Supply Chain Management Review Tackles India's Challenges

Earlier this month, I came across this Supply Chain Management Review article, which does a great job summing up some of the challenges of doing business in India today from a logistical perspective. Most Spend Matters readers already know about the road and port challenges that India faces, so I won't get into those here. But one of the ironies that the article points out is that despite the massive investment in technology infrastructure to support services-based industries in India (e.g., software development, outsourcing), that there is in fact still a "limited technology basis" to work from when it comes to the physical movement of goods. According to the article, "Firms don't use technology to plan, execute or communicate logistics operations ... only an estimated 30,000 commercial vehicles have tracking systems, leaving the remaining companies that ship within the country without visibility or notification."

In addition, India is plagued by the same challenges of small trucking fleets. Apparently, "two-thirds of fleets have less than five vehicles ... [and] Freight consolidators and brokers take a commission to provide truck owners with consignments, and corruption is rampant." What's the upshot? As I've talked about before, it will not just be a question of building out India's public infrastructure to bring the country up to global standards (similar to that of China). The private sector will have to follow with investment dollars as well. But given the booming stock market and the billions in wealth that are created every month in India, the good news is that investment capital should be widely available for those willing to take on debt or sell equity to grow their businesses.

Jason Busch

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