Trade disruption scenarios & solutions from India towards building resilient supply chains

Publication date: 
29 Jun 2021

The importance of resilient supply chains is receiving national attention in India. At the ‘Future of Asia’ Conference held in Japan recently themed on shaping the post-coronavirus era and the role that Asia would play, the Indian Minister of External Affairs made a strong pitch for global supply chains shifting to India.

 

This was against the backdrop of India’s efforts to make manufacturing globally competitive by creating economies of scale, ensuring efficiencies and the recently launched production-linked incentive (PLI) schemes to attract manufacturing in 13 diverse sectors. What was most interesting to me was that he sparked the debate of the Covid-19 pandemic’s real impact on supply chains, amongst other aspects. This raises a pertinent question. If India is to become a factory for several industries like pharmaceuticals, auto & auto components amongst others, is it only enough to offer good quality products at a globally competitive rate or also address the supply side bottlenecks?

Events in the recent years such as the US-China trade war, the Covid19 pandemic, the Suez Canal blockage, have on one hand led to serious disruptions in global supply chains but on the other hand served as a platform to showcase the building blocks of “Resilient Supply Chains”. I was curious to hear more from leading Indian business houses that stood strong, despite the challenging times. I present my findings from experts who tackled challenging scenarios with remarkably interesting ideas.

  

Mr. Shohab Rais, Chief Operating Officer - Indian Chemical Business, Tata Chemicals Limited Chair, Confederation of Indian Industry Western Region Steering Committee - Logistics & Supply Chain.

 

"As a consequence of COVID19 and resultant market disruptions coupled with restricted movements due to lockdowns etc., demand patterns became a little unpredictable. This led to a situation where order fulfilment took center stage, both from customers' expectation perspective and as opportunities for increased business. To address the challenge and leverage changing demand, we introduced floating warehouses at various market centers. This was done with the help of container rakes. Material was made available in containers at locations closer to customers without investing in brick-and-mortar warehouse spaces. This could be achieved at any market without any lead time requirement of warehouse space creation and helped us move material from manufacturing sites and to significantly improve customer service when it mattered the most. Additionally, it helped capture demand spikes as well.”

 
 

Dr. Ravi Prakash Mathur, Vice President Supply Chain Management, Dr. Reddy’s Laboratories

 
  “The launch of “Cinacalcet” in Europe ran into the danger of being significantly delayed, but despite all odds, our team didn’t let this happen. Because of the product patent still being in force the product could not land and get custom cleared in Europe. Our import location in the EU closed their airports which was critical for this launch. We, worked closely with quality and supply chain team to find ways to address the situation. The final option was an alternative airport where the medicines were shipped and from there moved via truck and ferry transported to the final destination under bond. The Logistics team was able to connect to the last Lufthansa freighter out of Hyderabad to ensure this shipment reached destination. The QC team supported by expediting the testing timeline with the external testing lab – having them come to the lab over the Easter break to ensure we completed the testing in time. Finally, the team arranged trucks waiting on each country’s respective border and the warehouses ready to sample the goods as soon as they arrived – providing access to an affordable medicine on day one of the patent expiry.”

Mr. Samit Datta, Global Chief Supply Chain and Technology Officer, Piramal Glass.”

 

The challenges

“Over the last year and half the pandemic has hit the world and now with the 2nd & 3rd waves, it has only shown how vulnerable human life is. The staggered lockdown and the unexpected timing of them across regions and then countries or states within the region has made things worse. The normal flow of trade and fundamentals of demand – supply of commodities and supporting commodities like availability of containers & ships is at stake. 

 

India is a very densely populated country where most of the section of the workforce are daily wage earners. The country has been one of the worst hit countries due to Covid 19 pandemic. It never ever boasted of a robust healthcare system and the last wave, and all future waves will only impact this vulnerable section of the population, who also traditionally have been the true workforce of the economy. A disruption in human life has multiplication effects because - apart from the normal disruption, the emotional angle to the disruption tends to exponentially damage the situation and if not handled well, also delay the end of the problem. Unforeseen impacts of accidents like the Suez Canal etc. further accentuate the situation. 

 

Further, the logistics industry stalwarts instead of calming the situation, resorted to opportunistic behaviour, which is further hurting the industry with respect to hyper inflated costs and operations unease. While a part of this may be justified because of the basic disruption in international trade, the industry stalwarts could have resorted to a more steady / gradual increase and ensured confidence to the whole trade. Emergence of new problems appear daily and the fixes provided to them only seem to have at best Immediate or Short-Term effect. The problems (like the pandemic) seem to mutate daily and unlike the past a problem once solved does not seem to have any lasting effect. Resources need to be deployed to attend to these, otherwise the service or costs will be let down leading to existential threats of business.

So, we live in a World today, where No amount of planning & blue-sky visioning is going to be able to predict what is going to happen tomorrow.

Actions & Best Practices

In such situations, which are one step above the VUCA world, the only way to tide the perfect storm is to approach the problems by becoming an Ambidextrous Organization.

1. Optimize - The tenets of optimize is to pursue the traditional mindset of doing the basics right at an affordable costs (costs will rise – and don’t live in a fool’s paradise that you are going to save over last year) and look at enhancing the service by pumping more information to your customers (Become an Amazon tracking the parcel for your customers).
  • Trust your people & vendors continually as you need them to be flexible and changing with times.
  • Empower the lowest levels to take decisions. If you have a strict centralized system, you are going to miss the bus in your penchant desire to Command & Control centrally.
  • Build a two-way communication channel on feedback and not hunch. Have a daily review (include the topmost person now). 
  • Invest in data and feedback
  • Institutionalize a Recognition system by highlighting achievements rather than Rewards – In these tough times, an announcement in a forum or newsletter has more motivating impacts on human ego than a cash reward, which is only known to the person who receives it. Roll it out to your employees and logistics service providers like transporters etc.

2. Innovate

  • Invest on digital technologies like track & trace. Further use the data to do analytics. Begin with descriptive analytics and then get into some amount of predictive.

  • Do detailed network engineering and network planning to optimize the costs.

  • Continually do scenario planning to have a fallback plan B. The most critical tasks (and they may change on a periodic basis) must have a Plan B, Plan C and Plan D, which must be known to all, so that the changeover happens seamlessly. Human minds take time to adjust and when the multiple plans are publicized in advance, it helps.

  • Place your inventories at strategic points close to the customer in case you do not have the ability to do in-sourcing or near-sourcing. This comes at a cost but gives immense comfort to your customers

  • Pull out all those skeletons from the closets. Re-assess all the ideas of the past that were considered marginal or expensive. You would hit a jackpot because the economics have changed drastically and build a sense of opportunity losses in the organization

  • Measure all operational KPIs like OTIF, Line Fill Rates, Ship reliability continually.

To perform all these activities, you need data on your fingertips. We must imbibe new age technology and integrate this to our basic systems and people."

To sum up, messages from the 3 experts are also aligned with the Port of Antwerp’s offer as a maritime gateway for cargo via Europe, which include:

 

1. Nearshoring - ample warehousing at attractive rates to service the European market.

2. Innovation & Digitalisation - continuous investment even during the pandemic, towards technology aided customer friendly solutions, to ensure a sustainable future.
3. Trade facilitation - from creating green channels to the EU hinterland during the initial pandemic days, investing in mobility solutions via rail-barge-short sea, to proactive & friendly customs procedures. 

 

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Contact

Malini Dutt

Function: 
Port Representative India
T.: 
+91 98 20 28 14 16
Address: 

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