How India is managing its supply chain bottlenecks?

Updated: Nov 22, 2021

Learnings from global supply chain bottlenecks during the pandemic is expected to boost innovation in India's logistics sector.

 

In a world where we are accustomed to getting a pizza delivered in 30 minutes, the pandemic was one of the biggest black swan events that fractured supply chain logistics. There was a point when even hand sanitisers and masks reached only a week after they were ordered online.

Some of the most prominent factories in China, South Korea, India and Vietnam shut down owing to COVID-19. With several countries announcing lockdowns, consumers took to shopping more and more online - whether it was office chairs, fitness equipment, gaming consoles to trendy clothes. The volume of demand superseded the existing inventory.


Image credit: Rodnae Productions, Pexels


In order to meet this growing demand, production had to be ramped up. And for that to happen, raw materials and other components were constantly transported to factories. This in turn led to a pile up in warehouses and ports, further marred by a shortage in shipping containers because of the exorbitant rise in demand.

All of this significantly impacted the Indian e-commerce industry, which had already grown to a large extent due to increasing internet penetration, smartphone usage and language diversity.

For instance, India’s smartphone shipments fell 5 percent in the third quarter due to supply chain blockages, reported The Economic Times. "These challenges will persist into Q4, and high component and logistics costs, together with container shortages will result in longer lead times and higher retail prices," Canalys Analyst Sanyam Chaurasia told the newspaper.


Driving the change

In the wake of the recent changes in the e-commerce retail logistics space, some aspects are worth noting. Here’s a close look.

Improved connectivity With a shift to surface transit, a lot of focus is being placed on improving connectivity in the country, and the same trend is expected to continue in the years to come.

Secured lockers Logistics companies have started providing a locker facility which houses lockers at strategic locations where customers can receive products from e-commerce companies and collect them as per convenience within a given time-frame.

Digitisation of addresses India has witnessed a huge spurt in the number of companies concentrating on digitisation of addresses to help reduce transit time, curtail customer initiated returns and improve accuracy of last mile delivery.

Reach expansion Due to the immense potential of Tier 2 cities, several e-retailers are looking at expanding their network via strategic alliances and establishing rural distribution models to cater to demand. Companies are attempting to build pick-up and drop points by tying up with local shops and also employing local youth to smoothen the delivery processes.


Illustration by Pratyush Thaker


Transportation of goods via rail, se and road have posed delays in product movement for online grocery companies to automakers in India. This is why Indian e-commerce companies are now taking the next leap to build a transparent and responsive system that can easily accommodate sudden and unknown variables such as shortage or excess inventory.


Innovations in last mile delivery

Players in the logistics space are leveraging technology and new business models to optimise cost and time efficiencies for last mile delivery. Here’s a look at some technological innovations that are driving this sector.

Internet of Things (IoT) Internet of Things makes way for the availability of key information such as parcel contents, location in the supply chain as well as points of arrival. It also allows faster flow of information in the supply chain, thus enhancing customer satisfaction levels. It connects various vehicles, loading and unloading equipment to one another through the installation of sensors which enables the procurement of real-time information of critical parameters such as temperature and filing rate. However, data privacy is a key concern, which is yet to be guaranteed for the last mile.

Advanced algorithms Advanced algorithms and superior software are enabling logistics companies to optimise routes and last mile deliveries. E-commerce retail firms are best served by incorporating a Transportation Management System (TMS). Companies are leveraging advanced technology (algorithms and superior software) to choose the right carrier mix, fleet size, location and fleet optimisation strategies.

Artificial Intelligence (AI) and automation As the industry continues to expand and cater to a whole lot of customers, the need for an automated system to streamline operations and marketing efforts has become one of the top investment priorities. E-commerce retail players have begun to explore technologies like chatbots, visual research, automated recommendation engines and design optimisation to achieve the desired results.

Globally, a slew of solutions such as drones, driverless vehicles and pick-up towers are being utilised for last mile delivery. However, these come with a downside since they involve high investment costs and regulatory constraints.

Analytics It has become crucial for Indian e-retailers to integrate data analytics, modeling infrastructure as well as methodologies into their decision-making ecosystem to make better and informed decisions. Strategies based on analytics have enabled organisations to resolve issues related to inventory management, performance management, fleet management, cost management, budget optimisation and business intelligence.

In the long run, India’s e-commerce logistics supply chain is expected to unremittingly adapt to the changes, trends and developments.


 

Edited by Roshni Shroff

Cover image illustration by Pratyush Thaker

 

Some resources to help you understand more about supply chain challenges:

Tech, balanced infra & government intervention key for supply chain rehaul

India’s Biggest Supply Chain Challenges in 2020