Supply chain and logistics management play a pivotal role in the overall growth of a nation’s economy. It’s like the Oxygen without of which no industry can run even for a short span of time. But here, in India, the condition of national supply chain and logistics is abysmal and still scratching the surface itself. In this blog, we are going to take a look on the factors that are responsible for the slow growth of supply chain and logistics system in this country.
“The average supply chain cost in the U.S is almost 8.5 % of its entire GDP. On the contrary, the average supply chain cost in India is as high as 13.5 % of its entire GDP.”
But wait a minute! cause the bad news does not end here. In 2018, India’s rank on World Bank’s Global Logistic Performance Index(LPI ), one of the most recognized way of measuring the ease of doing business based on the condition of existing supply chain and logistics infrastructure in a particular country, went down to 44 from her earlier position of 35 in 2017.
Whereas countries like Germany, Netherland, Belgium and Uk which always tend to eliminate all sorts of disruptions in their entire national and international supply chain management system successfully acquired first, second, third and fourth rank respectively.
All of these above-mentioned factors do not show any bright side of Indian Economy. According to the latest survey, the net worth of losses that are occurring, especially because of poor supply chain infrastructure and lack of proper managerial strategies, are nearly around $65 billion. Clearly, the supply chain and logistics management companies in India are definitely suffering from a lot of challenges.
Problems and Challenges:
In India, Supply chain & logistics management is facing both the demand side challenges and supply side challenges which are explained below.
Demand Side Challenges:
Demand-side challenges are basically related to the unstable price factors and the differentiating varieties if consumer requirements. We all know that India is a country of infinite contradictions and full of unimaginable diversity.
You can simply understand this fact by just taking a ride from one state to another. You will be able to recognize new culture, new languages, new dialects, new food style and above all idiosyncratic traditions, just after crossing almost every 40-50 km geographical distance.
As a result, it is not quite possible for a single manufacturer or even for a small group of industrialists to satisfy such a varying and highly differentiated set of consumer requirements.
What we require in this context is a bridge or more precisely a perfect organised supply chain collaboration system between the manufacturers, distributors, local agents and retailers who are directly connected with the domestic consumers.
There are dozens of Supply-side challenges which basically hamper the entire supply and distribution system. Some of them are listed as follows:
● Poor Distribution System
● Inadequate Infrastructure.
● Amature 3PL companies
● Complexities in Taxation
● Stringent Trade policies
● Closed Economic Policies
● Dispersed Market
● Old & outdated technologies.
● Lack of Skill & professionalism.