing industry’s potential for growth has been a woe of the Indian subcontinent for a long time now. For example, the country may have the 2nd largest road network in the world but most of it is sub-standard.
2. Distribution system: A disorganized distribution system affects the supply chain adversely and often, suppliers and manufacturers just do not seem to find the optimal links in a crowded market.
3. Fragmentation: Blame it on the market distribution or simply the economic, geographical and commercial diversity of the country, a highly fragmented logistics market poses myriad challenges.
4. Taxes: A multifaceted tax system that involves both the Central Government as well as the State Governments and is often too complicated to comprehend has been quite a bane for India, and the supply chain has suffered on this front too.
5. Adoption of technology: For a country that is a global performer in the IT segment, investments on IT in the manufacturing segment are not very impressive. The prevailing economic conditions have contributed to the lack of financial commitment towards developing IT mechanisms in the supply chain.
A supply chain that works optimally has to take into consideration all these impediments, making sure that solutions are a part of the Supply Chain Management mechanism.
Getting onboard a reliable partner in Supply Chain Management and Analytics can help manufacturers zero in on their strategic goals instead of spending time and extra resources streamlining the supply chain mechanism, and then maintaining it too. Apart from finding solutions to the above major factors, there are other benefits too.
1. Long-term stability: While economic uncertainty will continue for a while now, strengthening the supply chain takes care of at least one aspect of the manufacturing process, stabilizing the financial factor.
2. Handling regulations: SCM helps integrate regulatory tasks with the daily workings of the supply chain, thus enabling the redesigning of its mechanism in line with evolving regulations.
3. Enhanced collaboration: SCM facilitates finding the right partners that have a common goal and assists in developing these collaborations through supply planning as well as product and material development.
4. Cost management: Even in complex supply chains, integrations of SCM and Analytics helps cut costs. Risk is better distributed, market volatility is constantly on the radar and there is always an eye on the supply chain, thus helping in keeping a tab on costs and spending.
At Conneqt Business Solutions, we have every tool necessary to strengthen today’s highly competitive and constantly evolving manufacturing environment. Our expertise in Inbound and Outbound Supply Chain Analytics help manufacturers in outlining strategies that optimize the workings of a supply chain, while keeping costs at bay.