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3 Indian supply chain and logistics trends to watch

Trends like AI, mega-aggregation & micro-segmentation and social and environmental responsibility are shaping Indian logistics

1. Social and environmental responsibility

In tandem with global momentum to raise awareness and direct action towards social and environmental ethics, Indian businesses and policy-makers have forayed ambitious strides in cementing ethical business models.  

The international political climate inspired India’s bold Bharat Stage norms to periodically replace high-carbon emission engines with progressively more efficient models. Prime Minister Modi’s growing list of socio-environmental initiatives includes the mission to introduce all electric fleets in India by 2030 and provide subsidised zero-interest loans for women owned transport businesses.

The recently launched multi-modal transport system, Kochi Metro Rail Ltd., partnered with a women’s empowerment and poverty eradication organisation Kudumbasree to employ 780 women and transgendered workers to manage diverse aspects of its operations.

According to a 2015 report by the Varkey Foundation in partnership with UNESCO, each of eight Indian Fortune 500 companies spent $10 million a year on CSR activities, Chinese and Japanese firms on the same list, spent only $5 million and $8 million respectively.

Global surveys also reveal that 80% of consumers allow social and environmental ‘do-good’ to influence buying decisions. The most ethical of these consumers are Millenials – a cohort that constitutes 411 million Indians, as of 2016, and increasingly represents members of middle and senior management across industries.

Considering that impact-driven individuals will occupy important roles as both decision-makers and consumers, Indian supply chains are likely to vamp up socially and environmentally conscious practices including monitoring fuel usage patterns to reduce waste, upgrading commercial fleets to bolster driver safety and automating operations to enhance human labour.

2. Mega-aggregation and micro-segmentation

In an effort to build supply chains that are internally strong and externally agile, the modern logistics landscape employs a paradoxical mantra – to aggregate operations and segment deliverables.

The ‘lean supply chain’ seeks to consolidate activities into a core business model and leverage compounding efficiencies to invest in designing tailored products and solutions for diverse audience cohorts. It resonates with ‘the hedgehog concept’ of focusing on core competencies with an aggressive eye to detail while proactively culling efforts that are not mission critical.

E-commerce billing platform, PayTM recently delisted 14 of its logistics solution providers, closed 30 courier aggregation centres and reduced its distribution radius by 35%. In mid-November, 2016, PayTM reported 3-4 million new users signed up for its services in a single day. Yet today, in the face of steep demand and momentous growth, the company chooses to deliver superior customer service with few, high-quality channels. Ultimately, the strategy aggregates the company’s top priority zones and realigns a deeper, stratified focus on key service points.

India is set to witness the emergence of mega-oil giants. ONGC’s recent acquisition of the government’s majority stake in HPCL illustrates an aggregated supply chain that will offset risks and leverage an integrated framework to efficiently segregate and pursue competitive opportunities in a global market. Upcoming mergers or acquisitions planned between IOC-OIL and BPCL-GAIL target similar outcomes.

India’s economic pace will inevitably increase her dependence on 3PL and 4PL players, paving the path for 7PL firms that result from a domino effect of consolidation and micro-segmentation. In the case of e-commerce, these integrated segregations constitute last-mile fever – a rush to provide customers diverse delivery options through hyper local markets with click-and-collect services and pick-up points at public transport hubs (as the Kochi metro network has already considered implementing).  

3. Artificial intelligence in supply chains

Among the recent groundswells of investments relegated to developing giant warehouses in India, robotics have attracted sizable financial grants as investors bet on intelligent machines to replace monotonous tasks such as sorting through items at warehousing assembly lines or conducting quality checks at production belts.

According to Wired, 20 of Amazon’s “cavernous fulfilment centres across the globe” already employ “squat wheeled machines” to transport boxes. Although manipulating objects and handling nimble motor tasks is still challenging for early generation bots, the technology progresses daily and is likely to be implemented en masse in 5 years.

Additionally, intelligent analytical programs driven by machine learning algorithms, commonly used in high-frequency financial trades, linguistic platforms like Google Translate or navigation tools, will also permeate supply chains to optimise transportation through actual ETA calculations that account for soft variables like predicted driver behaviour and inventory management through pattern-derived demand forecasts. These self-learning programs will not only report but automatically organise and infer actionable points from internal data logs.

Eventually, a combination of agile machines and analytical AI will not only create new supply chain models but wholly reinvent distribution dynamics. Continued aggregation and micro segmentation will support agile business models, sustainable scale operations within molecular segments and efficiently serve shifting market demands. A chief advantage of aggregation will be deeper and more accurate data, which in turn will facilitate hyper informed target market strikes. Technology, at every imaginable point of interaction, will oversee and enable, this condensed, informed and stratified market nebulus. A silent and ongoing trend will, therefore, include the systemic obsolescence of analogue and disorganised operating models.

To learn more about supply chain trends, contact Numadic. We build intelligent sensors that pair with analytical dashboards to increase the visibility of fleet and transport operations for a better future. You can’t manage, what you can’t measure.

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