The last five years have tested supply chain professionals’ mettle at extreme levels. Starting from dealing with the Covid-19 pandemic to surviving the most unforeseen global eventualities such as Russia-Ukraine war or the blockade in the Red Sea, or the risks emanating from the climate change, the supply chain professionals have seen and dealt with them all. Such experiences have not only made them resilient but have also prepared them to be on their toes every time to manage such external pressures. While challenges are hard to abate, the latent opportunities are what keep the SCM fraternity stimulated to make their respective organizations survive & thrive amid such disruptive times. This Special Report in the Q&A format explores the lessons learnt and the various facets that have shaped the supply chains of tomorrow.
What lessons have been learned from the recent past when it comes to supply chain resilience?
Sharmishtha Niyogi, India Supply Chain Director, Merck Life Science Pvt. Ltd.: The post-COVID era has brought supply chain to the forefront of business world. Its critical role in revenue generation, profitable sales, and capturing market share through material availability, cost efficiency, and customer experience is now being recognized. As part of the global supply chain for a Fortune 500 company, we are heavily reliant on the import and export of raw material and finished goods. The Covid-19 pandemic disrupted suppliers, distribution centers, and ports worldwide, with unplanned lockdowns and huge backlog following the reopening. This caused supplies in various product categories to come to a grinding halt, highlighting the vulnerabilities within the supply chain, particularly for organizations like ours with a complex global footprint.
With several disruptions in the backdrop and a strong focus on strengthening supply chain for partnering on business goals, a need for supply chain risk management tool was identified and a dedicated team was formed to address it. The objective of the team was to evolve a risk playbook through detailed value stream mapping, defining risk and tolerance, creating KPI and process matrix. The playbook defined potential action plan and process owners responsible for efficient risk management. An AI-based control tower complemented the initiative, offering prescriptive dashboards and email alerts to process owners, informing them of the potential risks and recommended action to mitigate and manage those risk.
The key learning from the initiative was the immense value it added in building a resilient supply chain. It also underscored the fact that identifying vulnerability within the supply chain and ways of managing risk is an ongoing process and not a one-time activity. The success of such an intensive work can largely be attributed to the progressive mindset of the organization with a culture of continuous improvement ready to learn, change, and implement. Another crucial lesson was the importance of data governance and empowering data owners within the organization to maintain data quality. The risk management framework helped us adopt a structured approach that subsequently allowed us to remain adaptable and responsive to the evolving dynamics of supply chain risks.
A common risk in global supply chains is transit delay in sea freight. Unforeseen circumstances, such as a blockade in the Red Sea or a labor strike at a port, can cause uncontrollable delays, which directly affect customer service. The playbook addresses these issues by triggering the use of air freight for urgent supplies. Identified process owners, such as supply planners, are alerted to assess the impact and place air orders as needed. Simultaneously, manufacturing locations are informed of the potential increase in demand and the impact on inventory levels. Customer care teams are also updated on the issue and the affected orders, enabling them to take proactive measures to manage customer expectations.
Globally, across industries, supply chain organizations are re-evaluating the judicious use of traditional principles such as just-in-time inventory and lean manufacturing footprints. They are exploring more efficient ways to minimize supply risks, including near-shore manufacturing, strategic inventory policy, ‘plus one’ manufacturing, among others.
Considering recent disruptions, the focus of the supply chain has shifted from merely being lean and delivering productivity to becoming equal partners with business in growing market share and driving profitable revenue. Supply chain now has the potential to be a strategic differentiator, and this journey is only just beginning.
Ashwin Kak, Sustainability Consultant and Start-up Advisor: Giving an anecdote from my previous organization, AB InBev, barley was one of the raw materials that we used to procure in a large quantity, we had an agriculture sourcing program in the northern part of the country spread across Rajasthan and Haryana. We were able to secure only 5% of our sourcing needs from this program. The remaining sourcing used to be via the malt houses, in the form of processed barley.
When the Covid-19 1st wave struck, that was the first day of barley harvesting – 23rd March. All the warehouses and APMCs got shut due to lockdown, so we couldn’t buy from them because we don’t have the direct contract from the farmers. We waited for a few weeks for things to settle down, and we realized that we had the infrastructure for quality testing and purity testing ready, but ultimately the yard was the intermittent point and was not opening up anytime soon.
We then took this infrastructure to those village clusters. Even after the Covid-19 dust started settling down, we kept on continuing with the same formula because it proved to be cost effective for us and it also established loyalty for us from the farmers’ community as we were able to deal with them directly, and not leave them high and dry during the pandemic, like many other industry players had done.
This ultimately led to the growth of the farmers’ sourcing program from 400 farmers to 2500 farmers, and from it be a 5% of our sourcing needs to 25% of the sourcing needs – all developed through the most challenging time of the Covid-19.
Another interesting story I would like to discuss is about packaging material. I would like to take the approach of Cradle to Grave further into the idea of Cradle to Cradle. In the beer industry, glass bottles have been returnable but due to Covid-19, there was no chance of getting the bottles back into the system, as most of the collection systems had become dormant. It is then that the price of buying even more new bottles every time became a huge dent on the profit margins. It was during one of these brainstorming sessions, that we also zeroed in on the saving of 95% on GHG emissions for every occasion that we re-used an old bottle and did not have a new bottle manufactured for this process.
This was an ‘Aha’ moment for us where the excellent linkage between cost and sustainability was evident to a lot of colleagues across the supply-chain team. Such brainstorming sessions played an important role in both the sustainability, reverse logistics as well as the finance team very closely to ensure that the return and re-use of existing bottles would be maximized. I think these are a few classic examples that have taught us immensely to continuously innovate sustainably.
Devendra Rawat, Former Director, Planning & Distribution - South Asia and MENA, Levi Strauss: In the fashion and retail industry, the recent past has made organizations aware of two critical elements of the supply chain that need to be addressed for resilience. The first is related to supply continuity and second is inventory management. For first, it’s critical to ensure minimal supply disruptions, and this can be addressed with nearshoring, alternate sources of supply etc. The second one, working with the right inventory, is quite critical as well. Many retail companies are financially stressed today due to higher inventory as sales have slowed down. Hence, managing the inventory, that in turn depends on how well is your planning and order lead times, becomes important.
Karthikeyan Subramanian, Senior Director – Consulting, GEP Worldwide: The recent past, particularly the Covid-19 pandemic and other global disruptions, has highlighted several key lessons for enhancing supply chain resilience in India:
Agility is Essential: Supply chains must be nimble to adapt quickly to changing circumstances. Businesses that invested in flexible manufacturing setups and diversified their sourcing networks managed disruptions more effectively. Companies in sectors like automotive and electronics shifted production temporarily or adjusted supply sources to meet demand fluctuations.
Digitalization is Non-Negotiable: Real-time visibility across the supply chain is critical. Companies that implemented IoT and AI technologies could anticipate disruptions, manage inventory effectively, and improve coordination. Retail and FMCG companies leveraged data-driven demand forecasting to optimize stock levels during the pandemic.
Collaboration Drives Resilience: The pandemic underscored the importance of collaboration between manufacturers, suppliers, and logistics providers. Shared data and resources allowed businesses to overcome logistical hurdles. To give you an instance, pharmaceutical companies partnered with logistics firms to ensure vaccine distribution through cold-chain networks.
Diversification Mitigates Risk: Single-source dependencies are a significant risk. Diversifying supplier bases—geographically and in terms of the number of suppliers—has become a priority to ensure continuity. Indian businesses in the textile and apparel sector, for instance, have started sourcing cotton and fabrics from multiple regions to avoid bottlenecks.
Resilient Infrastructure and Policies Matter: Weak infrastructure was exposed as a bottleneck during crises. Companies have realized the importance of robust logistics and warehousing networks, alongside government policies that enable smoother operations. In this regard, the National Logistics Policy (NLP) is an effort to build resilience by reducing logistics costs and improving multimodal connectivity.
What opportunities does the rapid growth of e-commerce offer for supply chain innovation in the country? How can traditional retailers adapt their supply chains to stay relevant?
Devendra Rawat: E-commerce sector had a profound impact on the consumer supply chains in the last decade. About nine years back when I moved from Pepsico to Flipkart, I found e-commerce to be a totally different world compared to supply chains of traditional companies. In e-commerce, SKU count runs into millions, and it is impossible to even think of doing the forecasting or planning without the intervention of technology. A true evolution of AI & ML has come from fast shaping needs of the e-commerce industry. On the distribution side, the e-commerce industry was driven by SLAs, with tight lead times and embracing automation in the warehouses, it was very different from other industries.
Today, Quick Commerce is the buzzword. The way Q-commerce companies have created a network of dark stores to serve customers in urban areas, the question can be asked if traditional brands can learn from this strategy? Can the traditional distributors get substituted by the network of dark stores? Traditional brands will need to answer these questions with the right business case. Especially smaller brands, who are not happy with the services provided to them by the traditional distributors as most of the distributors are majorly focused on large companies who are giving them higher volumes.
Another big change that we are witnessing these days is that every brand has got its own brand store with an omnichannel presence. Online e-commerce players such as Myntra are actually doing some great work in keeping their consumers engaged with interesting storylines and user interfaces. These can be adapted by traditional brands for their own brand stores. This is where I feel we have great learnings to achieve from these players.
What are the most significant supply chain disruptions that Indian companies are currently facing? How can businesses mitigate these disruptions?
Sharmishtha Niyogi: India as an economy is experiencing unprecedented growth, amidst general slowdown of other comparable economies across globe. The pharmaceutical industry is showcasing double-digit growth year on year, with the potential of reaching an impressive size of 130 billion USD by 2030. Similarly, food and beverage industry valued at $332 billion USD in 2023, is expected to grow at a CAGR of 11%, and estimated to become nearly $691 billion USD industry by 2030. The automotive sector is also following a similar growth trajectory, with an estimated 30% of new vehicle sales expected to be electric in the coming years. With such strong signals of growth, the supply chain of India Inc. is expected to develop and expand at an unprecedented pace and meet the growing demand.
While this trend is welcoming, India's supply chain faces several challenges on its way of fulfilling the envisioned readiness plan. Broadly these challenges include poor infrastructure, complicated government policies and regulations, demand-supply imbalances, a large informal economy, and a lack of quality network partners and organized logistics players.
To support this expanding economy in a country as diverse as India—spanning across thriving urban and somewhat untapped rural landscapes—basic infrastructure is critical. Good roads, reliable power supply, a strong transportation network, compliant and reliable warehouse facilities, efficient multimodal logistics network are essential for managing the scale of growth that India is experiencing and anticipating in near future. Unless these challenges are addressed on priority, there is a risk that India Inc may not be ready to fully capitalize on its growth potential and may struggle to elevate its economy to the next level.
Government support for improving road networks, power supply, and overall infrastructure is fundamental to powering India’s growth trajectory. Additionally, consolidation within the transportation and warehousing sectors will be crucial to countering the highly fragmented nature of the industry currently. It will also be essential in improving the performance of logistics players to the required standard and quality norms. Enhanced visibility through AI-based control towers, regular quality audits, and performance-based incentivization will elevate performance of these sectors.
The much-discussed Public-Private Partnership (PPP) model is essential for infrastructure development projects and enhancing rural access. Powering up industrial clusters that connect rural production centre to both rural and urban markets will also prove beneficial for creating a more efficient and sustainable supply chain.
Ashwin Kak: Indian companies, especially in the FMCG sector, have faced disruptions like raw material shortages, unpredictable demand patterns as well as rising environment and climate risks. Businesses can mitigate these risks by adopting digital tools like demand forecasting, inventory optimization and also building resilient, localized supply chains – this helps address a lot of supply availability challenges.
A notable strategy has been the example of AB InBev to procure directly from farmer groups for raw materials – taking charge of the quality, ensuring commitment to the community and also reducing dependencies on imports as a result.
The trickier ones would be the environment and climate risks – the identification of which itself is at the nascent stages with many organizations. The subsequent integration of it into organizations’ risk management frameworks will become even more critical now.
What organizations also need to realize very soon now, is that the nature and climate related risks are no longer in the future – I had directly seen challenges with respect to flooding of manufacturing units in Kerala, cyclone’s affecting the feasibility of existing units in coastal Odisha as well the challenges of operating a plant in a state like Rajasthan with rightfully, the Ground Water Board, having very stringent norms with respect to water usage and recharge. It is here now that establishing a team of business strategy, policy-enabling and technical experts; driving the Sustainability agenda within organizations will become very critical.
Devendra Rawat: The most significant disruptions are happening due to the impact of various geo-political events on the global supply chain. These events are impacting commodity prices, shipping routes and lead times. And as most of the supply chains today are global, these are impacting almost all industries, from auto, electronics and pharma to apparel and consumer. In the short term, mitigation will be increasing inventory buffers and using alternate modes of transport. In the mid-long term, two key strategies for mitigation will be (1) developing local sources, or sources nearer to the destination (near-shoring) giving multiple sources of supply and (2) Adopting design strategies that give flexibility in operations, like alternate materials, etc.
Karthikeyan Subramanian: Indian companies face a range of supply chain disruptions driven by global, regional, and sector-specific challenges. Here’s some of the most pressing disruptions and strategies to mitigate them:
Geopolitical Uncertainty: Geopolitical tensions, trade restrictions, and shifts in global alliances have disrupted sourcing, particularly for critical materials and components. For instance, reliance on imports for semiconductors and electronics components exposes vulnerabilities.
Mitigation:
Diversify Supplier Base: Develop multi-country and domestic supplier networks to reduce reliance on a single geography.
Leverage Regional Trade Agreements: Tap into trade frameworks like SAARC and BIMSTEC for alternate supply options.
Rising Costs: Escalating fuel prices, inflation in raw materials, and higher labor costs are pressuring margins. The logistics sector, accounting for a significant portion of supply chain costs, is particularly affected.
Mitigation:
Optimize Logistics Networks: Use AI-driven route optimization to reduce fuel consumption.
Adopt Energy-Efficient Practices: Transition to electric and hybrid fleets where feasible.
Cost Collaboration: Negotiate long-term contracts with suppliers to manage price fluctuations.
Demand Fluctuations: Rapidly changing consumer behaviors, especially post-pandemic, lead to unpredictable demand. Seasonal peaks in industries like e-commerce and FMCG add strain.
Mitigation:
Data-Driven Forecasting: Use AI and ML to improve demand prediction accuracy.
Flexible Supply Chains: Build agile networks to scale production and logistics based on demand surges.
Workforce Challenges: Labor shortages, particularly in high-demand periods, and skill gaps in logistics and supply chain management reduce efficiency.
Mitigation:
Upskilling Initiatives: Invest in training programs for supply chain professionals.
Automation: Use robotics and AI for repetitive tasks to reduce dependency on manual labor.
Technology Gaps: Not all companies, especially SMEs, have adopted advanced supply chain technologies, creating inefficiencies.
Mitigation:
Adopt Scalable Solutions: Implement affordable digital tools like cloud-based ERPs and IoT devices.
Collaborate with Technology Providers: Partner with tech companies to co-develop tailored solutions.
In what ways can collaboration between different stakeholders enhance supply chain performance? If you can give some examples of successful collaboration?
Sharmishtha Niyogi: The supply chain of a thriving organization functions like the nervous system, managing the flow of information, product, and payment. In doing so, it interfaces with several internal and external stakeholders. The stronger the collaboration within this ecosystem, the greater the potential for enhanced customer experiences and business success.
Supply chain organizations generate and have access to sizable transaction-based data that can be leveraged by other functions in collaboration with supply chain teams to improve collective performance of the organization through all stages of the product lifecycle. For instance, customer preference data from last mile, point of purchase can support R&D in enhancing product design to better meet customer expectations, optimize demand forecasting for production and supply to align with evolving customer needs, and enable proactive communication with customers by the customer care organization during the phase-out stage of the product lifecycle.
Collaboration with commercial and marketing teams to gather market intelligence can significantly improve demand forecasting, leading to a more robust demand plan. This is critical for ensuring better material availability and creating a win-win for both the customer and the business. Working closely with trade compliance and finance ensures that supplies to customers are compliant and financially viable. Additionally, partnerships between supply chain and IT can drive efficient and timely implementation of advanced technologies like AI, machine learning, and automation platforms, boosting transaction efficiency. Supply chain teams can also support IT in data governance. The opportunities to stack and win through close collaboration with internal stakeholders are wide and large.
Strong partnerships with external stakeholders such as vendors and 3PL network partners enable the entire ecosystem to scale up, become efficient and sustainable. This collaboration reduces damage, improves quality, and ensures profitability. From an even broader perspective, supply chains have immense potential for adding diversity in workforce in manufacturing and distribution networks, positively impacting the overall economy of the regions in which they operate. By fostering inclusive practices and creating diverse job opportunities, supply chains can drive economic growth and social development in the areas they operate and serve.
Across the complete spectrum of plan, source, make, deliver, the supply chain partners with logistics providers, distributors, retailers, manufacturers, OEMs, vendors, and customers, and drives operational excellence through collaboration.
Ashwin Kak: Collaboration among stakeholders is vital to supply chain efficiency. An excellent example is AB InBev's barley sourcing program in India, where the company directly engaged with farmers in Rajasthan and Haryana to secure raw materials, building trust and resilience in its supply chain. Another case is Britannia Industries partnering with regional dairy farmers to ensure a steady supply of milk during disruptions. During the pandemic, ITC collaborated with e-commerce platforms and hyperlocal delivery networks to ensure last-mile connectivity. Such partnerships optimize costs, minimize delays, and foster long-term supplier and community relationships. With Scope 3 emissions becoming a priority, many companies will now need to work much closer with their supply-chain partners / suppliers, to ensure they work in tandem to reduce the larger value-chain carbon emissions, as also increase the human rights practices within it.
Karthikeyan Subramanian: Collaboration among various stakeholders within an organization— such as procurement, manufacturing, logistics, finance, marketing, and sales— plays a pivotal role in improving supply chain performance. Internal alignment ensures seamless operations, better decision-making, and the ability to adapt to disruptions.
Improved Demand Forecasting and Inventory Management: Close collaboration between sales, marketing, and supply chain teams ensures more accurate demand forecasts, avoiding overstocking or stockouts.
Faster Problem-Solving during Disruptions: Cross-functional teams can quickly address supply chain disruptions by pooling expertise and aligning on solutions. For example, during the global semiconductor shortage, internal collaboration between procurement, production planning, and R&D teams helped automakers prioritize models and redesign components to mitigate supply chain risks.
Cost Optimization through Joint Initiatives: Collaboration between finance and procurement teams identifies opportunities for bulk purchasing, supplier negotiations, or alternative sourcing strategies.
Enhanced Agility through Ma n u f a c t u r i n g - L o g i s t i c s Coordination: Real-time coordination between manufacturing and logistics ensures faster response to demand changes, especially during peak seasons. Example: E-commerce Fulfillment
Improved Supplier Performance through Cross-Functional Collaboration: Joint efforts between procurement, quality control, and R&D ensure better supplier performance and alignment with organizational goals. For instance, a pharma company’s R&D and procurement teams collaborate with suppliers to co-develop new raw materials or packaging solutions, ensuring compliance with regulatory standards while reducing costs.
Driving Sustainability Goals: Collaboration between supply chain, sustainability, and operations teams enables the organization to meet environmental goals efficiently. To give you an instance, a power generation company’s supply chain and sustainability teams work together to source equipment from green-certified suppliers and optimize logistics to reduce carbon emissions.
How is technology equipping supply chain professionals to drive growth? What are the upcoming trends that we will see in the coming years as far as supply chain is concerned?
Sharmishtha Niyogi: The advent of advanced technologies will intensify competition across industries. While large enterprises will invest heavily in these technologies to achieve a quantum leap in speed and efficiency, smaller businesses will strategically adopt to overcome resource limitations and personnel constraints. These businesses will leverage predictive analytics to make informed decisions, gain easy access to customer behavior and market trends, and optimize go-to-market time through smart manufacturing, create winning market campaign through leveraging smart content and access wide or niche market basis well planned success parameters.
In this dynamic landscape of highly diversified players, the responsibility of gaining market share and building brand equity will increasingly be shared by supply chains, working in tandem with marketing and commercial teams. This integration will help align operations with customer demands and business goals more effectively.
Artificial intelligence (AI) will revolutionize every aspect of the supply chain, from optimizing shipping and delivery schedules to enhancing demand forecasting, planning manufacturing capacity, and managing inventory at distribution centers. Predictive maintenance will ensure better production line uptime, while AI-powered virtual reality tools will facilitate training and audits at shopfloor.
Robotic Process Automation (RPA) will automate repetitive tasks and transactions, ensuring greater precision and speed in execution. By reducing manual intervention, RPA will free up critical resources, allowing businesses to focus on reviewing AI driven data output and making timely, strategic decisions that drive growth and operational efficiency. In this new era, technology will enable companies of all sizes to operate with greater agility and precision, leveling the playing field and enabling faster, data-driven decisions.
AI-powered supply chain tools will provide higher visibility through real time tracking of supplies as they flow through the complex and ever-expanding distribution network and manufacturing locations through the process of becoming finished goods. With these comprehensive insight and increased visibility, supply chain leaders well equipped to monitor the processes closely, identify potential risks and make data driven informed decision to develop risk mitigation strategies. By empowering the supply chain to take proactive actions, these AI-driven analytics and dashboards will help avoid escalations, ensure timely interventions, and protect the brand reputation of the organization.
Ultimately, AI-powered SCM tools not only streamline operational efficiency but also provide the necessary intelligence for organizations to maintain high standards of quality, compliance, and ethical practices, leading to more resilient and accountable supply chains.
Devendra Rawat: Technology is playing a key part in all aspects of the supply chain. It is enabling better planning, with huge improvements in demand planning (right market signals and demand sensing), better replenishment with the right pull systems that work with the sales offtake and enabling operations decision making with the inputs from various IoT devices. Tech is enabling automation in warehouses, leading to more efficient and faster operations. It is helping in controlling pilferage and wastage in logistics, and solutions like RFID are making tracking and visibility better across the supply chain.
Karthikeyan Subramanian: Technology is revolutionizing supply chain management, enabling professionals to achieve unprecedented levels of efficiency, visibility, and innovation. Here’s how some of the technology is driving growth in the Indian context:
Enhanced Visibility with Real-Time Tracking: IoT devices and GPS trackers provide real-time visibility into goods in transit, enabling businesses to predict delays, optimize routes, and enhance customer satisfaction. E-commerce firms use IoT to provide real-time delivery updates, improving reliability.
Data-Driven Decision Making with AI and ML: Artificial Intelligence (AI) and Machine Learning (ML) enable predictive analytics for demand forecasting, inventory management, and route optimization. FMCG companies use ML algorithms to predict demand spikes during festivals, ensuring optimal stock levels.
Warehouse Automation: Robotics, automated guided vehicles (AGVs), and smart conveyor systems improve warehouse efficiency by reducing manual errors and speeding up operations. Logistics leaders are adopting warehouse automation to handle increasing shipment volumes efficiently.
Cloud-Based Supply Chain/ Procurement Management Platforms: Cloud-based systems allow seamless collaboration between stakeholders, offering centralized access to real-time data. SMEs are leveraging cloud solutions to improve supply chain integration without heavy infrastructure costs.
According to me, we will witness these trends in supply chain technology…
Hyper-Automation: The integration of AI, robotics, and IoT will enable end-to-end automation, from order processing to delivery.
Sustainability and Green Supply Chains: Technology will focus on reducing carbon footprints through route optimization, electric vehicles, and renewable energy solutions.
Artificial Intelligence in Risk Management: AI-powered tools will analyze vast amounts of data to predict potential disruptions, such as weather events or geopolitical risks, enabling proactive responses.
5G and IoT Expansion: The rollout of 5G will enable faster, more reliable IoT connectivity, improving real-time monitoring and analytics.
Advanced Analytics for Personalization: Data-driven insights will enable customized supply chain strategies to meet specific customer needs, particularly in e-commerce and retail.
How does India’s infrastructure network impact the logistics efficiency?
Sharmishtha Niyogi: India's infrastructure network plays a pivotal role in shaping logistics efficiency, directly influencing the cost, speed, and reliability of goods movement across the vast and diverse country. Key factors affecting logistics performance include road infrastructure, the rail network, multimodal transportation viability, port capacity and efficiency, access to power and utilities, and government policies that affect the ease of doing business.
While India has an extensive road network, the quality of roads remains a major concern. Roads connecting rural and semi-urban areas are often in poor condition and lack proper maintenance, which hampers the performance of logistics partners. This leads to delays, higher vehicle operating costs, frequent breakdowns, and accidents, resulting in damage and loss of goods. In urban areas, traffic congestion presents additional challenges, significantly slowing down the movement of supplies, increasing delivery times, and raising operating costs.
India’s rail network, though extensive, is underutilized for freight transport. Rail routes suffer from delays caused by insufficient infrastructure, congestions, and dated technology. There is significant opportunity to enhance the rail network as a freight-friendly alternative, but the speed of Indian railways remains much slower than its international counterparts, making it less competitive. The overall transformation of this infrastructure mode is absolutely essential and must be prioritized by the government. It requires urgent attention and leadership to drive the necessary changes and improvements.
Ports also face inefficiencies, with limited automation, inadequate handling capacity, and a lack of trained resources. These factors exacerbate delays and hinder the smooth flow of goods. On the one hand, the rapid growth of startups and delivery apps have raised the bar for logistics performance, often promising quick deliveries within unrealistic timeframes ranging in minutes. However, India’s infrastructure is not yet equipped to support these high expectations, making it difficult for companies to meet these demands consistently.
The infrastructure challenges India faces have a significant impact on logistics efficiency, making it harder for businesses to deliver goods on time and at competitive costs. To overcome these hurdles, it is essential to invest strategically in infrastructure development, modernize transport networks, and implement policy reforms to improve logistics performance and support the continued growth of India's economy.
Karthikeyan Subramanian: India's infrastructure network plays a critical role in shaping the efficiency of its logistics sector. India has made strides in improving its logistics efficiency through major infrastructure projects (Bharatmala, Sagarmala, Dedicated Freight Corridors, etc.). These initiatives have reduced transit times, improved connectivity between production hubs and consumption markets, and lowered costs for industries like automotive and FMCG.
While there have been substantial improvements in recent years, several challenges persist.
First- and Last-Mile Connectivity: Many rural and semi-urban areas lack proper road and rail connectivity, increasing transit times and costs.
Urban Congestion: Major cities face significant delays due to traffic congestion, affecting last-mile deliveries for e-commerce and FMCG sectors.
Lack of Multimodal Integration: Road transport dominates (over 60%), while rail, waterways, and air are underutilized. This imbalance increases logistics costs, which in India are around 13-14% of GDP, compared to 8-9% in developed countries.
Warehousing Gaps: The lack of standardized and strategically located warehouses leads to inefficiencies in inventory management.
Technology adoption is helping mitigate infrastructure bottlenecks:
Route Optimization Tools: AI and GPS systems enable more efficient use of existing road networks.
Digital Freight Platforms: Connect shippers with carriers, ensuring optimized load utilization and reduced empty miles.
The National Logistics Policy (NLP) aims to address systemic inefficiencies by:
Encouraging the development of integrated logistics hubs
Promoting multimodal logistics parks (MMLPs) to facilitate seamless freight movement across modes
Streamlining regulatory processes to reduce delays.
Examples of few sector-specific impact:
Agriculture: Poor cold storage infrastructure and limited connectivity lead to post-harvest losses of up to 20-30%. Improved rural roads and cold-chain logistics are addressing this issue.
E-commerce: Many e-com companies leverage India's growing highway network but struggle with last-mile delivery challenges in rural areas valued 30-50% of total logistics cost.
Pharmaceuticals: Reliable logistics infrastructure is critical for cold-chain distribution, especially for temperature-sensitive drugs.
Sri Hari PM, Head – SCMA India, Continental Automotive Components (India) Pvt. Ltd.: Greater dependency on imports translates in increased input cost of a product produced in India like freight, transit lead time, inventory carrying costs, etc. uncertainties are arising due to force majeure topics. Geopolitical issues are causing diversion of ocean mode goods to travel from Europe to India via Cape of Good Hope instead of the regular Red sea route, which has increased the transit lead time by two weeks. There is a shortage of containers due to dominance of Chinese Exports to the US causing scarcity, which in turn, has increased the overall container costs for imports & exports to & from India.
Having said that air cargo handling in India has come a long way and is able to meet international standards in major airports like Bengaluru, Mumbai, Chennai, and Delhi. This needs to be sustained & improved to meet international standards. We also need to look at other states where a lot of industries have come up such as Haryana & UP.
Sea cargo handling needs to be enhanced with international standard material handling as consignments get damaged during handling. Congestions at seaports also needs to be addressed as it eats into the increased lead time very frequently. Clearance speed at ocean ports needs to be matched with international standards (ex-Singapore) so that containers reach the required destination with least lead times to required destinations. ICEGATE efficiency needs to be consistent with high standard speed as there are frequent failures or delay, causing a lot of inconvenience to importers & exporters. We need to get into trade agreements with the European countries at the earliest, considering the export potentials that has been generated.
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