— Vikas Sarangdhar,
Director Research, Gartner, Inc.
Gartner, Inc. is the world's
leading information
technology research and
advisory company that
delivers the technology related
insight necessary to
make the right decisions.
Vikas Sarangdhar shares
his outlook on the logistics
and supply chain sector in
India in this interview with
Jibran Buchh.
What is your view on the
Indian logistics sector?
In terms of logistics, there is substantial
growth potential; however,
the Indian logistics sector is
still immature and there are many
inefficiencies which need to be
overcome. As a result, the logistics
cost in India is 13 per cent of GDP
vis-à-vis developed countries like
the US and Germany where it is
only 8 per cent to 9 per cent.
The technology adoption in
logistics in India is very low.
Things like inventory management
and supply chain visibility,
which are facilitated by technology
and information systems, are
lacking in the Indian logistics
industry. So a logistics company is
seen more as transport provider.
We have a fragmented and
regionalised logistics industry
which consists of small players.
One may find companies which
are big but only in their own
region not throughout the subcontinent.
Distorted taxation system is yet
another problem and requires the
implementation of GST at the earliest.
The roads and railways are 40 to
50 years old. It's of great importance
how these problems are
addressed.
What is the current scenario
with regard to warehouse
infrastructure?
In logistics, about 25 per cent to 28
per cent of cost goes into warehousing.
What's peculiar about
our warehouse industry is that a
large amount of pie is dominated
by unorganised sector which is
around 50 per cent. The capacity
of the industry is 70 to 85 million
metric tonnes; the statistics may
not be exact because the industry
is driven largely by unorganised
sector.
Only 30 per cent of this industry
is outsourced, whereas there are
people globally who manage
warehouses and logistics players
offer end-to-end services. So, in
developed countries the number
is roughly 75 per cent for warehousing
operations outsource.
This is one of the key differences
between the developed nations
and India.
How much investment is
expected in upgradation and
expansion of warehousing infrastructure?
Around $200 billion in logistics
infrastructure of which a major
chunk of $50 billion to $75 billion
would majorly spent on warehousing
and $100 billion would
be spent on warehousing infrastructure.
The contributors are
going to be both government and
private players because of the
proximity of warehouses to rail,
port and other amenities, which
can only be achieved when the
government steps in. So there is
going to be a balance in planning
and investment of warehouses.
Can you share your outlook
on supply chain management
in India?
When we speak about supply
chain it encompasses all the verticals
of product planning, demand
planning, sourcing, manufacturing,
distribution and all elements
of end-to-end supply chain.
In terms of overall business outlook,
India has an opportunity; it's
just that after the downturn, in line
with the global markets, the
emerging markets like India and
china are also getting stabilised at
a new normal which will be slightly
at the lower level vis-à-vis what
the country used to grow at.
Comparing India with other
emerging markets, the per capita
GDP is low but there is a lot of
potential.
What are the loopholes and
challenges in the supply
chain management?
Indian subcontinent faces different
challenges vis-a-vis developed
nations. In foreign countries
the problem is demand; in India,
demand management has been a
great challenge.
India still has a long way to go in
terms of best practices. Maturity
level of most of the companies on
demand driven value network is
low. DDVN is essentially about
being customer centric.
Apart from the above-mentioned
points, the key challenge is
the lack of human resources followed
by infrastructure in terms of
logistics, power, and water.
The other challenge which
exists in a vast country like India is
that the customer base is diverse
and widely distributed. The point
I am making is that the real
growth which will occur in India is
from rural areas and remote locations.
For companies to win over
the Indian market which is huge,
they need to have right end-toend
supply chain strategies in
place, covering network strategy,
proper human resources, and
infrastructure.
The other key challenge is
volatile demand, needs and preferences
consumers, and customers
are changing rapidly,
hence creating uncertainty in the
demand patterns.
Tell us about Gartner,
Inc. and its plans in the subcontinent.
Gartner took over AMR in 2009.
The company used to be a global leader in supply chain research
and advisory services. Since then,
business is growing quite fast
across the globe. The main focus
used to be on the US and now it is
also on the EU and APEC. Hence,
we are investing in resources and
infrastructure in this region.
We are focusing on end users as
well as providers. We already have
world-class providers like our
clients Wipro, TCS, Infosys and
Geometric. Research and advisory
front remains the main point of
focus. We engage with our customers
calls, provide them access
to our global research base, and
conduct seminars and conferences
to present best practices.
We act like coaches and help
companies to build their own
capability in supply chain through
world-class knowledge.