Why Stress on Logistics & Supply Chain Management

In my career of nearly 16 years, I have worked on both sides of the divide. What in jingoistic parlance is called: B2C and B2B tools. B2B segment, of course, operates on different ..............
 
Nov. 24, 2010 - PRLog -- In my career of nearly 16 years, I have worked on both sides of the divide. What in jingoistic parlance is called: B2C and B2B tools. B2B segment, of course, operates on different dynamics tending to turn spotlight on the sectors which do not usually find the prominence they deserve.Logistics or what is often loosely referred as cargo in the Indian B2B space is certainly one such sector even as there are all indications to suggest that this line of business would grow exponentially in the coming years and that the inevitability of this proposition is now not even worth betting for.

“Why do these B2B tools in the country focusing on support services of manufacturing and distribution   ( a broader definition of logistics business) opt to adopt the term cargo for the title?” I often used to wonder initially when I got on the board of B2B platform. After trying my luck with many to get a logical reasoning for this, it’s an old marketing hand in this business who acted as Buddha to enlighten me on this pertinent point. The business in the past has been a highly disorganized line of economic activity and it’s broadly airline companies which have been representing the most shining and structured face of the logistics business. Point taken but will things remain the same?

No, logistics as a business is bound to skyrocket and the growth demand, as we have seen in other sectors, would eventually force this business to assume a more structured shape, a more composite contour with its linkages well defined. There are two critical factors (and they are interlinked) as why this would happen? According to a recent projection by a leading global economic research agency, by FY25 India is set to break into that premier league of top five manufacturing hubs in the world. And the second point is something which is being discussed in logistics conventions and seminars, our logistics cost to GDP ratio is too high, something around 13%, whereas in developed markets like US and Japan, it is in single digit. Talk to anybody in the industry and he will tell you that this difference hurts everybody in the value-chain – be it the producer, transporter or the end user.

As Indian economy continues to remain the toast of the world for at least over next decade or even more, the higher logistics cost ratio is something which would definitely become the fulcrum of attention for all concerned players. In a more fiercely competitive business environment, there would be more pressure to attain a higher degree of price competitiveness. And, therefore, there would be a lot of activity to bring in more efficient supply chain processes including IT applications, there would be a whole lot of new stress in filling infrastructural gaps, there would be more state-of-the-art storage facilities in the country and hopefully the implementation of GST would add new dynamism to the business as a whole.

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