India’s digital supply chains: connecting to the future

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The supply chain in India stands ready for a revolution, and investment in India’s supply chain infrastructure is gaining momentum. 2018 saw the introduction of the Goods and Services Tax (GST), which has relaxed foreign direct investment rules while an increase in government spending has kick-started growth in the sector. Digital transformation has the power to push India’s supply chain to the next level.

It is quite well known that India has, until relatively recently, suffered from a range of nationwide infrastructure issues that have had a negative effect on our supply chain network. Transporting goods by road, rail and sea have all had their challenges, and factoring delays into the movement of products has been commonplace. Likewise suppliers, manufacturers and retailers have had to allow for delays when shipping between India’s states, since complicated taxes and transport lines running over capacity have been in play, increasing overall logistics costs.

So we have faced challenges. But things are turning around, and the potential for digital supply chains to improve matters dramatically is there. In the past three years, India has seen a big influx of capital into its supply chain, while the government’s spotlight on “Make in India” is also focusing on transforming our nation’s supply chain. So what role can technology play in India’s digital supply chain?

Supply chain’s current status in India

According to Business Insider, logistics costs currently account for up to 14 percent of India’s gross domestic product (GDP), so deploying smart supply chain solutions to attempt to bring that down sounds like a smart move.

This transformation can have a knock-on effect on India’s economy in general, but particularly on trade and retail. And as India’s economy continues to evolve, ensuring that our supply chain continues to modernize will be essential for business growth. A modern, digital supply chain makes it easier to do business in general, it reduces manufacturing costs and in time will help accelerate consumption growth in both urban and rural areas, through better access to goods and services – vital in a country as geographically spread out as India.

Improving regional connectivity in general by making road, rail and inland waterways better and more consistent is another priority, and plans are already underway. Indeed India’s 2018 budget contained the highest ever financial allocation to spending on infrastructure, at around US$95 billion. Developing our country’s foundational transportation network has become a priority.

Logistics moving forward in India

According to the World Bank Logistics Performance Index 2017, India is now ranked 35th, up from 54th in 2014. Furthermore, it has been estimated that India’s logistics industry will continue with a steady growth of 10 to 15 percent annually and will continue to be important to the national economy.

As for APAC at large, the region’s role in global trade and importance in logistics terms looks only set to continue: PwC has estimated that by the year 2030, 16 of the top 20 bilateral trade routes in the world will include APAC markets, will account for $4.7 trillion in trade value and APAC routes will command over an 80 percent share of the world market. It is vital India plays a key role in that.

Transforming India’s supply chain digitally

A big factor in evolving India’s supply chain is in reducing logistics costs and increasing business efficiencies; and today industries like automotive, retail and manufacturing are adopting digital technologies to help reinvent their supply chains. RFID and IoT tools, for example, are already helping improve operational efficiencies and cargo safety as well as reducing transport costs by increasing the speed of freight movement.

Further to these tools, I can foresee other digital solutions making their way into India’s logistics sector, such as next-generation robotics, automated vehicles (AVs) in warehouses, blockchain, IoT sensors and more. According to IDC, digital tools will grow quite rapidly in use throughout APAC between 2016 and 2019, as organizations continue to realize the benefits of digital tools to their supply chain.

The data imperative

Another thing about the modern supply chain is that it generates huge amounts of data. And IoT-enabled supply chains that utilize data analytics tools will be essential to transforming India’s supply chain moving forward. Being able to react quickly to real-time data at all points of the supply chain will be a benefit: inventory levels, point-of-sale information, consumer buying habits, even fluctuations in freight costs or raw materials will all play a role.

This is an area where Orange has committed significant resources, as we believe that the data journey will be the focus of so much enterprise attention in 2019 and beyond. Supply chain is an area that leverages many IoT solutions, from sensors to autonomous vehicles and, as such, will generate massive amounts of data. All that data needs to be collected, transported, stored, analyzed and protected for enterprises to get the most benefits from it and drive actionable business insights. That is the data journey, and it applies hugely to the logistics and supply chain business.

A digital supply chain future for India

PwC has also found that 67 percent of businesses today “consider digital supply chain disruptive and important” and that 40 percent of APAC companies have already deployed technologies like collaboration tools and supply chain analytics to enhance supply chain operations.

Digitization can help India take our supply chains to the next level and drive major reductions in costs, which will in turn power an increase in annual revenues.

To read about how Asia Pacific companies can transform their supply chains using the latest digital technologies, download the PwC report Building connected supply chains.

Bala Mahadevan
Bala Mahadevan is CEO, India, at Orange Business Services. His role incorporates leading Global Communications Solutions and Global Services in India, and he is responsible for designing and executing business strategy to drive business growth in India.
 
Bala holds a Bachelor of Engineering from Birla Institute of Technology and Science, Pilani, India. He is an accomplished leader with a track record of key contributions in various leadership roles, encompassing business transformation, leading global businesses having multi-location, multi-faceted technology environments, setting up off-on shore development & support centers and more. His intense and varied experience in the IT services industry has cut across various service lines, verticals and local-global geographies for over 30 years.