“ GST alone can’t improve supply chain practices”

Renowned global supply chain expert, Dr. John Gattorna believes that supply chain practices are undergoing a critical phase of churning triggered by digitization and sustainability issues. In a recent conversation with Ritwik Sinha, Dr. Gattorna also emphasized that GST alone will not be enough to improve supply chain practices in India. Edited excerpts…

In your reckoning, what are the distinctive churnings/trends you are noticing in the supply chain domain in the global market place? 

dr. John Gittrona

There are a number of big converging forces which are as follows:

  1. Everything is getting faster, as digitisation becomes more widespread, and customers keep up their relentless pressure for faster and faster response times;
  2. Globalisation moves by companies is perhaps starting to faulter, and we may see a return to more regional/local production; this in turn will help companies become more agile/responsive to customer demands.
  3. Sustainability will be taken more seriously, and companies will factor this important dimension into their SC strategies going forward;

The immense technological innovation – IoT, analytics, robotics,AI, etc. – how have they begun impacting supply chain practices? 

Indeed, all the recent ( few years)  technological developments have meant that we have at our fingertips more technology than we can adapt to in the short term.

In short, this means that the leadership of major enterprises must start using this extra technology to make faster decisions and move to a faster ‘rhythm’ across the entire business. Few companies have achieved this, the exception being Zara-Inditex.

With India being an over $2 trillion dollar economy and one of the fastest growing markets in the world, do you think supply chain modules pursued here are reaching to a matured stage? Particularly in the new age domains like organised retail and e-commerce? 

India has the technology, but has a long way to go to reach maturity in SC thinking. By this I mean, SC network design must be driven by a new understanding of customers and suppliers [ the behavioural factor], and this is not evident in India. It is true that eCommerce is opening things up to the masses, but there is still a long way to go as this is just one of several potential channels/pathways to customers. The concept of ‘multiple supply chains’ running in parallel is still relatively unknown.

A popular belief in the market is that the implementation of GST will be that ultimate panacea to give facelift to supply chain practices. Do you also subscribe to this theory?  

No one factor will ever be a panacea. Certainly, the new GST will simplify hitherto contorted practices, and assist in freeing up cross-border flows. But it is only the beginning. Many more innovations are still needed to get SC practices where they should be in India.

 

(Dr. Gattorna will be the lead speaker at ICC’s 7th Logistics Excellence Award to be held on 27th February in Delhi)

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