Challenges like COVID-19 triggers digital transformation

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Although the majority of Indian businesses are still very much in the crisis management phase of COVID-19, some companies are already exploring how they can set themselves up on the right trajectory for growth as they come out the other side. Gopal R, Global VP, Transportation & Logistics Practice, Frost & Sullivan speaks to Upamanyu Borah about which course corrections companies need to make considering technological advances, evolving customer behaviour, the need for organisational agility and supply chain resilience, and the expanded role of the state.

Q. What are the long-term changes we’re likely to see as a result of the impact of the novel coronavirus on India’s supply chain network?

COVID-19 crisis has tested the agility and risk preparedness of the entire supply chain, not just in India but globally. Implications have been– constrained freight capacity, human resource limitation, and supply and demand shock.

Addressing the above three challenges will become the core of how the future supply chains would excel to deliver efficiency, continuity and customer satisfaction.

Long term changes in India’s supply chain network are more likely to embrace the following transformations:

a. Digital Reality: There are likely to be digital interfaces at more points in the supply chain; not just Point of Order, but order fulfilment, processing, delivery and stocking. Technologies like Augmented Reality (AR) glasses for warehouse productivity, drones for warehouse stocktaking, security and customer management interface will go digital.

b. Marketplace everywhere: This will lead to more online fulfilment business and accordingly a supply chain to tailor to that.

c. Big Data: Data will be leveraged for better predictability and future scenario analysis.

b. Autonomous world: Autonomous applications to find more opportunities in intra and inter-logistics.

e. Rise of digital platforms: This will enable better freight visibility for the future, thereby eliminating or if not, minimising supply-demand shocks in the supply chain.

f. Uberisation’ of trucks: Scalable transport solutions will be a norm than a niche trend, helping with asset challenges and offering flexible capacity at all times.

Q. How long before things goes back to normal?

COVID-19 challenge is expected to impact demand and supply for close to three months acutely and possibly another three months to recover. Revival or getting back to stability will be impacted by an average of 40 per cent of lost business opportunities on an annualised basis for most businesses. The next two quarters therefore require helping revive the demand to growth stage and sustain thereafter.

From a supply chain and logistics perspective, things are likely to rebound in a quarter in terms of freight capacities across key trade lanes. Storage needs may nevertheless undergo shifts in location and pattern of requirement. It is likely that the composition of future freight modes will also see changes as recovery sets in. The demand type will also see changes, both in consumption pattern as well as supply locations. These need to be considered when realising the new norm.

Q. What is the silver lining here? What can Indian supply chain and logistics companies learn from this situation?

Despite all the technology and software capabilities of India in the global marketplace, domestic adoption of digital transformation, specifically in the logistics industry has been limited and low. But, this will change.

Challenges like COVID-19 triggers digital transformation. The need is to build:

a. Supply and demand visibility to mitigate risks,

b. Accurate expectation of freight capacity requirements for the future quarters, months and days, and

c. Limited dependence on shocks to operating capacity (manpower) of warehouses, etc. which is likely to trigger the digital provenance of modern logistics and supply chain.

This is the silver lining for India’s logistics industry. The industry has to empower itself digitally to be the best among global participants, as we move into the future.

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