Enabling resilient supply chains

  • IASbaba
  • December 6, 2022
  • 0
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Context: The global supply chain dynamics was severely disrupted in the last two years of the pandemic couples with the geopolitical shocks of the Ukrainian crisis. Thus, there is an urgent need to make global supply chains more resilient to endure another ‘black swan’ event like the Covid-19 pandemic.

About Supply Chains:

  • A supply chain transforms raw materials and components into a finished product that’s delivered to a customer.
  • It is made up of a complex network of organizations and activities, such as raw materials suppliers, manufacturers, distributors, retailers and the customer.
  • Examples of supply chain activities can include designing, farming, manufacturing, packaging, or transporting.

Significance of Global Supply Chain management:

  • Higher Efficiency: Supply chain management uses various strategies to optimize the overall operations by improving the flow of products, materials, and information. It enhances the efficiency of businesses by accurately analyzing the demand and sales forecasting.
    • Therefore, investing in SCM leads to the timely delivery of finished goods or services to the customers.
  • Reduced Overall Operational Cost and risk assessment: Organizations are investing in effective supply chain management as it can minimize the expenditure by analyzing the real-time data to decrease the purchasing and production costs.
    • Therefore, realizing the importance of supply chain management can allow the organization to keep a watchful eye on the operations to control costs and allocate resources.
    • The supply chain tends to deploy predictive analysis which offers end-to-end visibility which detects the issue and mitigates the risk.
  • Enhance Customer Experience: Supply chain management is important to effectively manage and execute the tasks to help businesses enhance customer experience.
    • Prioritizing the customer’s wants is foremost essential as it is useful in customer retention and even establishes the strong reputation of the company.
  • Manage Supply and Demand: Getting deep insights into the overall supply chain ecosystem enables organizations to predict demands better and adequately.
    • Crafting innovative strategies has now become necessary for businesses to respond to the changing market trends.
    • In the contemporary world, an overview of everything across your supply chains enables businesses to be agile and highly responsive.
  • Embrace Technologies: New-age technological trends have the ability to enhance the functionality of supply chain management.
    • Managing the overall operations using automation tools can be extremely beneficial to scaling your business. Undoubtedly, implementing the new-age technology can optimize the processes and provide your businesses with a competitive advantage.
    • Technology plays a vital role to strengthen the overall functionality of supply chain management which allows businesses to scale.
  • Business Agility: Supply chain management enables businesses to be more resilient and adaptive to opportunities.
    • Supply chain agility tends to meet actual and unexpected demand changes as it implements new-age technologies like Internet of Things, Big Data, Artificial Intelligence in Logistics and so on.
    • Therefore, understanding the importance of supply chain management can enable stronger cash flow and shipping optimization enabled with the right technology.

Need for diversification of supply chains across countries and companies:

  • Inflation in food and medicine has sparked unrest and tensions the world over.
  • Ideas over identifying affordable, resilient, and sustainable supply chains started being discussed in regional forums such as the QUAD, G10, and even multilateral forums such as UNCTAD as soon as the pandemic began to recede.
  • The resilience of supply chains was stressed during the pandemic as they were on the verge of collapse.
  • Although, though there is a softening of prices and a relative redundancy in the logistics component of the supply chain today, there is still a worry among the shipping lines for sustaining operations and resilience in the logistics domain in the long term.
  • Resilience is necessary for the logistics sector to supplement the global supply, especially when the world is just coming out of the pandemic’s impact.
    • Now, there is a need to think about various strategies to bring about resilience in GSC, GVC, and the logistics continuum.

Government of India’s Initiatives to boost strong GSC:

  • The National Logistics Policy (NLP): Known as the Comprehensive Logistics Action Plan, the National Logistics Policy is an agenda to transform India’s logistics landscape by 2024.
    • The policy comes at a time when the country is already witnessing major changes in infrastructure planning such as-
  • PM Gatishakti National Master Plan (NMP): By adopting a ‘whole of the government approach’ more than 1,400 connectivity projects have been planned which include 2,00,000 km of National Highways, more than 65 ports, three National Waterways, over 100 airports, and helipads and increasing the capacity of the rail network in the next few years.
    • The National Logistics Policy adopts a similar approach and the proposals include efficiency drivers such as digitisation for enhancing human resource development.
    • The policy dedicates specific chapters to creating an efficient EXIM Logistics landscape.
  • The NMP-NLP complementarity will provide a greater boost to the ongoing initiatives of the government.
    • For instance, the government’s One District, One Product (ODOP) and District as Export Hubs (DEH) schemes have been a significant effort towards building regional value chains across districts and their primary focus has been on identifying, branding, and promoting products from each district for exporters through district-level management and production.
  • While the PM GatiShakti NMP can provide the infrastructure for these districts, the NLP can help the exporters from the district in developing their regional supply chains.
  • The introduction of new age technologies such as AI, Blockchain, Machine Learning, along with creation of a pool of skilled and knowledgeable workforce through the policy will enhance resilience.
  • PM GatiShakti and the National Logistics Policy together have the potential to not only bring resilience to the global supply chain dynamics that India can be connected to but also make the supply chain more standardised, predictable, and cost-efficient.
  • The combination will enable synergies between human resource and technology and increase the efficiency of logistics.
  • Such a complementarity between the two will also de-risk global investments in setting up manufacturing bases within the country thus helping India leverage the China+ 1 strategy.

Way Forward:

The GSC will aid India’s manufacturing competitiveness and increase its global trade share. In this pursuit, there is a need to build infrastructure that boosts India’s export competitiveness. While India appears to be an appealing option for potential investors as both a market and a manufacturing base, it needs to accelerate progress in terms of ease of doing business and skill development.

As India takes over the presidency of G20, opportunities open up for India to lead by example in bringing about the desired resilience through transformative policy interventions and state-of-the-art technology.

Source: The Hindu


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