"Amazonization" effect on Indian Supply Chains

What I and probably all folks in India are experiencing is something very divergent to how we grew up in Supply Chain & saw it getting shaped in India. My father tells me that when he bought his first Scooter, good 45 years back, he had to pay INR 5,000 & still wait for the scooter to be delivered at the convenience of the manufacturer. The Demand - Supply gap in Indian context of business favoured the Supply side. He did wait for 6 months to get the delivery of his scooter. Many of us have such stories to remember. A cultural pattern where supply was always constrained hence demand used to get tapered off.

I think what Amazon or any e-tailer has done to Indians is that its permanently changed customers "Value System". And its happened way too fast! And Indian Supply Chains are yet to explicitly acknowledge it.
 
Indian customer traditionally has been unpredictable in his demand patterns, frugal in his budgets & very demanding on his delivery expectations. With Amazonization effect this will multiply manifold, is what I suspect.

Practically speaking NOW "Waiting" is considered to be an unreasonable expectation. (Amazon is making people actually experience it with its one day delivery and now 2 hours delivery systems.) I suspect that the customer will carry that psychology into every other purchase he or she makes. It's going to go beyond only his or her etailing experience. And Indian Supply Chain will have to be super-agile to design the flow of material & information.

Buying without physically seeing it will be shaping up Supply Chains. Its been traditional to Indian customers to walk in, probably do a lot of window shopping & then finalize the purchase.Will that still be the preferred choice going forward? I would like imagine Indian customers who would study the product online & make the decision there itself. One may end up buying a product like car without physically walking into the showroom.

Expect customers to demand virtually unlimited "Variety". What etailing did to Indians, who basically like to see a lot of variety before making a decision (ask any gentleman who went shopping with the opposite gender!), is that it has dramatically changed the expectations of variety. Its almost infinite. Indians traditionally have been seekers of higher variety to make choices of purchase coupled now with the fact that unlimited variety is being experienced will lead to demanding that from every other product they purchase.Indian Supply Chains will have to soon get themselves re-organised to deliver higher demand side variety without increasing input variety.

Amazonization effect on Indian Supply Chains needs to appreciated quickly by all Supply Chains rather than feeling its limited only to Retail sector. While many of my client organizations may have been recipients of this tacit change in market behaviour, its explicit representation in re-designing the Supply Chains will be primary need in Indian Supply Chains.


Comments

Post a Comment

Popular posts from this blog

The Five Point 'Profit Protection Plan'

Business cycles come & go. And if history is any evidence then the cycles also get 'repeated'. The nature of the cycles undergoes a time frame change & a characteristic change although the broader 'structure' remains the same. Arguably the goal of the organization also shows continuity over the history & the overarching goal although is 'creating / preserving stakeholder value' the more commonly understood goal is 'Profit' . The current industry cycle seems to be of demand contraction hence decelerating revenues & profits. I was wondering what may constitute a 'Profit Protection Plan' for organizations. My five point agenda for Profit Protection is; a. Target Volume - It is unlikely that one enterprise has a capacity which exceeds more than quarter of the total market demand. Need to redefine markets & start selling more to the ones who you didn't sell. b. Price - Think 'service'. This is where the
Read more

Supply Chain KRI's (Key Risk Indicators) as a lead practice for improving Supply Chain Performance

In the evolution of enterprises, there comes a point in time when the circumstances lead to rethink the future course. I think Covid-19 has offered that, for those who wish to chart that course. Covid-19 has proven that the frequency at which Supply Chains are being impacted, due to unforeseen events, has increased to almost once every decade on a large scale. Coupled with the fact that Industry cycles have shrunk. With all the uncertainty arisen out of Covid-19, I am sure many enterprises have been working on how much would the Key Performance Indicators (KPI's) be impacted. Why enterprises? Even a country like China is thinking of its most important KPI - GDP growth rate - to be a number or a landscape / direction to be shared. In short, the stakeholders of Supply Chains are predominantly drawing on the KPI achievements factoring in for variations based on how Covid-19 unfolds. As a Supply Chain practitioner, I appreciate enterprises have spent lot of resources in designing the
Read more

The 'Adaptive' organisation

A lot is being said & pondered over the nature of the environment in which enterprises operate. The current environment is considered to be 'chaotic'. The 'Alignment' of the enterprise with the customer is considered to be the most important mantra for success.  I wonder what does alignment mean in the context where the environment is chaotic & the customer hence is not static. In my opinion organisations need 'dynamic alignment'. Organisations which are able to know the ingredients of what makes up for alignment & continuously gauge the shifts in the environment to keep themselves abreast with the latest parameters of alignment would be successful. Dynamic alignment needs 'Adaptive Organisations'. Adaptive organisations is a function of the People. It's your workforce. They way it is  recruited, developed, appreciated or rejected. Encouraged to take up new tasks. How is your workforce respected, trusted & celebrated.I think
Read more