Supply Chain Insights into India

This is an excerpt of the original article. It was written for the July-August 2012 edition of Supply Chain Management Review. The full article is available to current subscribers.

July-August 2012

Managers sometimes don’t understand the importance of the information provided by supply chain metrics—or even the need for metrics in the first place. But according to researchers from Penn State, having timely and accurate metrics in place leads directly to superior business performance. They make a strong case for why supply chain metrics really do matter.

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A modern highway infrastructure, tracking technologies like Global Positioning System (GPS), techniques such as cross docking, and state-of-the-art container ports have all become the norm for supply chains in the developed world. They are far from the norm, however, in the lesser developed countries of the world. For multinational companies that are doing business—or that want to do business—in these countries, it is vital to understand the supply chain gaps and challenges.

The focus of this article is on supply chain conditions in one emerging economy that has enormous long-term growth opportunity: India. In addition to a rapidly growing market, India possesses a workforce that is considerably younger and larger than more developed regions like Europe and North America. These factors have prompted multinationals to seriously consider India both as a source for manufacturing and as a market for their goods.

Yet doing business in India brings its own set of challenges— a slow and cumbersome bureaucracy, infrastructural constraints such as shortages in electricity and skilled labor, and road and port congestion, among them. With respect to supply chains, what may be taken for granted in developed economies is often the exception rather than the rule in India. Shipments by road that can be completed in three days in the U.S., for example, could take as long as nine days in India. Similarly, ships can wait up to five days to dock at an Indian port, compared to little or no wait time in Europe. Further, there are few logistics firms in India with a fleet size larger than 100 trucks. Moreover, very few trucks are fitted with a GPS tracking device, thereby preventing any real-time tracking of shipments.

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