Indian Retail Can Power Economy Riding on Efficient Supply Chain: CII Retail Logistics Session. Rapid Implementation of Supply Chain Infrastructure Key to Retail Growth: CII- Amarthi Retail Logistics Report. Over $65 billion is wasted due to inefficient supply chain systems in the country. Problems as well as recommendations to increase efficiency and profit discussed

Mumbai, September 1, 2010, Indian retail is the fifth largest in the world contributing over 30% of the national GDP. Yet the challenges of this sector slated to grow 20 to 25% in the supply chain segment is huge enough to make the head of anyone doing business in the country spin.

These problems, and their solutions, were discussed today in a Confederation of Indian Industry (CII) interactive session on “Retail Logistics Competitiveness – Imperatives to address the growing retail demand of India”.

The CII and Amarthi Consulting study ‘Global competitiveness of retail supply chain – Challenges, Strategies and Recommendations’ was released at the conference by the Chief Guest for the event, Mr. Anshuman Singh, MD and CEO – Future Supply Chain Solutions Ltd.

“There’s only 20% capacity addition in railway network since independence but traffic has increased 10 fold. Capacity constraints at airports lead to 20-30% additional fuel consumption. 30% farm produce worth $13 billion gets wasted due to lack of integrated cold chain infrastructure and there is complex taxation structure that adds to increased costs and delays,” said Mr. Sanjay Upendram, CEO Amarthi Consulting, laying out a few of the issues and problems of supply chain for Indian retail.

He also highlighted recommendation, that are part of a study done by his team with CII that includes, “Designing supply chain to suit products/customers in rural and urban markets, leveraging tax laws and incentives, building collaboration beyond traditional boundaries, designing appropriate network structure, developing common platform in products, developing strategic sourcing options, exploring options for unbundling, outsourcing noncore activities, developing and strengthening channel partners, leveraging IT for effective supply chain integration and visibility etc.”

The national level recommendations include rapid implementation of supply chain infrastructure, need for 20-30 expressways that connect hubs and spokes, dedicated freights corridors, 15-20 logistics parks, clear definition of taxable subjects and applicable laws, 72,000 kms of highway by 2015, over 1500 million tones of additional port capacity etc.

Being the largest single retailer in the country in most segments, Mr. Anshuman highlighted their challenges of supply chain, “During the last ten years in the Future group, every day has been a learning experience in supply chain management. It is no longer static and we have had to keep on evolving, changing and adapting to the needs of the market.”

Though supply chain is a new entity in the country, they have a great opportunity. Mr. Anshuman said, “The top 25 companies worldwide with the best supply chain systems never existed 25 years ago. In India till a few years ago, we did not even have the concept of supply chain. You may look at it as a problem. But I look at it as an opportunity. As a nation, we are without any baggage, and have the greatest opportunity to build the greatest supply chain in the world. Having no past baggage, we can change and adapt with time.”

Different products need different supply chain which in turn needs different solutions. Everyone at the conference was unanimous about a few things – the need to constantly adapt and evolve, apply effective strategies and implement processes and systems. World Bank rates India 47^th in logistics. This is not a good number to be in when the country, as an economy, wants to be in the top 10. Over $65 billion is wasted due to inefficient supply chain. It is time to put these factors into mind while developing newer, efficient supply chain systems.

To become demand driven, one has to think like the customer, stop making big bets on possible demands and instead rely on real time data on sales, trends, seasonality, lifestyle etc., getting different partners on board and investing in the right technology. The challenge is to manage cost and yet be flexible by using efficient processes and technology.

If India is to grow as an economic power to reckon with, it has to get its supply chain right. And the only way to do that is to adapt the best global practices and processes to increase profitability by on time delivery and reduce errors in the supply chain system.

Neelam Joshi

Media Desk

Confederation of Indian Industry

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Lodi Road

New Delhi – 110 003

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