Tuesday, May 16, 2023

Challenges for Supply Chain Management in India

The average supply chain cost in the US is about 8.5% of its entire GDP. In contrast, the average supply chain cost in India is as high as 13.5% of its entire GDP.”

But wait a minute! Because the bad news doesn't end here. In 2018, India's rank in the World Bank's Global Logistics Performance Index (LPI), one of the most recognized ways of measuring the ease of doing business based on the state of supply chain and logistics infrastructure existing in a particular country, fell to 44. Its previous position was 35 in 2017.

Whereas countries like Germany, Netherlands, Belgium and United Kingdom which always tend to eliminate all kinds of barriers in their entire national and international supply chain management systems have ranked first, second, third and fourth respectively.

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All these above mentioned factors do not show any bright side of Indian economy. According to the latest survey, the total value of losses that are occurring, especially due to poor supply chain infrastructure and lack of proper management strategies, is about $65 billion. Clearly, supply chain and logistics management companies in India are certainly suffering from many challenges.

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Problems and Challenges:

In India, supply chain and logistics management is facing both demand side and supply side challenges as explained below.

Demand Side Challenges:

Demand-side challenges mainly relate to volatile pricing factors and differentiating varieties in consumer needs. We all know that India is a land of infinite contradictions and full of unimaginable diversity.

You can understand this fact only by traveling from one state to another. Almost every 40-50 km geographical distance you get to know new cultures, new languages, new dialects, new cuisines and above all diverse traditions.

As a result, it is not entirely possible for a single manufacturer or even a small group of industrialists to satisfy such a diverse and highly differentiated set of consumer requirements.

What we need in this context is a bridge or more precisely a perfectly organized supply chain cooperation system between manufacturers, distributors, local agents and retailers who are directly connected to domestic consumers.

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Supply-side challenges:

There are dozens of supply-side challenges that essentially hamper the entire supply and distribution system. Some of them are listed below:

1-Poor delivery system

2-Inadequate infrastructure.

3-Amateur 3PL company

4-Complications in paying taxes

5-Strong trade policy

6-Close economic policy

7-Dispersed market

8-Old and outdated technology.

9-Lack of competence and professionalism.

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FAQ

What are the main challenges in supply chain management today?

Top Supply Chain Challenges for Shippers

Keeping transportation costs low.

Keeping up with customer/industry demand.

Sourcing consistent, reliable carrier capabilities.

Keeping up with the latest technology solutions and demands.

On-time pickup and delivery performance.

What is the biggest supply chain related challenge for India?

Supply side supply chain challenges in India are mainly related to poor infrastructure, complex tax infrastructure, weak distribution system, fragmented market and lack of technology adoption. Although India has the second largest road network in the world, totaling 4.2 million km, most of it is of poor quality.

What are the challenges in implementing supply chain management?

Suppliers and partners are not willing to compromise. Employees are struggling to adjust to new processes and tools. Lack of practice and training prior to implementation. Difficulty with communicating internally and externally.

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