Towards revolutionising the logistics sector: a closer look at the policy and processes
CXOToday has engaged in an exclusive interview with Mr. Jayanth Murthy, Joint Managing Director, South Asia& Africa , Kaizen Institute
- Can you elaborate on how the National Logistics Policy integrates with existing plans such as Gati Shakti, Sagarmala, Bharatmala, and Udaan to transform the logistics sector in India?
Considering the dire need of a robust logistics infrastructure in the country, the National Logistics Policy (NLP) introduced in September 2022 is an immensely significant initiative working towards reducing the burden on the logistics sector by transforming the existing connectivity and infrastructure across the country for efficient transportation. Through the integration of strategies including Gati Shakti, Sagarmala, and Bharatmala, the NLP aims to create a synergy between smoother logistics operations and efficient modes of transportation across the country to bolster transactions.
The NLP aims to enhance digitization of the logistics sector to ensure timely clearances, identifying existing issues, and monitor progress of projects[1], thereby ensuring a holistic development of the industry and reducing the chances of errors along the way.
Since its inception, the NLP has already effectively impacted the logistics realm in the country, bringing India from 44th to 38th position in the World Bank’s Logistics Performance Index.
- Could you provide insights into how improvements in logistics infrastructure and efficiency might contribute to stabilizing prices and countering inflationary forces in India?
Efficient logistics and inflation are highly correlated: disruption in one of these factors directly affects the other. A study conducted by the Reserve Bank of India and the National Institute of Public Finance and Policy indicate that for every rupee that the government spends on creating infrastructure, the country’s GDP gains worth Rs.2.3-3.5 accrue. [2]
This means that to ensure a robust economic growth and miniscule inflationary periods, a country must develop a seamless and an efficient logistics infrastructure to reduce costs, time, and manpower.
It is often said that companies don’t compete. Countries don’t compete. It is supply chains that compete.
Within supply chains, logistics plays a major role. It connects all the dots and efficient logistics is a key driver in making the rendering the end-to-end supply chain more efficient.
- What challenges does the logistics sector face, particularly in terms of complex regulatory issues, data privacy concerns, lack of infrastructure, and the need for a skilled workforce?
The logistics industry, particularly in a country as large as India, is vulnerable to a myriad of external and internal disruptions that could hinder operational efficiency.
Just recently, the deadline for the Bharatmala phase-I project was extended by six years amidst significant increase in costs, noting a massive cutback in the progress of the project and its implementation. Additionally, issues with land acquisition and obtaining all clearances also pose a major threat to the development of infrastructural projects, further increasing the costs and the scope of the overall project. [3]
Digitization, another imperative tool to garner robust logistics operations, is often exposed to massive cyber security threats and vulnerable to sensitive data leaks, including personal data of various state and private stakeholders.[4]
A lack of adequate skilled workforce is one of the biggest challenges in the industry, owing to long working hours, insufficient training and upskilling, and high attrition rates. Considering an unjust work-life balance, along with unclear growth opportunities restrict employees to harbor further upskilling training programs within the same domain. [5]
It becomes imminent to ensure robust on-ground training sessions to upskill employees, adapt to technological advancements to bolster efficiency, and identify existing loopholes/challenges in the projected plans to assess alternative solutions to reduce costs.
- Considering unforeseen events like geopolitical upheavals and climate change, how is the logistics sector in India preparing to adapt and ensure the continuity of supply chains to prevent further inflationary pressures?
Recent geopolitical trends, particularly region tensions and wars have caused massive disruptions in sustaining the global supply chain logistics. Considering the unprecedented threats and India’s geographical and geopolitical location, it becomes crucial for us to prepare alternative means and adapt to the changing geopolitical scenarios to ensure minimal disruptions.
The Indian logistics sector must ensure cost optimization techniques via analysis of the existing chain from the manufacturer to the end consumer. Additionally, robust international relations with the neighboring countries, as well as regions with significant trade routes is pivotal to ensure minimal disruptions on the supply chain – both domestically and internationally.
Ensuring a skilled workforce could further strengthen the supply chain logistics, which further ensures a robust work culture that remains unaffected by external forces. Through structured training programs for all employees, tailored programmes can be introduced to assess them in inventory management, transportation, warehouse operations, as well as soft skills.
Optimization of data analytics throughout the supply chain logistics could also necessitate in developing an efficient system of monitoring progress of tasks, movement of goods, manage inventory, and optimize routes, among other tasks.
- How does the National Logistics Policy plan to reduce logistics costs to single digits and enhance the competitiveness of Indian products in international markets?
The implementation of NLP is a great step in the right direction to optimize the logistics sector in the country. The policy aims to reduce the current 14-16% of GDP to 9% in the next three years, indicating an ambitious plan to greatly optimize the logistics industry and further improve exports.[6]
The NLP also aims to target the ranking in the top 25 countries in the Logistics Performance Index (LPI) by 2030, further indicating the urgency to create a robust system of logistics in the country to optimize supply chain operations. Provision of 260 ropeways and funicular railway projects, along with the development of 500 additional bus depots to house over 2 lakh electric buses have been proposed in the NLP.[7]
The extensive use of data-driven mechanisms to iron out decision-making process and real-life tracking are of utmost importance to the implementation of the NLP. [8]
The extensive planning indicates the quintessential need to develop efficient transportation connectivity throughout the country, while keeping in mind the need to adopt sustainable modes of transportation to develop a progress supply logistics and enhance India’s competitiveness among the international markets.
Finally, it is not only policy that drives costs down, it is operational efficiencies that does it
Enterprises and operators along the supply chain have to adopt more efficient practices. Kaizen is a powerful way to find and cut waste. In the final analysis, a waste free supply chain and logistics means a more cost effective supply chain, that everyone benefits from… From producers, to intermediaries to the final consumers.
