“Role of Supply Chain in making India beyond USD 5 trillion Economy by 2025”.

The IMF's (The International Monetary Fund) world economic outlook at the start of year 2023 said that the size of the Indian economy has increased from $3.2 trillion in 2021-22 to $3.5 trillion in 2022-23 and will cross $5 trillion in 2025. In line with respected Prime Minister’s vision, India has commenced its journey into 'Amrit Kaal', a uniquely auspicious period, representing India’s opportunity to herald a new world era. Being an emerging developing country there are still few gaps which India is facing. India is the second-most populous country globally and global GDP and international trade contributions are moderately low, contrary to its population and size. The country lacks numerous societal, economic, and environmental issues compared to the other developed countries in the world.

There are ten key enablers of growth that will impact sectors across the economy and play a critical role in propelling the growth engine:?(1) Information Technology and Services Hub where India has the potential to become a services and technology talent hub for the world. (2) Digitalization will democratize e-commerce market (3) Infrastructure of the future thereby lowering India's high logistics costs, making cargo delivery more effective, economical, and reliable. (4) Entrepreneurship - Start-ups have grown remarkably over the last six years, with India emerging as the third largest ecosystem for start-ups globally. (5) MSME’s - Micro, small, and medium enterprises (MSMEs) are the key players in the manufacturing domain because of their plentiful production output, export, and employment generation. (6) Global workforce where 25% of the incremental global workforce over the next decade will come from India. (7) Healthcare professionals which includes doctors and nursing staff of 6.2 millions from India itself. (8) Sustainable & renewable energy includes sources of wind, solar and water (hydropower). India saw the highest year on year growth in renewable energy additions of 9.83% in 2022. (9) Agriculture - Indian agriculture sector accounts for 18 per cent of India's gross domestic product (GDP) and provides decent employment to the countries workforce. (10) Supply Chain - Robust long-term vision for India to establish itself as a major player in the global supply chain arena.

Delivering the right product at the right time, at the right place, at the right cost, in the right quantity, of the right quality – this is the precise role of supply chain management as we very well know. Existing Supply chains of today are different from the ones that functioned earlier. They have an important role to play. From resource optimization to seamless and sustainable procurement of raw materials, effective inventory control to demand-supply harmony, efficient delivery to customer satisfaction – supply chain performance is now dependable on each of these components. New Supply chain objectives now requires to link the markets, distribution system, manufacturing and allied processes and the procurement to serve its customers across different parts of the world at lower cost and higher service levels.

Though the outbreak of the Covid pandemic in 2020 and the Russia-Ukraine conflict in 2022 has impacted the world output, increased inflation in several countries and raised uncertainty in the world economy. Reliable supply chains are one of the key drivers of economic growth. From the economic standpoint, for developing countries like India, supply chains create opportunities, augment productivity, improve technology and skills, increase employment, and diversify exports. Long-terms business relations ensure more income and uninterrupted revenue.?

The role of Supply Chain in making India beyond USD 5 trillion Economy by 2025 is definitely a task for supply chain management stream. To realize this vision, SCM fraternity in India needs to follow pronged approaches to supply chain management.

Understanding Supply chain Process: ?Resource acquisition, manufacturing, inventory management, demand management, supply management, product portfolio management, and sales & operations planning, are some of the core components of supply chain management.

Supply change management is a detailed and elaborate structure or system used by companies of all sizes across all sectors to handle and manage a host of processes involved between developing and delivering the final product to the consumer. Essentially, supply chain management focuses on aligning end-to-end business processes strategically to help businesses realize the market value while also giving them the upper hand over competitors. Apart from cost reduction, supply chain management aims to optimize operational productivity and efficiency within a company for speedy deliveries and improved customer satisfaction.

According to the government, India is on its way to becoming a member of the international supply chain. If the potential opportunities are embraced and a well-thought-out course of action is devised and successfully performed, it will quickly be catapulted, and further development will follow.

Effective Supply Chain Management with IT and ERP Systems: With evolving customer expectations, businesses must integrate IT with supply chain and logistics to ensure proper coordination between all tenets of the supply chain, right from sourcing and manufacturing to reaching the endpoint – the customer. Effective supply chain management is key to maintaining a balance between the demand and supply in the economy. The role of IT in supply chain management is so important. There are a lot of uses of Information technology in supply chain management.?It is providing the tools which can pick up relevant information, and break it down for proper analysis. Data is pivotal to the operation of the supply chain. Primarily because it offers the base on which the supply chain managers are taking decisions.

Integrated and Coordinated Supply Chain. A supply chain can work efficiently when it is properly integrated and well-coordinated. IT is performing this important task by bringing in multiple technologies and combining them to optimize the supply chain. These technologies are making data collection possible and much easier and more accurate. Ultimately, this is allowing precise and detailed data analysis leading to sound business decisions.

Supply Chain Visibility. Consequently, information builds the whole supply chain visible to supply chain managers. How the information flows from one collaborator to the other and the effect it has on others is used by the managers in creating strategic decisions.

Future of IT in Supply Chain Management. Emerging technologies like Artificial Intelligence (AI) and Internet of Things (IoT) greatly impact supply chain management. The role of technology in supply chain management is important. Technology has made things easier than before that’s the reason every organization want to adopt new emerging technology into supply chain management. For example, Blockchain is one such technology that provides data security. So, all in all, the future of Information technology in supply chain management is bright. Another example is right & strong Enterprise resource planning (ERP) in organization.

In today’s increasingly global and turbulent markets, companies need to adjust quickly to new conditions. The ability to flexibly adjust the business processes, operations and information flow along the extended supply chains therefore becomes vital for a company’s survival and success. Most modern companies, especially large and mid-size ones, have complex organizational structures, with many resources to be controlled and many processes to be managed. Huge amounts of data and information that must be available 24/7. To meet such challenges, various?Enterprise Resource Planning?(ERP) software suites have been developed to help manage processes, resources and information across a business. Any company or an organization who will not honor the in-depth usage of ERP system will defiantly have to face unidentified aliens in business such as increased inventory, Non-Moving stock, variances, theft, evaporation of profits, lack of standard operational procedure (SOP), imperfect analysis, week inter department data linkage and above all waste of time as well as manpower.??An ERP system is a combination of components that integrate people, information and processes comprehensively and flexibly, and allows companies to gain better control of their administrative and operational environment. The market leader in ERP systems is the German company SAP AG, which was one of the first companies to introduce standard software that covers all vital business processes within a company. An?ERP system such as SAP provides multiple functional modules to deal with various business functions, for example: Materials Management, Sales and Distribution, Production Planning, Quality Management, Plant Maintenance, Finance & Costing and Human resources.

E-Commerce Supply Chain Management:?When most people hear the words “supply chain,” they’re likely to think of the wide variety of product shortages that became especially problematic during the height of the pandemic. Production shutdowns, shipping issues and other challenges often meant that in-demand products were hard — or impossible — to find. Here E-Commerce took a big revolutionary step and covered activities such as the procurement of raw materials, manufacturing of finished goods, Inventory management, warehousing, order fulfillment and last-mile delivery. E-Commerce supply chain refers to a series of logistics processes involved in running an online store. E-Commerce supply chain management is therefore concerned with running a supply chain in the most efficient and effective way possible. There are numerous techniques and strategies to achieve better efficiency, productivity and profitability in managing supply chain.

The ultimate goal of supply chain management is to cut extra costs while simultaneously delivering your products to customers in a quick and efficient manner. The e-commerce industry is not just limited to setting up a website and selling products online. It includes product configuration, suitable infrastructure, logistics, secured payment gateway, and supply chain management. An efficient supply chain accelerates e-commerce processes to meet customers’ expectations.?The key benefits of SCM in E-commerce include:

Reduced Costs: SCM in e-commerce removes various stages of distribution, retailers, and outlets. The elimination of these stages reduces the overall cost of products. The reduced costs give customers a direct advantage when compared to the cost of products available in physical stores.?

Trade Globally: SCM enables e-commerce businesses to trade globally. An efficient SCM enables e-commerce businesses to import raw material from anywhere and export their finished product to any country easily.?

Enhanced Customer Satisfaction: Customer satisfaction is an important factor for the success of an e-commerce business. With an efficient supply chain management in e-commerce, enterprises can easily track demand, the time suppliers will require to fulfill the orders and order goods from suppliers to keep the inventories replenished.?

Improved inventory accuracy: ?Every year, retailers across the globe lose some trillion in sales and costs as a result of mismanagement of inventory. The culprits of this are overstocks, under stocks and preventable returns, much of which can be attributed to a lack of visibility into a business’s inventory.

In this volatile business environment, supply chain managers should consider developing strategies for dealing with the rapid swings that can result from increasing use of e-commerce in a globalized market. As technology, e-commerce, and globalization become more intertwined, buyers and sellers are increasing their connectivity and the speed with which they conduct sales transactions. Thanks to the development of electronic commerce, the most basic of economic transactions— the buying and selling of goods—continues to undergo changes that will have a profound impact on the way companies manage their supply chains. Simply put, e-commerce has altered the practice, timing, and technology of business-to-business (B2B) and business-to-consumer (B2C) commerce. It has affected pricing, product availability, transportation patterns, and consumer behavior in developed economies worldwide.

?A conceptual framework for Supply Chain Management & Strategic Planning: The whole path to the company's priorities is established by this technique. Design decisions relate to the supply chain’s strategy and structure. Planning decisions are tactical, covering weeks to months, up to a year. Execution decisions relate to the day-to-day operations, and span from hours to weeks. Management will analyze organizational processes and investment areas at this level. Design, planning and execution are the three key phases of SCM.

Organizations need to tap the principles of Supply Chain Management (SCM) to realize the criterion of serving the right customers, finding the right suppliers, and fostering trust with the right partners. Simultaneously Supply chain management (SCM) is also designing, planning, and execution of the materials, information and financial flows across the supply chain processes for different players to provide product and services to the end customers profitably. In short, SCM is about “getting things right”.

Exports in India’s Economy growth:?Exports are one of the fundamental drivers of growth for any economy. It can influence a country's GDP, exchange rate, level of inflation as well as interest rates. The possibility of a sharp recovery for the economy can only be realised through a strong focus on exports. The opportunity of India integrating itself into global value chains (GVCs) cannot be allowed to pass. Strong and coordinated policy action, across all levels of governments, is needed to realise this opportunity.

Over the last decade, the world’s perception of India and its capabilities has shifted. For the rest of the world, our nation is becoming an example of a thriving economy. The entire world is waiting for India’s steadfast and consistent efforts to convert the nation into a worldwide leader through its many initiatives. With more policy support, exports can help Indian economy reach the $5-trillion target sooner than expected. As components of both domestic and global economies, a country's exports can have far-reaching effects on businesses and consumers all around the world.

Importance of exports. ?(a) Employment. Growth in exports can create employment. Traditionally export jobs have been in manufacturing industries – an important source of full-time employment, especially in industrial regions. (b) Economic growth. Exports are a component of aggregate demand (AD). Rising exports will help increase AD and cause higher economic growth. (c) Competitiveness. The relative competitiveness of exports will play an important role in determining the level of exports. If India prices relative to other countries, the India will lose out. Competitiveness is determined by factors such as unit labour costs, inflation, productivity, infrastructure and price of raw materials. (d) Lower the value of their currency: Countries can also lower the value of their currency to make their exports cheaper to foreign buyers and therefore increase sales.

Changing scenario and measures of World class manufacturing (WCM) in Supply Chain: For years, manufacturing was internally focused and operationally compartmentalized. Before, critical functions such as purchasing, quality control, engineering and other preoccupations were clearly separated to such an extent that invisible ‘walls’ were created between departments. The results of this isolation were concretely felt on products that did not meet customer expectations, not to mention internal operational swags such as losses in time, money, opportunities, etc. The goal of implementing a lean world class enterprise was to improve all aspects of business and capitalize on advances gained from applying technically proven trade methods and principles to be profitable and eventually be globally competitive.

As the manufacturing sectors faces new challenges in the midst of competition, WCM organization strives continuously to improve on the areas of delivery, safety, quality, operating costs, transportation, inventory and profit margins simultaneously, eliminating waste in the production system y applying appropriate tools and techniques at all level with the organizations. In the frame work for continuous improvement, companies are pursuing world class status through dominant principles.

Total Quality Control (TQC)- In this principle everyone in the organization is involved in improving the product’s quality to meet customer need.

Total preventive maintenance (TPM) - With this principle, machines and equipments are maintained so often and so thoroughly that rarely even break down, jam, or not perform during production run.

Just-in –Time & Inventory management: JIT principle focuses on the elimination of waste. JIT is an inventory management method in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover. Inventory management will play a key role as it affects customer satisfaction. Firms need to maintain the delicate balance between carrying too little inventory & carrying too much. Thus in managing inventory, firms need to balance the cost of carrying larger inventories against resulting sales & profits.

Warehousing: The present concept of integrated SCM has to focus on all components viz. transportation, warehousing, inventories, information, etc. so as to improve the efficiency of the supply chain which is vital to the economy of the nation. With the vibrant economy, warehousing would be more adaptive, flexible; customers focused and continue to be a key driver to provide single-window logistics solutions.

?Conclusion: India will become a $5 trillion economy by 2025. To reach this goal, the economy will need acceleration in economic growth momentum beyond baseline expectations. It will need to grow faster than it has in the past decade. Supply chain will play pivotal, crucial and simultaneously important role to achieve the goal. The article highlights some important roadmap towards achieving this goal through SCM perspective.

Article by: Sushant Patare

Vice-Chairman, IIMM Aurangabad Branch

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