The COVID-19 crisis has raised serious questions on the resilience of Indian logistics & supply chains industry. More than 80% of organizations in India were negatively impacted by the crisis and a vast majority have struggled with significant challenges across all aspects of their operations. In conversation with Mr. Ashutosh Pandey, Asst. Manager, Supply Chain Operations, SRF Limited, we attempt to identify the key trends in Indian logistics industry, COVID impact and what will future hold for the industry.
How would you summarize the current state of the Indian logistics and supply chain industry amidst COVID-19? How is the industry reacting and responding to the pandemic?
The logistics industry is the backbone of the country; without which the whole nation would collapse. We are proud to say that we belong to an industry wherein from day one of the lockdown, despite all possible difficulties and unimagined circumstances; the logistics industry is providing its service to the nation in all possible forms. Apart from the medical fraternity’s service, logistics industry is the only one which is working at 85-90 per cent capacity.
How has logistics, warehousing and supply chain operations changed as a result of Covid pandemic?
The logistic industry has not changed much, because ‘work from home’ can’t be practiced here. In fact, in these coronavirus-induced circumstances, many logistic businesses especially B2B, e-commerce and retail business has flourished.
How equipped is the Indian logistics industry & your company to handle a potential pent-up demand post-Covid scenario by the end of this year? And what are your recommendations to the industry?
We have a robust infrastructure, technology and an experienced team put us in a strong and proactive position to service this critical requirement whenever it comes to addressing pent up demand in the way of affordable and accessible first mile / international transportation and last-mile distribution requirements.
Our recommendation to the industry is that given the nature of this virus and its life-saving impact on the patients please make sure that all stakeholders and participants are completely aware, sensitized and highly prepared and trained to play their part in this massive and most critical humanitarian global exercise. It would be very unfortunate if the integrity and the complete protocols of the distribution of these vaccines are not fully maintained and they fail to lead to any single loss of life.
What are the significant issues that have plagued the transportation value chain?
The market depends heavily on regional brokers and struggles with financing issues. Shippers face issues such as low-price power, low efficiency and transparency, and the limited visibility of vehicles
and shipment in the value chain. Carriers lack skilled drivers, technology, struggle with unpredictable backhaul availability and face long detention times. Middlemen (one or many) bridge the distance between the shipper (load provider) and truck/fleet owner resulting in additional costs in the system.
What are the approaches you have witnessed which the logistics players are attempting to create a network at scale and mitigate the current industry challenges?
There are basically three approaches being used by players/stakeholders in the logistics industry:
— Line haul (FTL/PTL) focused network (asset-backed/ “asset right”): This model requires the right mix of asset ownership and service provider partnership to be cost competitive. The load needs to hit a critical mass on the network to ensure maximum utilization of trucks resulting in cost leadership. Algorithm-based load allocation could help select the right truck and ensure backhaul availability with minimum wait times.
— Last-mile delivery network: While this model helps to reduce costs by consolidating loads to convert LTL into FTL movement, it can also use the same network for only FTL services. Offerings include same-day delivery, time-window/slotted delivery, multiple payment options, streamlined return logistics and 24×7 visibility. The fulfilment centers also function as warehouses.
— Hyperlocal services: This model requires high utilization to address skewed demand during peak time periods. For this model, load consolidation and route planning are critical to reduce costs. Key success factors also include expanding the network to multiple cities across India as well as deep pin-code level coverage within the city. Utilization of the fleet by venturing into adjacent value pools may become the key (such as food delivery agents doubling up as parcel carriers in lean time periods)
What would you recommend to the industry stakeholders to do in the future to face such drastic market conditions?
Historically, supply chain organizations have been viewed as cost centers. But, the global and prolonged impact of the Covid crisis has made organizations realize the need for strengthening supply chain resilience. Building resilience into supply chains means examining diversification and localization decisions while strengthening supply chain agility, visibility, and contingency planning capabilities. Supply chain sustainability is another key area with growing importance. In the aftermath of COVID-19, we are now witnessing that organizations are planning to increase their efforts in this new direction. However, when we look at the current levels of supply chain resilience and account for plans for the next three years, only a small minority seem to be adequately prepared to withstand the next storm. While organizations’ future aspirations are indeed on the right track, the critical mission for supply chain executives right now is to ensure that their organizations follow-through on these goals to be more resilient. We as a company have made all plans to be more ready for such circumstances and are now confident that we will come out stronger than ever.
