For any procurement or supply chain manager, India, perhaps, represents the biggest challenge out there today. The country is chalk full of Western style consumers and Western demand expectations (among the middle class and above). And it has a world-class information infrastructure in many parts of the country. But the physical supply chain environment is, well, a mess. Trucks crawl on highways. The traffic jams throughout the country are legendary. Ethics in procurement and other areas often leave a lot to be desired (especially in anything involving the government). And in the last mile -- sometimes more often than in the last mile -- manual labor substitutes for machinery. How can companies best set up their supply chain to thrive in this environment? In a recent article, Industry Week tosses out a few ideas.
Quoting JDA's Stephen McNulty, Industry Week offers five suggestions. The first goes without saying, but it's not something that many Western organizations are familiar with. And that's to "Ensure a clear understanding of local principles, customs and barriers. Understanding the tariff structures, road taxes, patent legislation and labor laws of India will be crucial to running a successful enterprise." In one company that I've known about over the years, certain team members expressed surprise when they learned that the Indian GM was building his own house at the same time as the new Indian HQ -- and that some of the materials used were in common. Needless to say, it took time for people to put two and two together that the cost of the build-out should not have been as high as it was, nor should the GM's house been as extravagant given his salary.
The rest of McNulty's recommendations offer up a number of key basic suggestions for doing business in India. But I'd argue the most important thing in working in any country with such a dearth of basic physical infrastructure investments in comparison to China and the West is a combination of patience, local understanding and physical presence. There's no substitute for operating on the ground and managing from the local point of view. Moreover, maintaining a strong local presence will help insure no one takes advantage of your company or your operations.