02 April, 2022
Corporate Strategy Consulting Firms with a focus on Asia Pacific, defining new models on accelerated growth.
02 April, 2022
Corporate Strategy Consulting Firms with a focus on Asia Pacific, defining new models on accelerated growth.
Supply Chain Management (SCM) is an approach for optimising company processes to make them more robust, flexible, and, as a result, competitive. The primary goal of SCM is to increase the competitiveness of a product or service. This work attempts to investigate, comprehend, and interpret the evolution of supply chain management. We sought to investigate the future of the Supply Chain based on a thorough literature study. We have collected many definitions of SCM supplied by professionals from the beginning to the end of time, as well as key classical definitions. This research incorporates several aspects of the supply chain. The article addresses SCM and its aspects, as well as attempts to distinguish SCM from similar fields such as Logistics Management, Value Chain Management, and Operations Management. The study also elaborates on several SCM ideas. Following a detailed analysis of the literature, the report concludes with a conclusion and future scope of the study. Supply Chain, Supply Chain Evolution, Supply Chain Theories, Supply Chain Future Dimensions.
Logistics is the backbone of a country's economy and progress. Improving the efficiency of the logistics industry is critical for the country's economy since it enhances economic growth, increases exports across global supply chains, and generates jobs. Logistics expenses in India account for around 14% of GDP in terms of value, which is much higher than the United States' 9%. When it comes to logistics, high prices are a reason for worry and degrees of development.
Many factors contribute to high logistics costs, including an unfavourable policy environment, a lack of a multimodal transportation system, resulting in a heavy reliance on road transport, a weak storage infrastructure, the presence of multiple stakeholders throughout the entire transport and storage value chain, poor road and port infrastructure, and a lack of technological innovation in transportation/storage and distributing activities. As a result of these high logistical costs, the country's worldwide competitiveness would eventually suffer. The primary components of logistics expenses include order processing costs, shipping costs, material handling and storage costs, warehouse costs, inventory carrying costs, administrative costs, and packaging costs. The cost of logistics is growing across all industrial sectors. Automobile, multimodal transport, air cargo shipping, maritime shipping logistics, inland waterway transport, dry bulk management, food & agro-business, oil & gas industry, warehouse automation, e-commerce, military logistics, emergency supply chain, and pharmaceutical supply chain are among the national economy's fastest-growing sectors.
This study emphasises the research topics that the Logistics community will need to consider by 2030. It focuses on many areas of logistics. It looks at supply chain management and logistics possibilities and developing issues in a variety of industries, as well as their economic, environmental, and social repercussions. It addresses global and industrial issues to provide safer, smarter, more convenient, and sustainable logistics. This research also delves into potential techniques for promoting efficient and effective logistics in the B2B world.
It refers to the movement of commodities from one location to another using more than one method of transportation.
Multimodal Logistics is defined as "the chain that connects different links or modes of transport – air, sea, and land – into one complete process that ensures an efficient and cost-effective door-to-door movement of goods under the responsibility of a single transport operator, known as a Multimodal Transport Operator (MTO), on a single transport document." Multimodal logistics connects many means of transportation like road, rail, air, and water to enhance the efficiency and speed of commodities moving.
Maritime transport accounts for India's 70% of its trading value and about 95% of commercial volume. India has 13 large ports and 205 small and intermediate ports that have been notified. The Indian ports and shipping industry is critical to the country's trade and commerce growth. With a coastline of around 7,516.6 kilometres, India is the world's fifteenth biggest marine country. Major ports in India handled 704.82 million tonnes (MT) of cargo traffic in FY20, representing a 2.74% CAGR from FY16 to FY20. The future will provide many obstacles, but it will also present many new opportunities for the marine sector. Today's difficulties in the development of an effective maritime transportation system include preserving global competitiveness, enhancing operational efficiency, and limiting environmental consequences.
High port expenses in India, such as port dues, berth hire, pilotage, and cargo-handling fees, are also impacting the foreign logistics. When compared to other competing nations in the area, India is known to have high ship calling charges. As a result, Indian ports are uncompetitive in comparison to other international ports. High pricing would generally deprive a port, a portion of the economy of its customers (vessels and cargo owners), lowering demand for port services.
In the absence of the necessary tools or processes, looking for the best freight shipping prices may be time-consuming. Putting in place a transportation management system might give a solution to this challenge.
Cargo can be carried from one location to another in a variety of methods. Lastly, understanding the shipping environment might save some time and money.
When shipping from abroad, one mistake might result in fees, delays, or customs stays, from completing the bill of lading to identifying freight classifications. Shippers must ensure that they are prepared ahead of time with the essential expertise to complete the task.
This causes delays, increased expenses, potential penalties, and strained relationships with clients and partners.
India features a vast network of inland waterways, including rivers, canals, creeks, and backwaters. When compared to other countries, freight transportation by waterways is vastly underused in the country. India's hinterland connectivity is mostly reliant on road and rail, with domestic waterways—both coastal shipping and interior waterways—playing just a minor role. Waterways are both cost-effective and ecologically benign modes of freight transportation. In India, inland water transport (IWT) has the potential to complement overcrowded trains and congested highways. Aside from cargo movement, the IWT sector also serves a useful purpose in associated activities such as vehicle carrying on the Roll-on-Roll-off (Ro-Ro) method of cross-ferry and tourism.
Regulatory: A lack of modal integration and accurate mapping of waterways and industrial clusters, as well as a lack of integration of hinterland coastal shipping with international marine traffic, exist. As inland rivers pass through many states, there is a lack of consistency in legal and administrative difficulties. Lack of a fair playing field policy (waterways were not on the national horizon for development and connection for a long time).
Geographical: Reduced navigability owing to siltation, as seen in the Bhagirathi Hooghly and the Buckingham Canal. There are issues with smooth navigation due to waterfalls and cataracts, such as those found in the Narmada and Tapti rivers. Reduced flow owing to diversion of water for agriculture, for example, in the Ganga, making even steamers difficult to ply.
Technical A key worry is the absence of enough depth of rivers for commercial freight transit. In addition, the quality of the water flow is deteriorating with time. The functioning of waterways is hampered by rudimentary infrastructure and a lack of water throughout the year. Multiple bridges with little vertical clearance hinder larger boats' passage. India's vessel construction industry suffers from a lack of capital incentives. This prevents end-users from connecting through the front door. The lack of automation in processes and the lack of multi-operational abilities have an impact on efficiency. There is a serious shortage of inland water transport vessel Maintenance, Repair, and Overhaul facilities.
Financial: The private sector's involvement in MRO is abysmal. The construction of dams/barrages to improve the depth of passage has economic obstacles.
Political: The interconnection of rivers is a big issue that has yet to be addressed.
Air Cargo Logistics is critical to a country's economic prosperity. Air cargo accounts for 35% of global trade in terms of value but less than 1% in terms of volume (IATA,2019). Continuously rising demand from sectors and end-users has fuelled the air freight industry's fast expansion during the previous three decades. As a result, competent management of this industry is critical. New technologies improve the efficiency and environmental image of the air freight business. The air freight sector is continually developing and pursuing new technologies and techniques.
Logistics process automation.
A comprehensive information technology system for transparency
Automation of work assignments and management
Reports, notifications, and alerts are sent automatically
Automation of work assignments and management
Complete product tracking
Big Data: Data's Potential
Robotics: Detects package flaws before delivery by screening through parcels at double the speed.
IoT – Internet of Things: Manages and increases supply chain productivity for their specialised procedures..
Cloud: Provides real-time data to specified scattered areas as well as people around the world.
Blockchain: Using powerful analytics and transparency, track a product's lifetime and ownership from delivery to the retail shelf.
Drones: Increases warehouse safety by employing artificial intelligence to detect any accidents visually that may happen. Reduces frequent operational obstacles, which speeds up the delivery process.
Networks: Manages and enhances supply chain productivity for their unique operations by reading algorithms from both current and historical datasets.
Autonomous Tracking: Sensors in the vehicle are used to assess road conditions. Access to other routes based on fleet location and shipment overflow.
Inventory visibility, tracking, and administration
Inadequate employment and commitment
The Difficulties of Warehousing Goods Packing and Moving Goods
Unusual characteristics of non-standard packaging
Management of Human Resources
Reduced Transportation Costs
In 2020, the top three logistics businesses in the world were air couriers, with United Parcel Service making the highest income from sales (84.4 billion US dollars). Air cargo revenue in the United States exceeds $100 billion per year. Logistics firms are in charge of coordinating the movement of goods from one location to another, which involves not only freight transportation but also packaging and warehousing. Logistics firms may specialise in certain means of transportation, such as air, rail, road, and sea in some situations. Union Pacific is the only rail freight company on this list.
The Indian logistics business is expected to be worth over USD 250 billion in the fiscal year 2021. This market is expected to expand to 380 billion dollars by 2025, with a compound annual growth rate of 10% to 12%. India has a higher logistics cost as a percentage of GDP, at 14% than the BRICS average of 11%.
Industrial clients, like individual consumers, increasingly anticipate speedier, more flexible, and transparent delivery at a lower cost. It's no wonder that both operational methods and profitability are under pressure across the sector. And the speed of transition for major manufacturing and retail clients may be much faster than for individual end-users.
Manufacturing businesses are facing significantly more efficiency and performance standards than ever before. Customers seek shorter time-to-market, lower failure rates, and customised goods. Ultimately, the outcome might be a once-impossible goal: a 'lot size of one,' in which each product is made to the requirements of a specific end customer. With the advent of the Industrial Internet of Things and what other research refers to as 'Industry 4.0,' manufacturing companies, whether they make industrial equipment, cars, planes, or consumer goods, are being able to redefine everything from how they interact with customers to how they structure supply chains. All of this has far-reaching consequences for transportation and logistics. LSPs, particularly 3PLs and 4PLs, will need to incorporate data analytics and social supply chains to give much greater traceability and predictability (not to mention cheaper costs); smart storage solutions will become critical. The ramifications are clear: 'digital fitness' is quickly becoming a requirement for every logistics organisation.
Labour is an essential component of any logistics operating model, and there has always been a trade-off between service levels and prices. However, automation simplifies this equation, allowing businesses to provide greater service while saving money. From warehousing to last-mile delivery, some of the industry's most labour-intensive activities are on their way to being entirely or largely automated. Automated warehouse systems are already being adopted, and their sophistication is expanding. Automated loading and unloading systems, for example, are now present, but in the future, these systems will likely be able to avoid impediments and modify paths automatically. Advances in data processing and optics now enable the automation of formerly thought-too-complex processes, such as trailer loading and unloading at acceptable rates. Package delivery might potentially benefit from increased automation, such as autonomous trucks or delivery drones. Google has already begun developing self-driving lockers, and the trucking sector is collaborating with OEMs on partially autonomous truck convoys. Even though more radical solutions are a long way off, other technologies that might make drivers more efficient are in the works, such as augmented reality systems that provide drivers with additional information about their surroundings and the items remaining on board. In the table at the top of this page, we've mapped out some of the most essential technologies. The rate of adoption of any of the technology opportunities discussed here will not be constrained by the rate of technological advancement. Instead, it will be determined by regulatory and customer acceptance rates.
Horizontal collaboration is already taking place, particularly in last-mile deliveries, but it is limited by discrepancies. More uniform standards, as specified by the Physical Internet, and increasing collaboration, whether in the form of alliances, joint ventures, or mergers and acquisitions, might result in higher levels of efficiency.
There are already prominent examples of market participants working together. For many years, firms such as FedEx and DHL have collaborated with national postal companies and small local competitors. However, with the introduction of new technologies, collaboration may become much more dynamic. Collaboration is made more difficult by fragmentation, responsibility, and a lack of consistency. For example, each firm has its labelling system, and some are hesitant to outsource the critical last mile of the route to an operator who may not represent its brand and service norms. Aside from the last mile, teaming arrangements are more of an exception than the rule. Consider freight forwarding. While containers are uniform in size, the things that fill them are not. Forms and digital entries used to clear customs are also not acceptable. Contract logistics businesses work closely with shippers but seldom share resources with the competition.
However, for the Physical Internet to succeed in practice, businesses would need to be prepared to interact significantly more extensively than they do now. The majority of the 535,000 distribution centres in the United States are stand-alone businesses controlled by various corporations; picture the savings if they were all linked and physical procedures were standardised for optimal efficiency.
There are also new less radical methods for logistics businesses to collaborate and use assets more efficiently. For example, by combining fleets and networks and creating arrangements akin to postal services purchasing airlifts from commercial couriers or airlines using code-sharing. Many organisations in the industry are also looking to merge and acquisitions, joint ventures, and alliances to achieve collaboration. Significant businesses wanting to expand their overseas operations and service offerings driving much of this activity. However, with upheaval on the horizon, there may be possibilities to leverage agreements to expand skills in crucial areas, such as digital.
Sharing Physical Internet: By collaborating more and adopting new business models, such as sharing networks, incumbents boost their efficiency and lessen their environmental effects. The 'Physical Internet' (PI) research results in universal standards for cargo sizes, increased modal connection, and IT needs among carriers.
New Entrants: Through innovative business models based on data analytics, blockchain, or other technologies, new entrants become big players and grab market share from incumbents. In certain portions, one or two become dominant. Crowd-delivery alternatives are gaining traction as last-mile distribution grows increasingly fragmented. These start-ups work with incumbents to supplement their service offerings.
Scale: Incumbents improve efficiency by simplifying their processes and fully using new technologies. They invest venture capital money in promising new technologies and hire new employees with crucial skills and knowledge to establish a dominant market position. Major players join together to broaden their geographical reach and improve their cross-modal coverage. It is becoming increasingly critical to have access to finance to support these developments.
Competition: Big retail businesses extend their logistical solutions to meet their demands and those of their consumers, essentially shifting from customers to competitors. They buy minor logistics companies to help cover big markets and use their extensive expertise in customer behaviour to optimise supply chains. Technology businesses that were formerly suppliers to the sector enter the logistics area as well, offering logistical services and becoming rivals.
The DGFT's office must ensure alignment with globally acceptable policy norms, introduce policy measures to address operational problems faced by the trade community, fine-tune existing policies to meet contemporary business requirements, and take India's macroeconomic policy framework into account when drafting the new Foreign Trade Policy. Simultaneously, policy measures must attempt to create synergy within the broader policy framework as well as with the current global economic and trade landscape. Going forward, authorities must double down on the benefits of free and fair trade, because trade benefits everyone, and endeavour to create a level playing field for both domestic and international manufacturers to manufacture in India and sell to global markets. The next FTP will address developing India's issues by implementing necessary policy interventions for green sectors, start-ups, women entrepreneurs, and service sector exports. To that aim, the policy's major objectives must be inclusive of an evolving India's aspirations, such as meeting the expanding demands of the country's agriculture, industrial, and services sectors while also producing a multiplier effect in the economy through increased trade.
In only the first five months of 2019, the logistics sector has seen a total capital inflow of $6.25 billion across eight transactions. This is more than a six-fold increase over the amount raised in 20 trades last year. When the eCommerce industry took off, one area that quickly rose to prominence was logistics, as companies rushed to provide effective business-to-consumer (B2C) supply chain solutions to online merchants. Now, the massive but fragmented logistics sector is becoming a darling of investors and entrepreneurs alike — only this time in the business to business (B2B) area. Investor interest in logistics and supply chain startups has already increased significantly as a result of the rising demand for tech-enabled, innovation-driven solutions to alter the logistics and supply chain sector. Investor trust in B2B logistics tech businesses, in particular, has increased significantly, as seen by the greater ticket sizes of recent investments in the field. "Unlike B2C, B2B is not a winner-take-all industry, particularly in logistics, which is a big business in and of itself." The market is broad enough to accept enterprises worth $10-20 billion that can execute successfully and create substantial sales and bottom lines. This instantly makes the sector appealing to us as investors. Innovative B2B logistics firms that use cutting-edge technology like robots, automation, data analytics, and the Internet of Things (IoT) have the potential to drastically disrupt the logistics sector. The trillion-dollar global logistics business is primed for disruption as a result of technological progress, particularly AI and Machine Learning-driven solutions.
Nonetheless, investor interest in the B2B logistics area is fueled by their conviction that the B2C logistics game has mostly played itself out.
The focus in 2014-2015 was on B2C logistics players. This time, investors are searching for firms that provide services that go beyond the needs and desires of the B2C industry, such as cash on delivery, app monitoring, and routing. Today, B2B logistics businesses that provide technology to meet the whole spectrum of logistics and supply chain demands of major organisations – from last-mile delivery, warehousing operations, freight transportation, and demand forecasting, among other things – are gaining traction. The fact is that businesses are suffering significant capacity difficulties. Volatile demand patterns, slashing competition, rising fuel prices, and speeding delivery are, if anything, significant dynamic costs. Truck owners encounter various challenges in the transportation logistics market, including discovery, tracking, transaction, routing, and even safety. One of the most difficult logistical difficulties is balancing supply and demand and then identifying the best technological play to match it.
The foundation for competitive advantage in the logistics business is fundamentally altering. A well-established network may become a barrier rather than an asset. New technologies will alter the industry's cost model and put into question traditional business strategies. And there may be new methods to dynamic pricing that take capacity use into account more fully. If logistics firms want to meet evolving expectations, they will need to focus on 'digital fitness,' cost efficiency, asset productivity, and innovation. Building and improving these and other skills, and then scaling them throughout the company, will be critical as they transform the strategy into the daily. Logistics firms must reduce costs for a variety of reasons, not only efficiency. They must also trim what does not matter to free up resources for the core areas of emphasis – such as digitalisation, asset productivity, and innovation – and spend more to support the company's essential strengths and value propositions. As a result, 'reducing expenses to become stronger' should be viewed as strongly tied to strategy. Finally, with additional upheaval on the horizon, businesses must foresee how their skills will need to adapt. The greatest will produce services and solutions that generate demand rather than simply responding to it. To do so, T&L firms must cultivate strong connections with important clients, keep an ear to the ground in the areas they serve, and actively create the future.
We've taken a wide view in this work. It provides some indications of how the sector could evolve, but you should analyse the unique ramifications for your firm and operational approach. In the future, we will think more about how these scenarios may play out differently throughout the world, as well as up, down, and across the value chain, and we will complement this general picture with deep-dive thoughts in specific areas.
Corporate Communications Specialist
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