What can the logistics and supply chain industry expect from 2022
January 21, 2022
The Covid-19 pandemic has caused devastation among supply chains all over the world. The two waves over the past two years have caused numerous problems, starting from procurement of raw materials to getting the finished product to the customer. However, at the same time, there have been a few learnings that can have long-term benefits for the industry, writesAnjani Mandal, CEO of Fortigo Logistics.
Logistics sector outlook for the year 2022
All indicators so far point toward growth across organized manufacturing & core-sector organizations. Demand for Logistics & Transportation will also have a corresponding growth. The large shippers will look at reducing risk in supplies by increasing the control they exercise on secondary transportation (intra-state & intra-region) to ensure product availability at consumption centres.
One good thing that came out of the pandemic is that it has accelerated the adoption of technology. The momentum for technology adoption by transportation & warehousing will continue to increase at an accelerated pace. The technology focus will be around cloud-based solutions for digitalization of the transportation process. All the growth in the transportation will be mostly distributed among organized players within the logistics Industry - preferably such organized players that are tech-enabled.
Learnings from the pandemic
One of the big changes has been the reduction of supply chain redundancy. For years, just-in-time manufacturing and the concepts of Lean were popular among companies. But the pandemic has shown that perhaps such concepts can no longer be sustainable.
Instead, companies will build resilient supply chains - holding extra stock and maintaining multiple suppliers are some of the steps companies are taking to keep their supply chain resilient to outside impact. These redundancies can give some much-needed breathing room for organizations when they face any disruption in the future.
Another learning from the pandemic has been the need for sustainability in the supply chains. It is necessary for an organization to be aware of its environmental, social, and economic impact. A sustainable supply chain can help organizations reduce their total carbon footprint, while at the same time optimize their operations so that they can increase their profitability and reduce their costs. Delhi State is the first geography to focus on this and are implementing this with strong regulatory support.
Cross-functionality was a major development thanks to the pandemic. Organizations have learned that communication between all parts of the supply chain is equally important to help ensure there is a robust end-to-end system in place.
The adoption of technology has been another development due to the pandemic. Organizations are investing in technologies so that they can have end-to-end visibility of the entire supply chain. This makes it easier to respond to disruptions, with easy access to information helping with informed decision making. They have also insisted that their vendor partners also implement technology solutions to facilitate supply chain visibility. Both the sell side and buy side need supply chain visibility to keep an eye on stock levels and consumption rates. This way, there can be better planning in terms of inventory and productivity.
Aftermath of the pandemic
As a result of the pandemic, a lot of small and medium enterprises had to shut shop due to a lack of customers and government support. As such, organizations are now finding that the supplier pool they had before is much smaller now. Only a handful have survived both waves of the pandemic. As such, the supply and demand balance are skewered, which companies will need to work with.
Additionally, there has been a marked increase in costs with respect to raw materials and services. Fuel and manpower costs have seen a surge as well, which has increased operational expenses for nearly every organization. This is mainly due to the volatile and unstable global markets, which have destabilized supply chains. Many of the raw materials needed for manufacturing various goods have become harder to procure. Also, the rise in prices of commodities may not just be a temporary phenomenon.
Government initiatives and expectations from the new year
he shipping and logistics cost is not expected to ease anytime soon due to the demand supply gap. However, the government has brought to focus the need to reduce overall logistics costs from 14% to under 10% for the competitiveness of the economy. The expectation is, there will be a continuance of a large outlay on infrastructure creation, building & Improving large tracts of highways to facilitate road transportation, all of which support the logistics industry directly & indirectly. Combining this with the focus on the freight corridors, the importance of rail & road multi-modal will become increasingly important. One hopes that the government would work towards elimination of highway speed-money & facilitate ease of doing business through technology that avoids any vehicle to be stopped on the highway by regulatory bodies.
Preparedness for future disruptions
The logistics sector is undergoing a transformation and consolidation, organizing the highly fragmented industry. The manufacturer / shipper has defined processes for disruption and recovery from them and the service provider is aware of the steps to be adhered to for self-protection & for maintaining safety with respect to any future disruptions. Companies are adopting digital technologies to be more resilient and agile and avoid late deliveries, lack of visibility and control.
The Way forward
The next stage of productivity improvement is expected to be delivered by deployment of technologies to facilitate collaborative-execution by integrating processes across the shipper & vendor organization to provide end-to-end visibility & get better control through the transaction execution. One hopes that this will be adopted & cascaded rapidly by large organizations through their supply & logistics chain.
Organizations will need to work on a two-pronged strategy to deal with these volatilities: short-term solutions and a long-term sustainability vision. The short-term solutions include cost control and supply chain resilience. In the longer term, however, companies will need to work on technology-based supply chain integration and deep collaboration through the supply chain – whether internal or external.
 | Anjani Mandal is the chief executive officer of Fortigo Logistics |
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Indian Transport & Logistics News
