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Key trends in supply chain management in India
Over the last 12-18 months, e-commerce is driving the increasing popularity of third-party logistics (3PL) and last-mile delivery vendors.
Such vendors provide heavily capital- and labour-intensive services such as transportation, warehousing, inventory management, freight forwarding, cross-docking and packaging.
Within the e-commerce space especially, it becomes increasingly cost-efficient for online players to use a 3PL vendor to provide end-to-end delivery solutions for everything from food, electronics, beauty products, branded apparel and footwear – at cheaper and cheaper rates.
India’s online and mobile shopping boom shows no signs of slowing down with a recent study estimating B2C transaction value topping US$100 billion by 2020, while B2B value is expected to hit US$700 billion.
With an increase in the number of online transactions, the online logistics space will continue to flourish, with consolidation around four to five prominent players (for example, Delhivery, Vulcan, E-Kart).
2. Operational efficiency
Companies are constantly facing pressure to manage their bottom lines across the business. Sourcing and procurement activities can be streamlined across different regions with better integration.
This, in turn, gives companies increased negotiating power and better economies of scale to drive operational efficiency.
Many companies are also looking at developing strategic relationships with key vendors to drive through the concept of supplier driven innovation. Apart from the services industry, where the concept of procurement/sourcing Centres of Excellence (COEs) has been fairly popular, traditional product-based companies also setting up similar COEs to leverage global relationships, driving operational efficiency.
Developing strategic relationships is also key as vendors are increasingly an extension of the company’s logistics arm, and they contribute directly to the brand’s image. Any service delivery issue or error could harm the company’s reputation.
3. Emergence of 'Lean Supply Chain' concept
The concept of a “Lean Supply Chain” has gained popularity in recent years. It’s no longer about just customer management or economies of scale but also how agile a company’s supply chain is and its ability to adapt to internal and external factors.
To develop a lean supply chain, companies are looking at adapting technological improvements across the entire organisation. But the success of a lean supply chain is heavily dependant on the ability of its human capital to make quick decisions.
Primitive reporting structures might no longer work, and this has led to an emergence of matrix structures within supply chain set-ups. Candidates with experience of working in such an environment, especially with exposure to global stakeholders, are heavily in demand.
Talented strategists rather than pure play execution-oriented staff are being courted for their ability to lead key initiatives and projects leading to operational efficiency. Logistics and distribution professionals with experience in handling imports, customs clearance and 3PL vendors are also prized.