2017...Indian Supply Chain year that unfolded....

Indian Supply Chains had one of the most demanding year. CY 2017. Its been a year which needed nimble footed Supply Chains, it also needed Supply Chains which needed to appreciate that disruptions to Supply Chain don't only mean natural disruptions and it also meant that transitions to new way of working needs to evolve much faster than your own comfort.

The year began with after effects of Demonetization.One of my agricultural industry clients which deals with Live Chicken had to face the challenges where the chicken is ready to be sold but the system couldn't have enough money to buy. Sales prices eroded and profits turned into losses in a matter of weeks. After effects of demonetization on FMCG/FMCD Supply Chain was drop in demand for a period which in 2017 eventually would go back. Many other examples can be quoted on Demonetization effect on Supply Chains in 2017.

Automobile Sector Supply Chains of India had to also see a year where the shift from BS III to BS IV was the major issue with some manufacturers. Supply Chain of opportunistic manufacturers were busy with BS III production assuming that 31st March would either not hold good or the provision said one could not sell from 1st April hence could produce till 31st March. None of that happened. And all had to have a crash sales in the last four days before 31st March. A Key lesson for all of us in Supply Chain - Indian Government seems to be very focused on its long term objectives of Global Warming (Paris Agreement). Indian Supply Chains had two problems immediately on hand - The excess of inventory on one hand and shortage of qualified Suppliers for BS IV on the other hand. Companies like Bajaj in two wheelers, Maruti-Suziki in Four Wheelers had already shifted to BS IV hence had nothing to crash sale! Learning for Supply Chain Leaders should be - Offer ethics (as BS IV was more important in the whole scheme of a better society) some place in decision making than only opportunity to save cost (which then turned costly!)

I also experienced some Supply Chains in 2017 where the demand has gone up and out of the roof. Particularly in industries where Infrastructure Projects is the basis of demand. One of my client engagements led to me the appreciation of the pick up in demand and the lag of the Supply Chain to meet that leading to long waiting times for customers. Eventually either the customer shifts or the demand vanishes. Learning was - before the time comes Supply Chain should improve & be ready.

While all the country was debating rolling out of GST, my experience was that the Supply Chain professionals looked at GST as more of a tax issue than a Supply Chain issue. It was only in later of May 2017 and June 2017 when the Supply Chain woke up to the fact that shipping volumes are dropping. It came as a rude shock that retailers have stopped buying which looked logical for they were focused to clear the goods before July 1, 2017. Supply Chains looked very vulnerable as forecasts went below the bottom, demand in June probably clocked fairly poor (at in case of my clients in FMCG) and world starred at the largest democracy to roll out the largest tax reform. Supply Chains in India are scrambling for the right network, optimizing the network & in the whole journey of evolution have realized that GST is less of Tax but more of Supply Chain Material & Information flow improvement initiative. 

 

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