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The five biggest supply chain challenges of 2020

05 Sep 2020

Logistics Service Provider in India
The year 2020 has been challenging for businesses to sustain in the market due to the recession. There was a COVID-19 outbreak in early 2020 and this forced the nations to go for lockdown in order to curb the spread of the disease. All human activities were suspended, people were not allowed to move from one place to another. Transportation, industries, offices, school, colleges, malls, parks, religious gatherings, were forced to close as these places have large gatherings and could become the hotspot for the disease.

Due to the lockdown businesses of various sectors were affected that include hospitality, tourism, transportation, manufacturing, logistics, and supply chain. There was no trade and commerce during the lockdown months and this had affected the logistics and supply chain companies and industry. It is surprising to know that the e-Commerce company took only one week to regain the pace in the market after they were permitted to operate amid lockdown, this indicates the importance of the internet in business. In the lockdown, the ministry of finance, Government of India came with certain relaxations like an extension of the moratorium for loans, extending the date for IT returns, providing loans for the corporates.

The five biggest supply chain challenges of 2020 are as follows:

Support for e-Commerce growth:

The e-Commerce requires delivery of products at the promised date and time at the desired cost but for the supply chain, the process becomes challenging as they also have to take care of the product and packaging quality which has become the basic definition in the e-Commerce and supply chain industry. The retailer may be online or offline but the pressure is always lean on them to achieve the goal without any exception with the growing numbers of direct-to-consumer manufacturers. So, this process becomes complex to operate and requires new ideas and this can be achieved by investment in the distribution network and operations which provides reliable order and tracking visibility. Reverse pickup is also arising in the market for better customer satisfaction.

Balance in labor and technology investment:

The e-Commerce and supply chains are growing simultaneously with the expansion of warehouses. With the increase in the number of warehouses, the strength of the labor has also be maintained along with the advancement in the technology. There is a myth that integrating new technologies in the industry will cause unemployment but most experts agree that new technologies will create new jobs as they demand skilled people for the operation. So, the investment should be done in the labor and technology in a proper ratio.

Choose favorable transport mode:

Choosing the right transport mode is important as transportation costs rely on this. Along with the mode of transport, the changes in government policies should be kept in mind. The Government of India is making several policy changes to make the business process simpler. The transport and logistics companies in India are getting benefitted. The introduction of GST has resulted in about a 20 % reduction in the turnover time for vehicles carrying goods cross borders. This fast transit time is leading to the effective operation of the warehouse which further reduces primary transportation costs and time. It is estimated that the unit transportation cost will be lowered by 20 to 25 % if the payload capacity is increased in the transporting vehicles.

India's railway ministry has also set up a Dedicated Freight Corridors (DFC) exclusive for the transportation of the goods which will allow longer freight trains with double-stack containers to move with increased speed. Industries of various sectors will be getting benefitted from this.

Optimization of inventory and asset needs:

Considering both B2B and B2C supply chains, companies that are loosely tied with the consumers are experiencing a decline in the demand as they may not be able to fulfill the customer's demand. These businesses have to seek innovative ways to extract value out of their existing tools and infrastructure. Investments done in the heavy equipment should pay off and plan and analysis data from the software tools can be used for improvement and operational efficiencies. The overall asset and inventory costs should be optimized.

To operate ecofriendly:

With the rapid expansion in the supply chain there is a huge competition and in order to sustain in the industry use of the latest technology is a must in such a way that it does not have an impact on the environment. Efforts should be made to minimize the emissions, warehouses should be operated using renewable energy sources if possible and the waste generated during the packing and unpacking should be recycled. This shows the corporate responsibility of the company. India is attracting various foreign industries and businesses due to its dynamic and robust policies that make ease of doing business simple so strategies should be developed to address any issues concerned with the impact on the environment.