The Confederation of India Industry (CII) along with Arthur D. Little published its new report highlighting the need for immediate attention given to the high logistics cost of 14% of GDP in India compared to 8-10% of GDP in the US and Europe.
The report which is titled Reimagining India’s supply chain: A bold vision for 2030, brings to light these issues and sets a bold Vision 2030 and roadmap for ensuring global competitiveness of India’s supply chain. The report was released by Mr. Pawan Kumar Agarwal, Special Secretary (Logistics), Government of India, at the CII National Packaging Conference today.
The report details the improvements needed to make India’s supply chain competitive. It provides a glimpse of learnings from around the world, presents five imperatives for the Indian supply chain, and sets aspirations to achieve Vision 2030. It also brings to light the vulnerabilities that the supply chain network is exposed to if transformative actions are not taken.
“To bridge the current competitiveness gap of USD 180 billion, India needs to halve logistics cost from 14 percent of GDP to 7 percent. The supply chain industry in India needs to be reimagined and efforts need to be made to move towards creating an optimized and digitized logistics ecosystem, a delayered distribution system and a green, resilient and flexible supply chain. The reimagined supply chain will help realize the Honorable Prime Minister’s Atmanirbhar Bharat vision and supplement Make-in-India and Start-up India strongly, catering to the global supply chain.”~ Barnik Chitran Maitra, lead author of the report and Managing Partner of Arthur D. Little India and South Asia.
“To manage the supply and demand shocks in the supply chain, India needs to find new ways of doing businesses and bring innovation into their planning and operations”.~ Thomas Kuruvilla, Global Board Member and Managing Partner of Arthur D. Little Middle East
He further adds, The report discusses at length international learnings that Indian supply chain leaders could take inspiration from
“A national supply chain taskforce with five working groups will focus on the crucial dimensions of supply chain operations across the sectors of relevance. These groups will meet monthly under the leadership of CII and Arthur D. Little to realize the aspirations set in the Vision 2030 report.”~ Harinarayanan S, a supply chain expert and facilitator of the CII-Supply Network & Procurement Forum, as well as one of the co-authors of the report
The key findings of the report are:
- Logistics cost in India stands at 14 percent of GDP, compared to the global average of approximately 8 percent, creating a competitiveness gap of USD 180 billion for India, which could increase to USD 500 billion by 2030.
- Supply chains are transforming globally by adopting Industry 4.0 trends including agile networks, disruptive technologies, end-to-end visibility, and risk mitigation vs, risk management.
- India can benefit from the experience of mature economies, which have used emerging technologies such as artificial intelligence, blockchain, and the Internet of Things (IoT) to enhance supply chain operations and resilience.
- To make India’s supply chain competitive, efficient, and resilient, Vision 2030 aims to pare logistics cost to 7-8 percent of GDP, optimize the logistics modal mix, digitalize 90 percent of supply chain operations, develop omni-channels, move towards green supply chains and enhance skill development.
Furthermore, the report also takes a long-term view of the Indian supply chain and sets five broad aspirations to achieve Vision 2030.
- Optimize the logistics and warehousing network : Reduce logistics cost to 7-8 percent of GDP; optimize the logistics modal mix with roads constituting 25-30 percent, railways comprising 50-55 percent, and waterways accounting for 20-25 percent; reduce indirect costs to 20-25 percent; expand cold chain storage infrastructure
- Hasten adoption of cutting-edge technology: Digitize more than 90 percent of the supply chain network; implement technologies such as artificial intelligence, blockchain, and the IoT
- Restructure the supply chain: Build omni- channels and simplify supply chain network; ensure visibility; and collaborative planning
- Enhance skill development and talent management: Senior management in organizations to become more comfortable with digital transformation, data analytics, and AI; develop cross-functional teams to facilitate supply chain decision-making.
- Move towards a green supply chain: Move towards greener modes of transportation to reduce carbon footprint by 50 percent; use electric vehicles for deliveries, targeting a 50 percent electric fleet; optimize transportation routes; use biodegradable or recyclable materials for packaging and deliveries.