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?

📷

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.

Transportation, Logistics and Supply Chain Professionals – current & future needs Prof Archie D'Souza

My article is on page 38

https://bcic.in/upload/pdf/Synergy%20March%202019%20Web.pdf

Transportation, Logistics and 

Supply Chain Professionals – 

current & future needs

Prof Archie D'Souza

India has consistently, for almost three decades, been among the fastest growing major economies of the world. While serves 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. Even as I write, the Adani Group has been awarded 5 airports.

These investments have resulted in a great deal of opportunities for professionals at every level.Thanks to this and various initiatives from the HRD and Labour & Employment ministers, 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. 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 need to move from farms to consumers. Before goods leave their origin, they, almost always, need to be packed. 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.

What is so notable is the fact that while professionals in many industries may have observed a notable decline in skills amongst recent graduates, during the past couple of decades, the opposite is true in the field of SCM.  I can safely ascertain that we’ve become a profession and a recognised one at that.  As stated, several universities are offering specialised courses in these areas.  This is the trend world over.  Globalisation of the economy has become a reality that we can’t run away from.  Technology has been upgraded and supply chains have become very sophisticated.  Therefore, good quality SCM professionals are a necessity without which no economy will survive.

In the past and to some extent in the present too, universities have not been working in sync with industry.  However, in the field of Transportation and Logistics this trend is changing.  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.  Centres of production and consumption are no longer close to each other.  International transportation infrastructure connects the two.  Without shipping, air and land transport services this would never have been possible.

Food grains, fertilisers, 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.  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.

What is Logistics?

Logistics 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 logistics. Professionals in this field, i.e. logicians, 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 currently employs several crores of people and will create many more jobs 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 organisation, 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 are needed. Also required are analysists, software developers and experts in robotonics 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.

[The writer is a logistics professional and currently adjunct professor at Dayanand Sagar University]

The Golden Quadrilateral

https://sunriseacademyonline.blogspot.com/2012/03/thegolden-quadrilateral-archie-dsouza.html

I had written this in 2012. sharing it again to update based on new developments 

The Golden Quadrilateral

Archie D’Souza

The Golden Quadrilateral is a highway network, envisaged during Atal Bihari Vajpayee’s prime minister-ship.  It connects India's four largest metros, viz. Delhi. Mumbai, Chennai and Kolkata.  As these four highways form a quadrilateral of sorts, it’s been given this name.  Besides these four metros, four others from among India’s top ten, viz. Bangalore, Pune, Ahmedabad and Surat are also served by it.  It is part of the largest and most ambitious public infrastructure project in the country's history, one with a social engineering goal at its heart: Much as the U.S. interstate highway system mobilized American society and grooved the post-war economy, India hopes the Golden Quadrilateral will push the country's economic engine into overdrive—bringing the benefits of growth in its booming metropolises out to its impoverished villages, where more than half the population lives.  It is the first phase of the National Highways Development Project (NHDP).  It consists of 5,846 km (3,633 mi) of four/six lane express highways at a cost of 60,000 crore (US$ 13.2 billion).  In January 2012, India announced that the four lane GQ highway network was complete.  The 5,846 km of highway connects many of the major industrial, agricultural and cultural centres of India.  Most of the stretches within the GQ are not access controlled.  However, certain safety features such as guardrails, shoulders, and high-visibility signs are in use.

The project was initially announced in 1998 by Sri Vajpayee.  He has also been credited with giving the project its grandiose name.  The Golden Quadrilateral is exceeded in scale only by the national railway system, most of it inherited by us from our colonial rulers who started constructing it in the 1850s.  For decades after independence, thanks mainly to shortage of resources, India’s founding fathers believed that socialism was ideal for India’s economic growth.  This was in keeping with the ideals of our founding fathers, Gandhi and Nehru.  Severe restrictions on imports were also in place.  In the mid-eighties, thanks to growing prosperity and availability of capital, the country began opening its markets to foreign investment.  From a controlled economy we started moving towards a free-market one.  This led to very high levels of economic growth.  With Vajpayee’s predecessors having laid the foundation for a modern India with high levels of growth, it was only natural that he continue the process.  Roads were the most visible way to show that the government business even though they may have hardly looked at other areas.  The project started by him was successfully carried forward by successive administrations led by PM Manmohan Singh. 

Today, fourteen year later, the GQ is considered to be among the most elaborately conceived highway systems in the World.  While India was growing into a visible soft-power worldwide, PMs Vajpayee and Singh realised that hard infrastructure to needs to be developed.  So, along with implementing this highly visible project PM Singh conceived of another almost invisible project – the Pradhan Mantri Gram Sadak Yojana (PMGSY).  We shall be looking at this in more detail in another article.  Coming back to the GQ it is considered by many as a masterpiece of high-tech ingenuity.  Along with the strides we’ve made in software, this could be looked upon, in many ways, as a calling card for India in the 21^st Century.  The GQ definitely makes for an excellent sight on a TV screen or computer monitor.  There’s plenty in it that should make its designers and the rest of the country proud.

While the road surface is state-of-the-art, the system and design too are technologically very advanced.  So advanced, that the designers claim that one day, the tiniest of ruptures will be detected by sensors and communicated to maintenance crews who will be immediately dispatched to the place needed.  Toll collections too, already computerized could be instantly tabulated against long-term projections.  Accidents, whenever and wherever they occur, would trigger instantaneous responses from nearby emergency teams, who are all ready for action at very short notice.  The building of the highway has per setriggered a great deal of economic activity, generating development and a great deal of employment with it.  This has definitely quickened the pulse of the nation.  We shall have a look at the economic impact of the GQ and other infrastructure projects at a later stage.  What it has done that is visible to all is that it has boosted traffic volumes and, with it, brought crores of workers from rural areas moving into medium-size and large cities.

When it was first envisaged, the government had estimated that the GQ project would cost a staggering Rs 60,000 crore at 1999 prices.  However, it is one of the very few, perhaps only, government project that has been completed built under-budget. At 30,858 crore as of AUG 2011, the amount of money spent by the central government is about half of initial estimate.  Another announcement was made in September 2009.  The existing four-lane highways would be converted into six-lane ones.  This expansion has not been progressing as quickly as desired.  There are two main reasons for this, one – land acquisition constraints and two – re-negotiation of contracts.

The agency managing the GQ project is the National Highways Authority of India (NHAI), which comes under the Ministry of Road Transport and Highways (NHAI).  India’s first controlled-access toll road, the Mumbai-Pune Expressway is part of the GQ.  This project, however, is not funded by the NHAI and is not on the GQ’s main route.  This has been funded by the Infrastructure Leasing and Financial Services (IL&FS), a major contributor in infrastructure development in India.  The IL&FS has also contributed in a big way in the GQ project.

ECONOMIC BENEFITS

One of the most direct benefits of the GQ project is that it establishes better and faster road transport networks between many major cities and ports.  This obviously provides a major impetus to smoother movement of products and people.  The impact is not restricted to larger cities and major ports.  Also enabled is industrial development in smaller towns.  This helps in job creation in these places.  With job creation come increased purchasing power resulting in demand for agricultural produce and consumer products.  Better access helps farmers transport their produce to the local markets faster with reduced spoilage.  Produce can also be moved from interior places to the bigger towns and cities as well as to ports and airports for export.  Road construction, in the first place, drives economic growth directly pushing up the demand for cement, steel and other construction materials.  This is a sector that grew by 12.6% in the financial year ending March 2008.  The transport sector is another direct beneficiary as better highways give a further impetus to truck transport throughout India.  The GQ’s sheer size at over 5800 km is phenomenal.  It connects all the major population centres in the country, viz. Delhi, Mumbai, Chennai and Kolkata.

A huge economic fallout from it is very similar to the effects that the US highway system built in the 1920s & 50s and the German autobahns had.  The improved connectivity aided goods and services to be moved to and from very isolated areas leading to the economic development of these places and free movement of people.  As we have seen in the previous paragraph, the construction of the highway led to several employment opportunities and demand for cement, steel and other construction materials.

Manufacturing is another area which has received a great boost leading to the creation of a great deal of jobs.  The Hyundai plant near Chennai directly employs around 5400 people.  This not only feeds the nation’s increased desire for cars but also helps in several other ways.  Like several other companies on the GQ, Hyundai creates ancillary and support industries, leading to indirect employment.  An automobile manufacturer will require to be supplied with accessories like windshields, headlights, rear-view mirrors, carburettors, shock-absorbers, etc.  Many of these units will be located in the proximity of the purchaser.  All these companies, Hyundai include, need the services of truck drivers, warehouse workers, record-keepers, etc.  They also need to use the services of freight forwarders and carriers.  Hyundai’s cars are not just sold in the domestic market.  They are also exported.  This led to the commencement of RO-RO shipping services from Chennai, a possible boon to other auto manufacturers.

Hyundai is just one example of a successful manufacturing unit on the GQ.  Every factory that exists on the GQ, including Hyundai, creates its ownecosystem.  Employees and visitors need transportation, cafeterias, etc.  This has led to opening of scores of specialised niche units.  These in turn are quickly filled by energetic entrepreneurs.  Remember, India has more of them than any other country.  Only Thailand has a higher percentage of its population compared to India engaged in entrepreneurship.  Hyundai, itself has 83 ancillary units in the vicinity of its factory.  The cascading effect is tremendous.

Taking a cue from China, the Indian government created or let the private sector set up several Special Economic Zones (SEZs).  This is a topic that shall be dealt with in detail elsewhere.  These SEZs provide new state-of-the-art infrastructure, tax concessions, freedom from stringent labour regulations, etc. to any company – Indian or foreign – that sets up units here.  The products/services made here are mainly for export markets, most of them to the developed World.  Most of the companies that have set up units in the SEZs are foreign MNCs taking advantage of the highly skilled workforce and low input costs.  There are today, over 200 SEZs all over India.  These earn the nation over US$ 15 billion in foreign exchange, thanks to the exports generated from units situated there.  In addition, we have over half a million people employed in these SEZs.  One factor that has played a significant role in India’s high GDP & export growth is the vitality of these ecosystems.  This factor is definitely partly, if not wholly, responsible for India's consistently high economic growth rate of 9 percent a year for most of the decade.  In terms of economic growth, we are second only to China among comparable market economies.

However, unlike China, India is a vibrant democracy where people’s representatives are elected and need to stand for re-election every five years.  The elected members of national & state legislatures and local bodies cannot afford to antagonize their voters.  Freedom of expression and the right to protest are enshrined in the Indian Constitution.  Therefore, protests by affected people, very often peaceful but sometimes quite violent, are a regular phenomenon.  Clashes take place over land acquisition for the highway, both new and expanding, and setting up of industrial clusters, which are what SEZs are, and individual units.  Many experts on the subjects have termed these as inevitable.  Remember, we live in a very densely populated country.  We have more than a billion people living in an area about a third the size of the United States.  So, it is very unlikely that even a single square metre of viable land would remain unspoken for.  New factories gobble up farms.  Widening highways leads to the displacement of several small shops, restaurants, other businesses and residences too.  While roads do change everything and are a boon from several people, not all of the change affects everyone positively. 

Although land disputes are not within the scope of our discussion, they are so common that one cannot avoid touching the topic.  Whenever a new highway is built or an existing one widened, it destroys restaurants and shops as well as farmlands and residences.  True, landowners are compensated.  However, quite often, the levels of compensation are not always enough.  Politicians too very often incite violence taking advantage of the genuine plight of farmers who very often know nothing else besides farming and are left helpless without their land.

Yet, the GQ has been a great boon to the agricultural communities.  Thanks to improved transportation, as we have already seen, agricultural produce from remote areas is able to move to the biggest of cities.  Compared to the numbers of farmers displaced those that still have land are much more numerous.  Paved roads, many of them constructed under the PMGSY, connect villages to secondary highways and then to the GQ.  Another innovation, the cell phone, has helped these farmers to trade with buyers in distant locations.  Markets have been opened up beyond nearby towns and villages.  Automobiles and the better roads also cut down the amount of time needed to haul goods to markets.

Without a shadow of doubt, the automobile industry provides employment opportunities to a great deal of people.  The automobile also helps improve the movement of people and goods.  Today, the annual sale of passenger cars exceeds 1.5 million in India.  However, there is a downside also to it.  What is good news for Hyundai, Ford and other auto units on the GQ can be bad news elsewhere.  In spite of huge oil reserves, India has yet to reach self-sufficiency in energy production.  We rely heavily on coal and foreign oil imports for energy needs.  This means that a volatile global oil market could potentially cripple not only automobile manufacturers, but also the people who drive the automobiles.

However, opportunities do exist that can convert these shortages into our favour.  India has still to tap its resources in areas like solar, wind, hydropower, and biomass production. An estimate prepared by the Global Energy Network Institute reports that the sum of India’s potential renewable energy sources is 152,000 megawatts.  This interestingly, is greater than the current total installed generating capacity of the entire country.  Luckily, the governments at the centre and states are well aware of the dangers of relying primarily on fossil fuels for energy.  Hence, they are developing a regulatory framework to promote energy diversification.

The developed World has still to recover from the recession that hit it not long ago.  Despite this fact and the continuing economic downturn there, India is heavily industrializing.  While population growth continues at menacing levels the markets for goods and services is also growing rapidly.  It is this persistent economic growth that is leading to increased incomes for more people and therefore further automobile sales.  This will mean greater demand for energy.  Therefore, the nation will be forced to seriously consider renewable fuel sources not just for electricity, but also consider alternative fuels for vehicles. 

In any situation, problems and benefits exist side by side.  Our nation’s workforce today is highly motivated and creative.  Companies have been offered tax holidays/concessions and infrastructure in these SEZs which are dotting the countryside.  The result is greater foreign and domestic investment leading to greater employment.  The number of Indians living below the poverty level has seen a dramatic drop in recent decades.  However, there is a downside to it.  Improving transportation of products requires a better highway system.  This results in displacing farmers and using their land for roads instead of growing crops.  More cars on the road lead to higher pollution and congestion levels.  Safety is also a factor that needs to be taken into account.  However, the end result is a prosperous and industrialized India.

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The Need for Efficient and Effective Logistics in E-Commerce

The Need for Efficient and Effective 

Logistics in E-Commerce

Prof Archie D'Souza

Logistics is the key enabler in driving change in e-commerce in India. The size of E-Commerce Logistics in the world is today USD 2.5 trillion, the US at 550 billion is, by far, the biggest market; next comes China, a distant second at 140 billion; Britain is another large market with 110 billion. In contrast, it is just 20 billion in India, but growing at an annual compound rate of 35 to 40 percent. This means that it will more than double every three years. China moves 52 million shipments a day, compared to 1.8 to 1.9 for India. The e-commerce logistics ecosystem is supposed to grow year on year at 50%. Non-metros will drive this growth and logistics will bridge the gap. Increasing internet penetration, smartphone usage, and language diversity on e-commerce platforms have led to substantial growth of e-commerce platforms in India.

Unlike traditional retailing, e-commerce entails the delivery of merchandise to the buyer. While this does away with the need for shop shelves and expensive real estate, distribution, and fulfillment centres need to be set up at strategic locations. Warehouses though can be located away from residential areas where rents would be far less. They, however, can never be too far from the ultimate customer. Further, last-mile connectivity becomes crucial, a big challenge in big cities where traffic congestion is a major problem. The result is a sector that is seeing very rapid growth. This discussion is about efficiency and effectiveness, so we'll skip the statistics.

One of the reasons why India's logistics industry has lagged behind is because of slow technology adoption. It hasn't been on par with international standards. Thanks to e-commerce this is changing. The demands of e-commerce, with the customer wanting immediate deliveries and information in real time, have forced the logistics industry to adapt.

Customers today have a variety of hand-held devices with myriad apps. They place orders at the click of a button and expect instant information and immediate delivery. The digital revolution has gone beyond the social media. Today, analytics, the cloud, Artificial Intelligence (AI) and Internet of Things (IoT) has caused revolutions that were unimaginable. The entire landscape has changed. A report published by the Texas based Intel IDC states that 70% of Indian firms will deploy AI before 2020. The logistics industry, to catch up, will need to hire qualified AI professionals. No logistics firm will be able to thrive without professionals in AI and Machine Learning. It looks like SAP and Blockchain are passe. The former definitely is, the latter will be soon.

There are multiple components in digital space. The mobile is but one of them. It has, though, resulted in logistics and customer service taking a quantum leap. Among the things that mobile apps provide are dashboards, analytics, and real-time customized business information. In addition, what is also required to be provided to the customer last-mile delivery information along with timely deliveries. The right type of vehicle with the right delivery staff is needed here, a service no app can provide.

Technology has also helped in creating previously unheard-of value-added services such as a trucker delivering a shipment and, immediately thereafter, picking up a fresh one. For this to be done, interlinked processes are called for. Quality and quantity parameters ought to be in line with the system processes. Delivery staff ought to be able to do a product-wise check. For this, they have to be qualified and skilled. The day of the unqualified driver is gone. Also, without mobile devices and bar-coding (not really a new technology) this would never have been possible. Even the card-swipers have become mobile. This helps pass on information on last-mile delivery and first-mile pick-up immediately. Electronic payments too ensure that services like COD are provided to the customer.

One of the things that scanning devices have done is that they've enabled users to assume that every package can be traced and tracked in real time. Not long ago, this was inconcievable and, till very recently, a service available only to the courier and express cargo industries. With Radio Frequency Indication (RFID), and using mobile technology, full visibility has been rendered possible. This has resulted in customers deriving exponentially enhanced value, never envisaged before. RFID scanners are now available at unbelievably low costs. So, packages can be traced without the need for package-level individual scans. Surely, this will not only revolutionize logistics operations, it will also result in much better customer service.

Demand elasticity is another challenge that e-commerce companies have to contend with and, with it, the logistics service providers. There are times, like at festivals for instance, when there is a spike in demand for goods. This puts a great deal of pressure on the logistics service providers. E-tailers' order volumes can jump to unimaginable levels. Then, in very quick time, they could shrink back. Scaling up and down so rapidly would be impossible without the right use of technology. Almost every e-commerce player has multiple service providers for pick-up, line-haul, international carriage, storage, and other services like customs clearance. It is only an integrated technology interface with multiple service providers that can aid this scaling up or down.

So, creating an architecture that has a scalable environment becomes imperative. This should have a scalable environment tightly integrated with analytics, IoT, AI, and Machine Learning, all this, with the right levels of security. Only then can the demands of elastic logistics be met.

Due to the lifestyles of most people and also, due to long distances between places of work and residence, the demand for fixed-time pick-up and deliveries is increasing. This is a service given not just to the customer but also to the customer's customer. Would this be possible without technology?

Storage places or warehouses too have changed in a way that's unbelievable. Fully automatic warehouses, using robotics is becoming the trend. Robotic Process Automation (RPA) is a concept whose time has come. Its adoption is a foregone conclusion. It is transforming customer service and, at the same time, reducing costs. Like robots, it won't be long before drones and driverless vehicles become the norm rather than the exception.

We are today at the cusp of a revolution, the scale of which was never thought of. The last innovations to have such a sizeable impact on logistics was perhaps the introduction of the oceangoing container and the wide-body aircraft. If India has to catch up with the developed world, we need to see all this happening here.