Corona Covid 19 - an opportunity to push make in India ~ Prof Archie D'Souza

Corona Covid 19 - an opportunity to push make in India

Prof Archie D'Souza

Archie D'Souza is adjunct professor at Dayanand Sagar University, Centre for Executive Education. He is also director of CSSPL Tech Pvt Ltd. A recognized  expert in Airfreight, Logistics and Supply Chain Management.

Starting from December last year the world has been afflicted with the Covid 19 virus, which is alleged to have been originated in Vuhan in China. Its impact has been felt across the globe. It has adversely affected every sector in the country, with the logistics sector being the worst affected. According to the Indian Brand Equity Foundation (www.ibef.org) the sector employs 40 million people, contributing $ 200 billion to the economy. So, we are looking at a very big sector being affected. Is there any hope for redemption as far as the sector is concerned? While in the current scenario it seems unlikely, one can definitely look at the future and plan for in the present.

Here are two reports which explain in detail the kind of adverse impact the pandemic will have on India's GDP and on retail supply chains, across the world. The McKinsey report on retail supply chains talks about five actions retail supply chains can take to navigate the pandemic. An article published in Business Today based on a report from KPMG details the impact on India's GDP

https://www.businesstoday.in/current/economy-politics/coronavirus-india-gdp-growth-may-fall-below-3-if-lockdown-extends-says-kpmg-report/story/400135.html

We will focus on how India could use this an opportunity for the current and future. The focus will be on supply chains. India has consistently, for almost three decades, been among the fastest growing major  economies of the world. While services have been a major contributor to this growth story, manufacturing isn't too far behind. This high level of growth has been riding on investments made by governments at the centre and states, the private & public sectors and through public-private-partnership (PPP), on infrastructure projects. Primary among these are ports, airports, roads, special economic zones (SEZ), industrial clusters & corridors, dedicated railway lines for freight and warehousing, to name but a few areas. Not very long ago, the Adani Group was awarded 5 airports. New major ports, highways and rail corridors too are being built or, at least, construction will be resumed once the lockdown is lifted.

These investments have resulted in a great deal of opportunities for professionals at every level, opportunities that will be fructified once things return back to normal. Thanks to this and various initiatives from the HRD and Labour & Employment ministries, there are courses being developed to train professionals in the field of Logistics & Supply Chain Management (SCM).  The Ministry of Labour and Employment (MOLE) has come out with a number of vocational programmes to train people at every level in the field of Logistics.  Details of these skill development programmes are available on the MOLE and National Skills Development Corporation (NSDC) websites.  Similarly, universities, in their MBA programmes, have started introducing Logistics as an integral part of the courses that students have to undergo. We will look at courses later. Right now, let us look at the industry.

Another benefit that this high growth brings is a greater demand for goods of all kinds, across segments, whether they're luxury goods or products for mass-consumption. One thing that will happen for sure, when we see normalcy again is that major manufacturers will look for new sources for acquiring raw materials and components. This will result in a spurt in construction of manufacturing plants.  Wherever new manufacturing units are set up, plant and machinery need to be procured and installed. Once commissioned, these units need to procure, among other things, raw materials, components and packing materials to ensure that production takes place. These have to reach the factories. Similarly, finished goods need to be moved from plant to market. Agricultural products too will Also required is storage at the origins, destinations and in-between. All these activities need the services of professionals, called logisticians. The business of logistics requires crores of professionals, at various levels, taking part in myriads of activities. Can we use this period to train online young people who wish to enter this sector? 

When normal life resumes, the demand for skilled logistics professionals will increase manifold from the current level of 40 million. The figure for new fresh professionals will be anything between 5 & 10 million. Globalization of the economy will not die as a result of the virus which originated in Wuhan. It will only go up with manufacturers looking for new sources to procure supplies from. Universities across  India and the globe do offer specialized courses in these areas. With classroom sessions having stopped, learning has become online. This is the trend world over. Good quality SCM professionals are a necessity without which there'll be no recovery. So, e-learning in the field will be the buzzword for, not just the immediate present, but the future as well.

We will state here, what opportunities could be provided in e-learning. The contribution to the world economy of shipping, aviation, road & rail infrastructure and every other sector related to the field of Logistics is tremendous.  Without transportation there would be no trade and most of the world’s populations would starve. New centres of production and consumption, which will no longer be as  close to each other as in the past, will require new international transportation infrastructure connects the two.  Without new shipping, air and land transport services this will not be possible.

Let us look at what happens currently. Food grains, fertilizers, cement, coal, ore and a host of products are transported in bulk carriers; crude oil and other liquids as well as LPG & LNG and several petroleum products – crude and finished – move in container ships; container ships, ro-ro services, break-bulk, reefers, etc. – we can make a long list of the kind of shipping services available.  Without shipping the entire world economy would collapse.  Water is the most economic mode of transporting most goods.  Only pipelines are cheaper for a single liquid or gaseous commodity moving in very large quantities, in one direction.  Shipping services also leave a much smaller carbon footprint compared to the mother modes of transportation.  Here again, pipelines are the exception.

Air services also play a major role in international trade.  Transportation of goods by air has reached unimaginable proportions.  Today the world’s major passenger carriers earn a great deal of revenues from cargo, more often than not, exceeding passenger ticket revenues.  Several major airlines, e.g. Lufthansa Singapore Airlines and Emirates Airlines, have hived off their cargo divisions into wholly owned subsidiaries.  In addition, we have all-cargo airlines and integrators – cargo airlines offering door-to-door services for freight.  The variety and range of services that all these airlines offer are numerous.

Airports, ports, truck & train terminals, courier service providers, etc. all require top quality logistics professionals.  Apart from these, there are a range of intermediaries like freight forwarders, customs brokers, shipping & air cargo agents, etc. that need professionals.  Manufacturing and service undertakings too require logistics and SCM professionals.  So, the opportunities are virtually unlimited.

The importance of the supply chain

Logistics, a very important component of the supply chain,  is the universal thread or pipeline that plans, coordinates and implements the delivery of goods and services to customers all over the world. Without trade there can be no economic development and without transportation, there can be no trade. Transportation is the most important component of logistics. There are several other components of logistics. Professionals in this field, i.e. logisticians, manage and coordinate the activities in the global pipeline to ensure an effective flow of materials and information from the time a need arises until it is satisfied; often beyond, e.g. equipment that is supplied needs servicing, viz. maintenance, repair & overhaul (MRO). Service providers need to procure, move and store spares for this purpose. This flow and storage of goods encompasses planning activities, implementation and control in both forward and reverse directions.

The sector, as we've seen, will see a spurt in the number of people employed and will create many more jobs, not just immediately but also in the next two or three decades. Some of the activities or functions of industrial logistics include, order processing, inventory management, transportation, storage (viz. warehousing), packaging, customs clearance and several value-added services.

Logistics involves so many critical business activities that nearly every business organization, from the smallest to the largest, requires, either through direct employment or indirectly, professionals in the field. Needs range from CEO to drivers and handlers. In other words, besides qualified persons, a number of unqualified, but trained, people a, re needed. Also required are analysts, software developers and experts in robotics and artificial intelligence, the list seems endless. Most of the jobs in the sector do not require highly qualified individuals. Universities and institutions across India and the world, offer certificate, diploma and degree courses in logistics, including an MBA. Indeed, the industry, as well as professionals employed here are poised for exponential growth.

This is the best time for professionals who are idle to get qualified. Also, for students to get the necessary skill-sets needed to start careers in the industry. What about the supply chain in general?

From a business-use perspective, logistics does have a role to play to ensure that supplies continue to be maintained not just locally but globally as well. So, passenger aircraft, which would otherwise have been grounded, now carry cargo in their cabins. Here's a report on the same:
https://www.businessinsider.com/coronavirus-airlines-flying-cargo-only-planes-for-medical-supplies-mail-2020-4?IR=T

There are several such reports across the globe and a few in India also.

Here is a graphic that nicely explains which sectors are likely to gain and which likely to lose

Here are two reports one good and the other, not so good:

https://www.businessinsider.in/india/news/in-maharashtra-the-biggest-roadblock-of-farming-is-removed-due-to-the-coronavirus-lockdown/articleshow/75021749.cms?utm_source=browser_notification&utm_medium=chrome&utm_campaign=BI_Browser_Notification_New

https://logisticsinsider.in/the-vehicular-lock-jam-an-augury-of-an-impending-essential-commodity-crisis/

Today almost the whole world is on a shutdown. There's hardly any manufacturing happening. Certain essential industries , like medical equipment and supplies, are open. The government must allow agricultural produce to be harvested and moved into warehouses. Those not in business currently need to look at how to cut their losses. All businesses, especially those in manufacturing, need to look at newer opportunities that will emerge once the crisis is over and be ready with a strategy. As I often repeat, stop relying on a single source for supply of raw materials, components and services. This is also a time to relook at their social orientation.