[The Jolt] Overcoming India’s challenges

India - Procurement professionals looking for savings in recessionary times are taking a second look at getting the most out of their low cost country sourcing strategies. JDA tells us how to make sure your supply chain is robust enough to capitalise on the many benefits India can bring as well as withstand its many challenges. 

It is hard to deny India as a growth market even in recessionary times, with the populous nation expected to hit 5.5% GDP growth this year, after raking in over US$1 trillion in GDP in 2008 (up 6.5% on-year).

"To keep pace with India's growth rate, companies have been focused on building production capabilities, distribution networks and retail outlets resulting in complex supply chains with long lead times," said Stephen McNulty, regional VP of Asia Pacific at JDA Software. "As the market continues to mature, companies must focus on optimising operations to become more efficient."

India's rapid expansion could lead to unplanned spikes in demand, JDA says. To address this and other challenges unique to India, the company lists five key strategies to help companies establish an efficient, flexible supply chain. These are:

• Ensure a clear understanding of local principles, customs and barriers. Doing business in India requires a thorough understanding of the unique culture, legal regulations and infrastructure of the country. Understanding tariff structures, road taxes, patent legislation and labour laws is crucial to running a successful enterprise. Knowing the limitations of India's transportation infrastructure is critical in adjusting distribution strategies and having the flexibility to adapt to the varying restrictions and needs that exist within India.

• Establish constant communication. The size of India and its insufficient communications infrastructure pose unique challenges for companies doing business in this region of the world. This requires adapting traditional means of information sharing to ensure that manufacturers, suppliers and retailers are all on the same page. Leveraging dedicated Web portals for exchanging information helps address communication issues by enabling trading partners to share information from diverse sources in a unified manner, reducing lead times and operational expenses.
  
  
• Develop comprehensive procedures and processes. Streamlining supply chain functions, as well as sales and marketing operations, allows companies to implement and adopt standardised processes that can be easily replicated as companies expand. By operating with a structured base for demand forecasting, companies can easily gather and analyse distributor sales data for generating distributor-centric forecasting and networks. The next step is to analyse the impact of various types of drivers like pricing and promotions on overall customer demand which can significantly improve forecast targets that result in overall lower supply chain costs. By synchronising the multiple dynamics of demand planning and production planning, companies will have the ability to reduce over-stocks and stock-out situations.
  
  
• Ensure the quality of input information Most merchandising plans are developed today without any actual demand data, causing gaps between customer purchasing information and supplier planning forecasts. As a result, shelves are filled with too much of the wrong inventory or customers are not finding what they need when they need it. Investing in Collaboration, Planning, Forecasting and Replenishment (CPFR) solutions and Sales & Operations Planning (S&OP) solutions provides a link between disparate information by allowing companies to create plans based on actual demand data.
  
  
• Identify and integrate the right professionals and insist on teamwork. The scarcity of a skilled, knowledgeable and committed workforce is a challenge facing Indian companies. With an increased number of mergers and acquisitions and management takeovers, remote reporting is becoming a mainstream part of corporate life. Combining logistics and procurement personnel into a "supply chain team" with shared responsibilities enables companies to utilise individual strengths and strategically map skill sets to help lower operational costs and bring in efficient customer management and sustainability.

Successful companies will continue to improve the design and utilisation of their global supply chain network, JDA said. 

"More frequent operational reviews are now essential to meet increased demand, adapt to varying fuel prices and account for fluctuating currency valuations," said McNulty.