Smart Contracts & Blockchains in Supply Chains & Projects, the dire need for legislation

 The second article in a series on the use of blockchain technology in supply chains and projects

Blockchain technology has been powering the Bitcoin since its inception. It is an ingeniously simple technology that has immense potential for use in supply chains and projects. It is a public ledger to which everyone has access. However, at the same time, no single individual or entity can control it. The technology allows companies and individuals to collaborate with an unprecedented degree of trust and transparency. Despite being cryptographically secure, it is fundamentally open. Blockchain technology is a revolution that begun already and will change the world. Its impact on supply chains and projects will be unprecedented. Governments around the world need to be aware of its potential and legislation is needed to give it legitimacy.

As early as in 1994, Nick Szabo, a legal scholar and cryptographer found that decentralized nature of cryptography could be used in smart contracts. These are basically self-executing contracts and ensure the performance of virtual agreements through blockchain technology. They provide a hassle-free execution of agreements made between parties. The main property of blockchain technology is its decentralized nature. This is because it takes away the requirement of intermediaries. This, in turn, saves a lot of time and prevents any conflict that may arise due to a third party. A smart contract is a self-performing contract. The terms of the agreement that exist between a buyer and a seller are written directly into lines of code. A distributed, decentralized blockchain network contains the code, which consists of all the agreement terms. In addition to the agreements, the code also consists of information that executes the transactions and ensures that these transactions are tracked and are irreversible.  

A smart contract can therefore be termed as mainly a type of computer protocol. It digitally performs the function of facilitation, verification as well as enforcement. In other words, the performance of the contract is self-enforced and digitally recorded. Here are the key factors of smart contracts:

• The smart contract, once released, can’t be altered by anyone. No one can change its terms, not even the creator or owner
• The execution and completion of a smart contract does not require physical preparation and/or submission of documents
• Users can and may be anonymous but, the transaction details are recorded and registered
• Transactions of smart contracts can’t be revered

Smart Contracts & How They Work

The terms and conditions of a smart contract are engraved in the code itself. Typically, a smart contract interprets, verifies, and automatically executes any transaction laid down in the terms and conditions. Let us take a rental contract, for example. When it is made into a smart contract, we will see its efficacy and effectiveness. The tenant pays the rent to the house owner in cryptocurrency. As soon as the payment is made the code carries out the transactions in accordance with the terms of the contract as entered into the code. The landlord receives an advice when the transaction is successful and will issue a receipt. The first-time deposit and advance that are paid will lead to the release of the house key. The system operates on the If-Then principle. Whoever is involved in the blockchain will observe the transaction and become witness to the contract. The record of payment and key release are visible to all concerned. One action will not be completed without the other. What could be a more efficient and effective system than this?

Smart contracts specify the rules and penalties related to an arrangement in the same manner and format as a conventional contract. They also implement those obligations automatically. The contracts are implemented using a platform, which consists of two elements, currency and contracts. Smart contracts are essentially agreements in electronic form rather than paper. So, the question is ~ what is its legal status? Can they still be regulated by the existing legal framework? Do they require a new legal system to govern them? We shall see.

Secured Transactions & their Benefits: With smart contracts transaction can be carried out and terms can be enforced seamlessly between the parties concerned. The concept of a smart contract is that while one person gains something of value in return to the second party being paid. The absence of intermediaries makes it easy to enforce. In the non-smart era implementation wouldn’t be as seamless. Often third parties, usually in foreign countries, are part of the contract. This makes enforcement complicated. Blockchain platforms have made this possible. The networks are transparent as is the ability to determine and formulate who has priority over the funds in question. Parties can therefore easily accept or reject certain terms thus promote quicker and more efficient ways to implement contracts.

Regulation of Smart Contracts Around the World: Under contract laws applicable almost universally, a conventional contract must contain the following elements to be considered as valid:

• A legitimate offer
• A properly communicated acceptance
• Enforceability by lawful
• Consideration
• Consent of all competent parties in regards to all aspects of the contract

The Uniform Electronic Transactions Act (UETA) serves as a framework that states can use in order to determine the legal status of electronic signatures. It is not a federal law. As many as 47 states have passed and started enforcing it since 1999. UETA places regulations on electronic contracts, records and signatures. It states that electronic contracts and signatures are valid. They constitute a legitimate way of providing contractual consent. In the European Union (EU), Rome I Regulation is the legislation which determines the legality of all EU civil and commercial contracts. The Rome I Regulation governs the choice of law in the European Union.

Overview of Contract Law in India

Contracts in India are governed by the Indian Contract Act of 1872. It lays down the basic elements under which contracts are enforced and governed. Section 10 of the act states that “all agreements are contracts if they hold the free consent of parties willing to contract, for a lawfully accepted consideration and with an object.”

For an agreement to be enforceable by law it must consists of an offer, acceptance and consideration. By definition, it would be construed therefore, that smart contracts are valid under the Indian Contract Act 1872. A smart contract consists of the offer, the acceptance and consideration in the form of cryptocurrency. Cryptocurrencies are not consideration as legal tender under Indian law. Therefore currently, these are not enforceable and hence don’t constitute a contract. Section 5 & 10 of the Indian Information Technology Act 2000 states that electronical signatures are legally accepted. So, a contract is legitimate and enforceable if it is prepared and signed electronically.  Section 65B of the Indian Evidence Act 1872 states that contracts digitally signed shall be admissible in the courts. 

So, what about smart contracts in India?  Smart contracts basically provide a platform for contracting parties who do not know each other. Not that parties who know each other are excluded. Every contract involving exchange of goods/services and money is prone too many risks. Smart contracts can help mitigate this problem. However, the Indian Contract Act is the law which will regulate the contract. So, to be enforceable under Indian law, due caution must be exercised. Although electronic documentation and signatures are valid, the Indian Contract Act needs to be amended to make all smart contracts legal. For example, the absence of consideration should not render the contract null and void. So, though smart contracts are legal in India, several provisions need to be added to it to make it compatible with the Indian laws. For a smart contract to be valid it must fall within the boundaries of Indian contract law.

Risks of Smart Contracts: Today, Indian law allows electronic contracts and signatures. However, several Ponzi schemes which succeeded in duping many people indicate that there is lack of desired safety in electronic documents. Will blockchain technology help in safeguarding people’s interest? As things stand, there are no well-established legal frameworks to regulate Crypto-transactions, not just in India but almost everywhere else in the world. Section 35 of the of the Information Technology Act, 2000, regulated electronic signatures. It states that “Any person may make an application to the Certifying Authority for the issue of a Digital Signature Certificate in such form as may be prescribed by the Central Government.” This raises a problem as far as smart contracts and blockchain technology are concerned. When using blockchain technology, the hash key is self-generated. It is the hash key that is used as an identifier to authenticate the smart contract. Under the Indian legal system today, there is no legal authority that regulates blockchains sanctions electronic signatures in the form of hash-tags. There is a dire need for legislation in this direction.

Section 88A of the Indian Evidence Act 1872 states that “The Court may presume that an electronic message, forwarded by the originator through an electronic mail server to the addressee to whom the message purports to be addressed corresponds with the message as fed into his computer for transmission; but the Court shall not make any presumption as to the person by whom such message was sent.” Explanation. –– For the purposes of this section, the expressions “addressee” and “originator” shall have the same meanings respectively assigned to them in clauses (b) and (za) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000).

So, under the act the court presumes that an electronic record produced in court is genuine. However, it does not make any presumptions about the sender of the contract. So, if a signature obtained using blockchain technology, what will be its status? Und the act, it will only be admissible if the signature is obtained as per the provisions of the Information Technology Act. Unfortunately, this not only vitiates the system of encryption present in the blockchain technology for smart contracts, it also disallows their use. That is why we need legislation, maybe a brand-new evidence act, to replace the existing one. Remember, the current one is close to a century and a half old.

Despite the absence of legislation, some businesses have already started using blockchain technology and smart contracts to conduct their business.  

One such company is Bajaj Electricals, a leading manufacturer of a wide range of electrical equipment. The company, one among the Bajaj Group of Companies, is perhaps a key player in this industry. Its business activities affect several sectors, not just channel partners and vendors internal & external, within India and abroad. One of the biggest problems for vendors, whether supplying goods or rendering services, is that payment processes are always cumbersome. Payments are forever delayed and this badly affects their cash-flows. In most cases, customers deliberately delay payments but, even if they don’t, the very act of processing documents and payments plus the money transfer mechanism, leads to delays. This happens even in this day and age of electronic documentation and payments. How Bajaj Electricals dealt with this issue makes an interesting case-study. [see: https://www.livemint.com/Companies/BcqXQgey9fieFps9xVZxrK/How-Bajaj-Electricals-uses-blockchain-to-pay-suppliers.html ][also, https://www.thefuturescentre.org/signal/bajaj-electricals-in-india-uses-blockchain-to-pay-suppliers/ ]

According to the report in the Mint getting paid for the material they supplied to Bajaj Electricals Ltd was a cumbersome process for vendors. It involved several steps that included confirmation of delivery by Bajaj Electricals, raising of a physical bill of exchange by the supplier and submission of invoice and transport documents to Yes Bank Ltd, for payment.

This prompted the Bajaj Electricals management to explore a speedy and secure solution to replace its manual bill discounting process. The solution they hit upon was blockchain. In January, the company announced going live on a blockchain-based vendor-financing (also known as supplier financing) solution developed by Yes Bank. The use of blockchain technology eliminated the manual steps involved in the company’s bill discounting process and the entire transaction is now paperless. [Click on the link above for the full report]

Besides Yes Bank, the Mahindra Group and IBM are pursuing and experimenting with supplier finance blockchain. This was revealed in November 2016 that they are co-developing a cloud-based blockchain framework with the potential to reinvent supply chain finance in India. [Details available in these reports: https://cointelegraph.com/news/tech-mahindra-employs-ibm-blockchain-in-new-platform-to-combat-digital-piracy & https://mediacenter.ibm.com/media/Mahindra+Group+unlocks+the+disruptive+potential+of+IBM+Blockchain+technology/1_0qnjw112 ]

Meanwhile, the Institute for Development and Research in Banking Technology (IDRBT) has come out with a blueprint of blockchain technology for the banking sector. The institute has been working with government, banks and industry for building a blockchain that can serve as a common platform to launch varied applications. [see: https://www.financialexpress.com/market/idrbt-proposes-road-map-for-blockchain-technology/1451854/ ]

There is no question that the implementation and growth of smart contracts is the next step of innovation. It can lead directly to billions of overhead costs being minimized while making the whole system more efficient. Regulatory issues, however, exist, especially in India where there are no regulations regarding the finer details of a smart contract. If specific regulations are not made, a wide-ranging adoption of the technology will require the government to make amendments to the Indian Evidence At, 1872 and the IT Act. Therefore, although there is a certain amount of progress in government thinking and more businesses are adopting the smart contract concept, the law is still functioning in a grey area. Legislation is direly needed to establish an intricate framework within which to regulate the functioning of smart contracts in India.   

https://www.livemint.com/money/personal-finance/blockchain-in-personal-loans-how-it-will-redefine-the-future-of-lending-11734938973041.html 

How Blockchains will Build a Transparent Supply Chain

Using blockchains, a great game-changing technology, to enhance trust, efficiency, and speed in supply chain management.

©Prof Archie D’Souza

Faculty in Logistics, Supply Chain & Project Management at Dayanand Sagar University and Rajeev Gandhi National Aviation University.

He is also Subject Matter Expert and Faculty at the Logistics Sector Skill Council of the National Skill Development Corporation.

His forthcoming book on how blockchain technology will impact project and supply chain management will be launched soon

Blockchain technology has been the greatest game-changer in the field of finance. There are other industries too where it’s having a great deal of impact. One such sector is the supply chain. Its use in managing supply chains is one of the most promising applications of emerging blockchain technology. So great is the potential impact on supply chain management that companies like Maersk and IBM are getting together to offer logistics solutions using blockchain technology. [see: https://casepillar.com/harvad-business-review/maersk-betting-on-blockchain/ ]. Blockchain technology has the potential to help supply chain partners with some of their challenges by creating a complete, transparent, tamperproof history of the information flows, inventory flows, and financial flows in transactions. Besides the study just mentioned, several researchers have found out how blockchain might improve their supply chain operations. Seeing its success elsewhere, there’s no doubt that the technology can enable the following:

·         faster and more cost-efficient product delivery

·         make products more traceable

·         streamline the financing process

·         enhance coordination among buyers, suppliers, and banks

If one looks at the history of supply chains, we’ve seen SCM progress over the decades, sometimes rapid but, most of the time, slow and steady. However, blockchain technology is out to transform and cause disruptions in a way and at a speed that we’ve never in the past witnessed. Companies should gear up for the biggest revolution after the inventions of the steamship, steam locomotive, the automobile, and aeroplane. Companies that do not update to this new underlying technology will be left behind. Once they start using blockchain technology in logistics they will wonder how they have been managing their supply chain operations all these decades. It’s like the internet when it was introduced. Today no one can think of life without it. Once they introduce blockchain technology, companies can rebuild their approach to supply chain management at the ecosystem level and go from the frog-in-the-well to an integrated global view, all at the drop of a hat.

At the very basic level “blockchains will do for networks of enterprises and business ecosystems what enterprise resource planning did for the single company,” said Paul Brody, a leader in blockchain technology from EY. He also stated, “At its most basic level, the core logic of blockchains means that no piece of inventory can exist in the same place twice.” We will look here at some ideas on how Blockchain Technology has the potential to revolutionize and re-engineer the supply chain sector, all over the globe and across the board.

The Elimination of Middlemen & Value-sucking Intermediaries

There’s no doubt about the fact that everyone just loves to hate the middleman. Some of them, like the freight forwarder – especially the customs broker – for instance, have made themselves indispensable. Clients have been made to think that they are really useful and add value. In reality, they are value-sucking intermediaries. The advent of bitcoin along with smart contracts thanks to the introduction of blockchain technology has changed all this. In the past, the only way one could get a large number of entities to agree upon a shared, truthful set of data and a coordinated operation of the services they offer was by mandating it. The airline, shipping line, and crude oil cartels – IATA, the shipping conferences, and OPEC – had a vice-like grip on the consumer. The transparency that blockchain technology brings will change all that.

Let’s look at how a typical international consignment moves irrespective of the mode of transport, irrespective of whether the shipment is containerized, bulk, or breakbulk. These are the steps that almost every shipment has to go through:

·         Goods are packed by the shipper (exporter) and they, in turn, inform their agent that goods are ready to be shipped – need for an agent

·         Goods at the shipper’s premises need to be loaded on a truck, container on a trailer or any other means of local conveyance involved – need for a local trucker

·         International carriage should be arranged for – besides the need for a carrier, viz. airline/shipping line, an IATA or steamer agent’s services also needed

·         Insurance needed to be purchased – need for an insurer and an insurance agent/broker

·         Goods needed to be moved to an airport/port/truck or train terminal – the same trucker mentioned above does it

·         For full-container-loads – will the cargo fit into one container? – need for a surveyor

·         For less-than-container-loads – weight & volume of the cargo to be calculated and freight amount calculated based on the same – again a task for the same surveyor

·         Customs clearance of goods for exports – need for a customs broker

·         Terminal charges to be paid at the origin

·         For bulk or breakbulk shipments, cargo to be loaded on the vessel – the need for a stevedore at the origin

·         International carriage takes place. Containers may be offloaded from one vessel to be loaded on another – need for tracking information

·         Goods reach the destination and the consignee to be informed – need for a custodian at the airport/terminal at the destination

·         Again, for bulk or breakbulk shipments cargo to be unloaded from the ship – the need a stevedore at the destination

·         Goods to be customs cleared for imports and duty paid – need for a customs broker at the destination

·         Good to be delivered at the consignee’s premises – the need for a customs broker at the destination

·         In case the goods are damaged, pilfered or lost, a claim has to be made – a new professional is needed to assess the damage and help in filing an insurance claim

From the above steps, one can see how many intermediaries are needed and, the list is not exhaustive. One agency may perform more than one task alternately all or some of these tasks may be outsourced to a third-party logistics service (3PL) provider. More than the pain of dealing with multiple agencies is the opaqueness of procedures and hidden costs involved. These are two of the pain points that blockchain technology will do away with. Will it lead to job losses? Yes, but only the value-sucking ones. Anyone adding time or place value need not really fear of being rendered redundant.

Blockchain technology will ensure an impartial intermediary to process and account for all transactions. Blockchains can make it possible to build an ecosystem of business partners to share and agree upon key pieces of information, something badly needed in supply chains. Facebook’s Libra, the new cryptocurrency is also using blockchain technology. Blockchains do away with local and central intermediaries by synchronizing all data and transactions across the network. Each participant verifies the work and calculations of others. This does away with enormous numbers of redundant practices and unnecessary cross-checking. Value-suckers get eliminated and only the value-adders remain. As the information is transparent and visible, its reliability can’t be doubted. Using the technology hundreds of thousands of transactions across nodes and networks can be instantly checked on a regular basis.

Now, let’s apply the same security and redundancy principles to something like inventory. Let’s substitute supply chain partners for banking nodes. We now have the foundation for a radically new approach to supply chain partners for banking nodes. We also have the foundation for a radically new approach to supply chain management. There are several cases for this new way of working and, they are all so compelling. As Paul Brody said, “At its most basic level, the core logic of blockchain means that no piece of inventory can exist in the same place twice. Move a product from finished goods to in-transit, and that transaction status will update for everyone, everywhere, within minutes.” With blockchain technology, we now are able to trace every piece of inventory from source to consumption point. Blockchain technology is revolutionizing and disrupting the Supply Chain Sector. It’s a known fact. Here’s a brief look at what these two terms mean.

Blockchain

The terms blockchain and supply chain tend to leave a lot of people more confused than they ever were before. Blockchain is a decentralized, distributed database that holds digital records securely. Also, all records are transparent and accessible to the public, yet they cannot be altered, deleted or edited. Data, once placed in a blockchain, remains permanently etched or encrypted there. Each transaction or record inserted there registers a different block in the chain. What blockchain provides is a highly secure method of record-keeping. It is also more efficient for businesses to work with. Blockchain technology along with artificial intelligence, machine learning and the internet of things, will determine the future of supply chains and how trade is conducted in the future. Robotics is another field that will reshape the future in many ways. Their use can add a great deal of efficiency to a range of products from autonomous cars to warehousing and inventory management.

Supply Chain Management (SCM)

Thanks to the ecommerce revolution, we nowadays have the luxury of getting readymade high-quality items delivered to our doorsteps. The one who makes the purchase, whether in a store or through the net, hardly thinks of how the product was manufactured and how it got there. For the product to reach the buyer, plenty of hands and heads get to work providing raw materials to the manufacturer and finished products to the retailer. There may be any number of distribution and marketing channels in between. The process that links all the parties involved in delivering the product to the consumer is called the supply chain and managing it is what SCM is all about.

SCM has many components but logistics is a very key one. Products are shipped, stored, customs cleared and quality checked, among other things, before they reach the final consumer. These processes are time-consuming, expensive, and very often complicated. Global trade also involves dealing with parties across the world including foreign organizations, importers, exporters, national & international government & quasi-government agencies and a host of others. Hence, traders have to deal with plenty of political outcomes, international law, and high tariff regimes. With the introduction of blockchain technology, companies gain what is termed as a real-time digital ledger of transactions and movements for all participants in their supply chain network. The tool, viz. blockchain, may look very simple and facile, but it is tremendously disruptive and transformational. Blockchain technology can provide novel ways to record, transmit and share data. These are some of the most urgent and burning issues facing supply chains.

So, what then is the blockchain? In essence, it is nothing but a unique database system created and maintained by participants in a decentralized network. It offers a secure and reliable architecture for conveying information and transactions. This is all recorded digitally. It could include the exchange of data and assets among participants in a supply chain. The distributed ledger is decentralized. Also, every stakeholder maintains a copy of the ledger. For these two reasons, a single point failure or data loss is prevented. This further implies that blockchains are impervious and highly resistant to alteration and/or tampering. It also makes regulatory compliance simpler and easier as records are tamper-proof. The ultimate result is that blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment.

Every party involved, from the beginning to the end of the supply chain, every participant, every service provider, is aware of the situation when blockchain technology is used. This includes everyone involved in the transaction as well as movement, storage, and handling of the product and, at all times. The implementation of blockchain technology in supply chains also ensures that products can be tracked and traced throughout their entire process.

Another key feature of the technology is that blockchain data is immutable. Besides the reasons stated above, is the fact that digital signatures are required. This confirms information ownership. So, if multiple companies work together, they can use a blockchain system to record data about the location and ownership of their materials and products. The data is stored in the blockchain. This offers a full history of all items in the supply chain. Any member of the supply chain can see what is going on as materials move from location to location or company to company. None of these data records can be altered. Also, the data stored, along with every transaction and movement, is highly traceable. If a product or component is defective, the source of the problem can be identified with ease and so much more quickly. This improves the effectiveness and efficiency of product recalls and grievance resolution between stakeholders in the chain. Having a traceable and immutable record on every transaction and also a transparent and complete inventory of product flow help businesses make better decisions. It gives stakeholders and customers more confidence in the products’ quality. The improved transparency is also a tool for fighting fraud and counterfeiting.

Cost savings are another huge benefit of blockchain technology. There is no doubt that inefficiencies in the supply chain create a lot of waste. This is especially prevalent in industries that have perishable goods, such as the food industry. Blockchain technology provides for a much-improved tracking and data transparency system. This can help the business identify flaws and correct them almost instantly. These wasteful inefficiencies thus prevented can also lead to the implementation of targeted cost-saving measures.

The use of blockchain can also eliminate fees associated with funds passing in and out of various bank accounts and payment processors. These bankers’ fees and other transaction costs eat into profit margins of companies to a very great extent. Therefore, being able to remove them from the equation will lead to a significant drop in costs.

One of the greatest problems with current supply chain technology and methods is that one is not able to integrate data across every partner or participant in the process. In contrast, blockchain technology is the exact opposite. Blockchains are built as distributed systems that maintain a unique and transparent data repository. All parties in the network contribute to adding new data and verifying its integrity. So, every party involved in the network is able to access it. The result is that one company can easily verify the information being broadcasted by another.

Finally, last but not the least, manual data interchange is replaced by electronic data interchange (EDI) systems, not really a new phenomenon. More and more companies are relying on EDI systems to relay information to one another in real-time rather than in timed batches. If a shipment goes missing or there is a sudden change of price, every party in the supply chain will get this information automatically.

One can safely conclude from there that blockchain technology is the future of supply chain management.

 

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.

What the I in India Stands for and How we Can All Contribute to bring India to its rightful place - #1 ~ Prof Archie D'Souza

When I finished reading this story a few weeks ago on How an Indian Entrepreneur is taking on sportswear giants like Adidas & Puma, I was reminded of a book I picked up in 2009. Do click at the link to read the article:

https://www.business-standard.com/article/companies/how-an-indian-entrepreneur-is-taking-on-sportswear-giants-like-adidas-puma-119051200713_1.html?utm_source=FB_Story&utm_medium=Social&utm_campaign=Reach&utm_term=19May_Consideration_Funnel&utm_content=India_Sports_FB_Engagers&fbclid=IwAR0XANt2OcoXAkJlTZzKCsxn-O79xFku0a9puKdpfb88r27VxYKPG2l-QKM

The book I'm referring to is written by Porus Munshi, entitled MAKING BREAKTHROUGH INNOVATION HAPPEN, with a sub-title – How 11 Indians Pulled off the Impossible, with a front jacket comment by none other than Ratan N Tata who says, “This book....distinguishes itself by its detailed focus on the thought processes which inspired the breakthroughs. This innovative approach in storytelling enhances the book's inspiration quotient for the reader and challenges her or him to set out on a similar journey.”

By the time this review is published the NDA2 government will be well into doing business. So, whichever political formation is in power at the centre, like them, hate them or be indifferent, India must move on. Indians need to get on to business in the best way possible. We have it in us to take ourselves to #1, it is about time we work to our potential.

This is a review with a difference and I say this before you, the reader, ask me why I'm reviewing a book which was published ten years ago. As I stated, after I read the above article, I pulled this out of the shelf to reread it. In the foreword, titled The India Eleven, written by Rajiv Narang, Founder, Chairman and Managing Director of Erehwon Innovation Foundation, of which the author is also a part of, the following is stated in the first paragraph:

When you think of innovation, which companies come to mind? Apple, 3M, Google, Sony? Perhaps Dupont, Microsoft, Starbucks and Virgin? Can you think of an Indian company? Rarely.........The Iin India ought to stand for innovation, if we Indians have to regain our rightful spot in the world of being #1. We must transform ourselves into a nation of innovators. Do read the following before you continue with the review.

https://economictimes.indiatimes.com/jobs/view-innovation-holds-the-key-to-indias-job-crisis/articleshow/69610274.cms?

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In the year 2009, I was asked to “teach” entrepreneurship to MBA students. The university I then taught in even provided me with a whole lot of “textbooks” on the subject. My question to my dean was, “Can one learn entrepreneurship from a textbook and in a classroom?”

“One can't,” said the dean, “an MBA faculty's job is to inspire more than teach. If, when they graduate, even three students decide to start their own businesses and create employment, rather than being employed, I'd say, me decision of allotting the subject to you would be vindicated.”

I took up the challenge head on. Walked into the library, returned the textbooks, and asked the librarian to get me India specific books on innovation. Also, on a daily basis, paper cuttings on the subject from The Economic Times, Business Line and Business Standard. Remember, the year was 2009. Of course, she also handed over Porus Munshi's book to me. That's when I decided to use the 11, yes eleven, cases mentioned in the book as case-studies for analysis.

On reading the Azani Sports story, (link in para 2) I decided to reread Making Breakthrough Innovation Happen and write this piece. It's neither a book review or synopsis, it's just an inspirational article which I hope will inspire the readers to get into innovation mode, like a few of my students did ten years age.

The “I” in India stands for innovation and if we Indians have to regain our rightful spot in the world of being #1, we must transform ourselves into a nation of innovators. Going back to the year 2009, when I was asked to teach entrepreneurship to a batch of sixty students, I thought of a quote I had posted in a channel long ago during my student days, long before electronic communication became the norm. Management cannot be learnt in a classroom and from a textbook. What applies to management, is far more true to entrepreneurship.

“Use the case-study method,” my dean told me. Unfortunately, I said to myself, this has become as mundane as teaching from a textbook. There are plenty of textbooks and case-studies available on entrepreneurship. How many of them have inspired students to start their own enterprise? In fact, do textbooks and academic case-studies ever inspire?

So, I told myself, let me use the storytelling method in the classroom. While plenty of biographies and autobiographies are available, I needed some stories to inspire my audience. I found here just the type of stories I was looking for. Let me quote from the inner frond jacket. If the 1980s and 90s were the decades of Japan and quality, can the decades of 2010s and 20s be the decades of India and innovation? Can we use innovation as a springboard to tackle the challenges facing India today?

Looking at the eleven stories (I won't call them case-studies) of Indian innovation here and the country's progress in the first two decades of the millennium, I feel, it is possible. These eleven can inspire us to reach 11,000 and more.

Although ten years old, this book is still current and will continue to inspire. Of course, if the author, his sponsor and the publisher decide to bring out a new edition, I will try and be the first to lap it up.

“We are concerned about how we make the “I” in India stand for “innovation” and not “inhibition” or “imitation.” How could we create, by design, vast numbers of innovators and innovation leaders?” As Indians, we need to believe in ourselves. We need to believe that innovation led quantum growth could happen here. And, the eleven stories tell us just how. The book, as Rajiv Narang puts it, is written “in a

manner that will inspire people to actually sit up and take action, rather than just read an “interesting” story.”

Although authored by Porus Munshi, the research that went into it was conducted by teams from Erehwon Innovation Consulting and the Marico Innovation Foundation, where they launched, what they called, aptly the Challenger Research Project. They started with the question, What does it take to make orbit-shifting innovation happen? To find the answer, they met over 180 people, across forty industries and sectors. They identified challengers and orbit-shifters based on the criteria of impact, uniqueness and leverage. Every one of the stories is based on first-hand and in-depth research into individuals and organisations, not necessary businesses, that make orbit-shifting innovation happen.

The eleven stories include a newspaper, an eye hospital and a start-up, which gave FMCG giants like Hindustan Unilever, a run for their money.

When the author was about to start writing, some of the project team members suggested, “Why don't you write in a manner that will inspire people to actually sit up and take action, rather than just read an “interesting” story?” So, it was an “orbit-shifting challenge” for the author himself. And, the book is a direct result of that. I would urge everyone to read this book and be inspired and, in turn, be the source of inspiration. I must add here that the dean and college management was more than happy with my efforts and results.

So much as far as the book itself. What is in it for India? Are we going to be a nation of innovators or immitators? India is beset with problems, a challenge for any government in power. Amidst these problems are opportunities. Over a million people, whatever the government may claim, are still without electricity. Can't we find a way of harnessing the sun, wind and bio-mass to ensure cheap sources of energy to every individual in every village, town and city?

Can't we find a bio-degradable substitute for plastics?

Can't we find a way of bringing cleaner water and sanitation to every village? Plenty of funds are available with the government for this purpose.

Can't we come up with cost-effective, sustainable ways of making our cities more liveable?

There is no shortage of opportunities. Every one of them calls for innovation waiting to happen.

If Dr Govindappa Venkataswamy, who founded Aravind Eye Hospital despite suffering from an illness which handicapped him for life, could make a dent in global blindness, why not many of us in other areas?

Here are lessons for every Indian, lessons which will help us realise our goal of taking India to its rightful position of #1.