India is $1.6 trillion dollar economy which is growing at an average annual rate of 7.5 percent. No global corporation can ignore that. To do business successfully in that geography, their Indian business units and partners must be able to overcome the challenges from several domains: supply chain, regulatory and socio- cultural. I am going to write about the first one here.
Recently I came across this post where the author has given a very good perspective of supply chain issues, mainly infrastructure (unpaved roads), taxation (tax on movement of goods) and has an interesting takeaway in the end, "Traditional methods of supply chain design and management do not always apply," and I fully agree with that statement.
Let's look at couple of success stories. In spite of challenges, there exist very good examples of six sigma supply chain setups in India, like Dabbawalas, which operates in the most populous city of India, Mumbai. Dabbawalas is a company which picks up and delivers fresh and home cooked lunch to office goers. It's a highly specialized business service that involves various lunch box carriers throughout the city and they do close to 200K deliveries a day with less than one error in 6-million (if you are vegetarian you can be assured you never end up with chicken curry lunch). Readers may refer to Wikipedia for more details on their business and for more technical insight they may read the Harvard Business Review case study on in its success, and how FedEx learnt from it for better operations of its Indian BU.
Another good example of success in setting up a supply chain is major auto manufacturer, Maruti. By establishing close collaboration with its suppliers, it overcame typical challenges posed in the country. Here's a very interesting article in CIO India titled: How Maruti Identified a Smart Supply Chain System
Lack of a good infrastructure makes getting the raw materials and carrying out the finished goods distribution very complex â€• there is more than an average number of distribution points or warehouses a product has to go through before reaching the end user. The current state of infrastructure in India forces companies to use several modes of transportation in the value delivery process. The highways and rail systems do not reach major portion of the country, and a product has to travel on train, truck, or auto/cycle rickshaw before landing into the end customer's hands. Every time the mode of transportation changes, there is handling, sorting, and storage involved – this make the supply chain very complex and decreases the reliability of whole chain.
In my opinion, to have more reliable and successful supply chain setups in India corporations should keep these things in mind:
- Visibility — As the number of warehouses and distribution points grow, better visibility into your network becomes more necessary for customer service and a competitive edge. If youknow what is where, then you can control it. Systems should be able to do all kinds of simulation for exceptions, so decisions can be made quickly.
- Collaboration — As cited in Maruti example, the way to beat the supply chain challenges was to collaborate with suppliers and distributors. This makes the supply chain issue not a company issue, but an issue of the entire value chain – from supplier to end product distributor – and everyone tries to overcome it.
- Simplification — Keep it simple, in fact, very simple. Use a system which is clear to understand, not only by your employees, but also by your customers and suppliers. India is a country of several languages and several cultures. There is huge risk of "lost in translation" if anything is complex. Use visual tools as much as possible.
- Flexibility — Pick a supply chain solution which can work with several applications. When collaborating with local suppliers and distributors, it should be no surprise to discover that some of them still operate on dated custom-built systems. The supply chain solution should be flexible enough to work with all of them.
- Mobile Phones — This is one technology that almost everyone has access to. Access to them is very inexpensive, and most people have them ( over 800 million out of 1.2 billion in India). Any supply chain strategy should leverage this, similar to how Marketing firms have used mobile phones very effectively with SMS campaigns.
World class Supply chain is the mantra for building competitive advantage; having good understanding of country specific needs and having solutions for them will enable corporation to be world class across all geographies.
Originally posted by pchadha at http://blog.kinaxis.com/2011/12/challenges-to-setting-up-a-successful-supply-chain-in-india/