Since the onset of the decade, supply chains have evolved into indispensable pillars for numerous Indian businesses and industries. What defines a well-orchestrated supply chain? The answer varies, ranging from cost efficiency to customer service and, more recently, resilience, sustainability, and artificial intelligence (AI).
Looking back on the past year
Digitalization and automation will shift supply chain dynamics in 2023. Across sectors, the adoption of digital platforms and automated processes has revolutionised traditional workflows.
Sustainability and resilience emerged as focal points, with 75 per cent of supply chain leaders acknowledging their importance. Yet, only 19 per cent believe they currently have sufficient capabilities for sustainability outcomes. This underscores the critical need for organisations to shift from profit-driven to purpose-driven approaches, aligning strategy, vision, and organisational structures for impactful change, as emphasised by Gartner’s research.
Leadership in sustainable supply chain practices, as exemplified by Amazon, has inspired diverse sectors, including energy and natural resources, to adopt eco-friendly initiatives. Companies within this sector prioritise sustainable sourcing, reducing carbon footprints, and optimising resource use, mirroring the commitment to environmentally responsible practices set by industry leaders.
Public Services fortified resilience strategies to ensure uninterrupted service delivery by diversifying suppliers, strategically placing inventory across regions, embracing cutting-edge technology like real-time monitoring, and fostering collaborative partnerships. These measures, adopted in the past, ensured a consistent and responsive approach during crises.
What is on the horizon?
Risk resiliency has firmly entrenched itself in the Indian supply chain landscape. Over the past three years, the vulnerabilities and shortcomings in global supply chains have come to the fore across all industries. Supply chains are now acknowledged as central to the survival, success, and growth of businesses, rather than just a means to reduce costs.
In tackling supply chain complexities, companies are deploying diverse approaches. These involve aligning domestic, nearby, and overseas operations to match demand, enhancing adaptability. They’re also diversifying sourcing for crucial materials, emphasising supplier variety across regions. Simultaneously, they refine inventory tactics, identify pivotal points, and deploy postponement strategies. Furthermore, there’s a drive to enhance cooperation and transparency among stakeholders to bolster resilience and streamline operations.
Sustainability is top of mind.
In 2024, a steady flow of regulations around environmental, social, and governance (ESG) criteria will come into effect in India. Companies will be mandated to comprehend and disclose their carbon footprint and emissions, with a keen focus on their supply chains for data.
Supply chains contribute significantly to emissions, circularity, and inequality challenges, making them a focal point for solutions. According to an analysis by DHL, the global supply chain and logistics industry generates approximately 3.9 billion tonnes of CO2 emissions annually, constituting about 8 per cent of the world’s total emissions. This statistic underscores the substantial environmental impact of supply chains on a global scale.
Moreover, as international commerce increases and supply chains become more global and complex, it’s estimated that carbon emissions from supply chains will exceed growth in emissions from all other transportation activities, including passenger transportation. The expanding global reach of supply chains highlights their increasing role in environmental challenges.
Employees, stakeholders, customers, and regulatory bodies in India are demanding sustainability data. Decision-makers must grasp how the supply chain functions, which suppliers and logistics providers contribute to a greener business model, and what changes can influence the rest of the business.
Suppliers failing to meet ESG regulations may witness dwindling business as customers seek more sustainable alternatives. The need for sustainability in supply chains is not only a regulatory requirement but also reflects a global imperative driven by environmental and social responsibility.
Transparency and predictability are the enablers.
In pursuit of greater risk resilience and sustainability, companies in India must begin by understanding the current situation. Predictive and prescriptive analytics play a crucial role in anticipating upcoming challenges and opportunities and providing relevant and timely information for informed decision-making. Digitisation and AI emerge as transformative tools, enabling better handling of disruptions and enhancing visibility, agility, and resilience across the supply chain.
The strategic integration of AI into supply chain processes yields tangible benefits. Studies indicate that companies adopting AI experience up to a 15 per cent reduction in supply chain costs and a commendable 10 per cent increase in overall revenue. Digitization complements AI, allowing businesses to navigate uncertainties effectively while ensuring transparency in operations. As companies embrace these transformative technologies, they position themselves for not only short-term resilience but also long-term success in the dynamic business landscape.
The Future of Supply Chain Management in India
Looking ahead, technology will play a pivotal role in shaping the Indian supply chain landscape. The workers of tomorrow in India will be digitally connected, with access to information at their fingertips, expecting seamless connectivity and access to information in their work environment. Companies in India will increasingly focus on leveraging IoT, AI, and other technologies within their factories and across the supply chain, enhancing productivity, retention, and decision-making.
Supply chains hold immense significance for Indian businesses today and in the future. Embracing technological advancements, sustainability initiatives, and resilience strategies will be imperative for navigating the complex and dynamic Indian market.
