Ptak India 2016 Make in India Case Study

ISCEA Ptak Prize Global Supply Chain
Case Competition 2016

Asia Qualifier INDIA Finals
Live India Finals hosted by NMIMS Mumbai
19th & 20th November 2016
This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Associate Director, KPMG and Chairman
ISCEA India Advisory Board. No part of this text may be reproduced in any form by any electronic or mechanical means (including
photocopying, recording, or information storage and retrieval) without permission in writing from the author except for reading
and browsing via the World Wide Web.
Copyright - Sandeep Chatterjee, KPMG, 2014. All rights reserved.
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Introduction
My definition of FDI is 'First Develop India'

PM Narendra Modi
Whether or not Narendra Modi's ambitious "Make In India" campaign successfully draws foreign
manufacturing to India, the proposed infrastructure investments will have a significant impact and
lasting consequences for the subcontinent's supply chain.
With newly elected Prime Minister Narendra Modi at the helm, India is seeking to emulate the success
of Japan, China, and other Asian Tiger economies by doubling down on domestic manufacturing
with its Make In India campaign. Launched on the eve of PM Modis landmark visit to the United
States last year, the campaign seeks to encourage manufacturing in the country and attract international
investors and industrialists. The ultimate goal of Make In India is to raise manufacturings
contribution to the countrys GDP from 15 percent to 25 percent, bringing it more in line with other
developing countries like China (31%) and Korea (35%).
PM Modis government is calling on all of Indias ministries related to manufacturing, from heavy
industries to telecommunications, in a collective push to make the country more attractive and
accessible to foreign investors. Currently India is ranked 139th out of 189 countries on the World
Banks Ease of Doing Business Index. The proposed investments are largely focused on reinforcing,
and in some geographies, building a reliable infrastructure to handle the supply chain challenges that
will accompany a massive influx in manufactured goods.
Though in its early stages, the campaign has already attracted notable participants. Electronics giants
Samsung and Sony have recently announced plans to set up manufacturing bases in India. Samsung is
reportedly establishing manufacturing units in the country to produce smartphones and tablets, with
investments estimated to be between US $500M and US $1B, while Japanese multinational
conglomerate Sony is launching an Indian manufacturing unit very soon, according to Sonys Indian
operations head Kenichiro Hibi. Chinas Ambassador to India Le Yucheng has also said that Chinese
firms are expressing interest in setting up manufacturing facilities in India; Chinese e-commerce
conglomerate Alibaba Group has already made commitments to serve the Indian market.
As the Make in India campaign begins to pick up steam with foreign investors, international analysts
are beginning to voice concerns about how high the ceiling really is for domestic Indian manufacturing
and the export economy. Aashish Mehta, Associate Professor at the Global and International Studies
Program at the University of California, Santa Barbara, cautions that the sweeping changes in labor
laws, land rules, environment regulations, and education policy unleashed by the government come
with significant social costs and ultimately may not result in enough good jobs. He cites the reality
that mechanization and greater competition from other developing countries should also be taken into
consideration. If the economic climate surrounding Make In India changes, foreign companies will
be sure to relocate quickly. Investors seem to get this short-termism, Mehta quipped. He
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acknowledges the vital importance of having a solid manufacturing base but adds that, It is just too
costly to get wrong.
Indeed international and domestic factors may conspire to scuttle Modis high hopes for Make In
India over the next decade. Large scale manufacturing pushes like Make In India require a young
population willing to work long hours on factory floors. The population of workers aged 1524 in
India and the other BRIC countries is projected to fall by 61 million by 2030 and the over-65-year-old
population is expected to rise almost 50% by 2020. Foreign manufacturing companies are more likely
to set up shop in other fledgling economies like Indonesia and Mexico where the population of young
people is projected to grow rapidly.
Irrespective of the ultimate outcome of Modis Make In India, the nature of the subcontinent's
supply chain is guaranteed a makeover. The urgency behind Modis infrastructure initiatives will
inspire rapid expansion and hardening of the nations freight transportation network to accommodate
the projected increase in traffic. Indias national railway budget was approved earlier this year and
included expansions to the nations total rail freight capacity by 50% to 1.5 billion tons per year.
The supply chain makeover is a much needed one for India. The 7th largest country in the world in
terms of land area presents a unique logistical challenge for domestic and international manufacturers.
Before any of the planned and proposed improvements to Indias infrastructure and domestic
bureaucracy are enacted, those considering business involving the Indian supply chain should consider
several factors:
A 2014 World Bank survey ranked India 46th in global trade logistics performance, placing it
behind some of its biggest competitors for foreign manufacturing investment like Mexico and
Turkey
Planned domestic infrastructure improvements will be costly, especially freight rail expansion
expect those costs to lead to higher freight tariffs
Perishable and cold supply chains face a 20% spoilage rate on average due to inefficiencies in
Indias domestic freight infrastructure
India is approximately two weeks farther from the United States by shipping line than China
Frequent power outages may cause delays in manufacturing schedules and an increased
likelihood of defective parts
The Indian bureaucracy itself poses a challenge: government processes are complex and
confusing, and have the potential to cause further delays and frustrations
India lacks a developed supply base: raw materials and parts are still often imported for
production
The import process to the country remains complicated and non-standardized, causing higher
than normal requirements for inventory to offset unpredictable delays
The lingering question remains: will Modis many infrastructure investments bear fruit in time to
attract enough foreign manufacturers to call Make In India a success? As the country enters into
this period of rapid industrial growth, the already struggling logistical performance of India is almost
guaranteed to suffer in the short term.
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Public works projects on existing rail lines and roads are sure to cause delays in an already heavily
backlogged transportation system. Congestion at major ports is also likely to worsen due to an inability
to quickly acclimate to increased traffic as more international manufacturers move to India. Until India
begins to see returns on its domestic investments, the unavoidable headaches, bureaucracy, and delays
that come from gambling on the Indian Supply Chain threaten to eliminate any savings foreign
manufacturers may see from moving to India.
Now is the time for an Indian Strategy
In 1602 when Sir James Lancaster arrived in India, commanding the first trading expedition of the
East India Company, the economy of the Indian subcontinent dwarfed that of the British Isles. What
many people in the West don't realize is that, except for the last 500 years, this has always been the
case. What even fewer realize is it likely will be true again. A huge, educated, and motivated population
with access to capitalsuch as India'swill demand a strong economy, and India is reclaiming its
traditional role as an economic power.
Considering the bright future that lies ahead for India, now is a good time for companies to develop
their supply chain strategies for serving the country. India's 7-percent growth rate for its gross
domestic product (GDP) may not be as attention-grabbing as China's. But India is the second fastestgrowing economy in the world, and it is more diversified. Its burgeoning middle class is employed in
a wide variety of business services, leading some experts to believe that India will be more resilient in
the current economic downturn than China.
India's government has begun implementing tax-law changes that will make delivering goods to
consumers and businesses much more efficient, making products more affordable and spurring
demand. The government also is gradually lowering barriers to foreign direct investment, and soon
retailers will be able to operate in India by taking majority positions in Indian subsidiaries.
Although India offers a huge growing market for outside products, setting up a distribution network
there presents a host of challenges in areas ranging from infrastructure to human resources, from
warehouse site selection to hiring a trustworthy trucker. These challenges shouldn't discourage
companies from expanding into the country. Rather, they should simply motivate firms to start their
planning now. The popular belief is that if a company starts to navigate the obstacles now, it will be
well-positioned to reap the benefits when government regulation and economic reforms finally align
behind this very large consumer economy.
Breaking down barriers to Investment
India has not always offered as attractive an investment opportunity as it does now. When India
established its republic in 1950, the government tightly controlled the economy. The country began
moving to a free market economy in the 1990s, and in 1991, the government began instituting a series
of economic reforms designed to open its markets and eliminate some restrictions on foreign trade
and investment. Those reforms have fostered the development of a growing middle class with an
interest in Western-style consumer goods.
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This young, highly educated segment of the population will continue to drive India's economic boom.
In fact, in a 2005 A.T. Kearney survey, global executives rated India as the greatest consumer market
opportunity, placing it second highest on the consulting firm's Foreign Direct Investment (FDI)
Confidence Index.
India's state tax system historically has hindered the establishment of regional distribution networks.
Many of the 29 states and seven Union Territories that make up the federal state of India have levied
a local sales tax, known as a CST (for Central Sales Tax), on manufactured goods. The CST is the
primary source of revenue for some of these state governments, so enforcement is strict; guard towers
at state borders are a common sight, and vehicles are required to stop and pay a tax to secure admission
into many regions or municipalities.
The CST applies when merchandise moves between states as well as when goods change owners.
(Stock transfers among a company's internal warehouses, however, are not subject to the CST.) This
has motivated most of the big companies in India to have warehouses in every major state. As a result,
consumer goods companies cannot easily centralize their inventory. Instead, they typically use a
number of smaller warehouses to get the products into the various markets, and then turn the goods
over to local distributors or small retail stores. This practice, of course, adds more inventory, handling,
and transportation costs to products.
Fortunately, this situation is about to change. The government plans to end CSTs completely by March
31, 2017, in preparation for a national Goods and Services Tax (GST). The national GST is intended
to integrate taxes and duties on services and goods at both the state and the federal levels. As a result
of this change in the tax structure, it will become more economical for a company to set up a
distribution network with central or regional warehouses.
With the promise of a more cost-efficient distribution network and a large base of consumers
clamoring for goods, more and more companies may be enticed to enter the Indian market. Before
they plunge into this complex environment, however, they need to clearly understand and plan for the
distribution challenges that they will face.
The Warehouse Scene
While regional distribution centers promise greater efficiency and effectiveness, few facilities in India
today could fit the bill. Called "godowns," most Indian warehouses owned by multinational companies
are small in sizebetween 5,000 and 25,000 square feetcompared to the 250,000- to 1-millionsquare-foot structures found in the United States or Western Europe. Existing Indian warehouses
tend to be located close to a customer base and carry only enough inventory to serve those customers.
Large warehouses are rare because there has been little demand for storage of huge volumes of product
to date.
Most Indian warehouses have few racks for shelving product and are likely to have dirt rather than
cement floors. This means that they use space inefficiently, and managing them is actually quite
complex because there is little in the way of technology or material handling equipment.
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The "warehouse management system" at these small sites is a bookcase filled with three-ring binder
notebooks. Each notebook holds the receiving documents for one or more products.
When an order is received, someone looks up the locations of the required items in these notebooks.
The loading and receiving docks at these small sites are alive with activity. Without forklifts, flex
conveyors, and/or dock levelers, everything is passed from hand to hand for stacking inside the trucks.
These types of warehouses employ three to five times the number of people one would expect at a
Western facility of similar size.
This does not mean that the warehouses have no information technology. They often do, but it usually
is employed for the customer's benefit and not for management of the facility. For example, one of
the third-party logistics (3PL) warehouses has the same characteristics as described above. The
warehouse had a computer terminal that was connected directly to the local automobile plant's
manufacturing resource planning (MRP) system. Warehouse employees would print out the order and
then go to the bookcase, look up the location of the required inventory, and then go and pick it. Three
other people would update the records.
The more modern warehouse buildings are generally prefabricated structures made from steel, with
steep sloped roofs to divert water away during monsoon season. In addition, many distribution
facilities are housed in structures that were designed for other purposes. For example, one of the
largest pharmaceutical distributors in Mumbai runs a warehouse out of the third floor of an apartment
building.
While constructing new facilities may be the only viable approach for developing large regional
distribution centers, finding land for those two, three, or five facilities will be difficult. Land can be
expensive in parts of India. For example, land on the outskirts of Mumbai is more expensive than
acreage on the outskirts of Atlanta, Georgia, USA. Additionally, there are few large landowners in
India. As a result, purchasing a parcel of land big enough for a large distribution center is likely to
require negotiating with hundreds of individual plot holders.
Even the influential domestic automaker Tata Motors had trouble getting land for a planned factory
in West Bengal. To obtain the 997 acres required, the company had to work with the state government
to consult with 13,000 farmers and pay them either for their land or the rights to use their land. But
that wasn't the end of Tata's real estate troubles. The farmers protested that their compensation was
too low and that some of them were being forced to sell their land. In response, the automobile
company shifted construction to another, less hostile region of the country. Big domestic retailers,
such as Reliance Retail Ltd., have had similar problems.
Because of the issues involved in land acquisition, most companies entering India and adopting a
regional network model should consider a partnership with a third-party logistics company that already
has a warehouse or land on which it can build a facility. An important consideration, of course, will
be the quality of the service provided by this operation. Few international 3PLs operate warehouses
in India, and some local logistics service providers are only now becoming familiar with the service
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expectations of multinational companies. Still, for some firms, partnering with a 3PL will be easier
than going it alone.
Facility Design
Once land has been found, the actual construction and design of a new warehouse brings another set
of challenges. A company wanting to put up a Western style building with cement walls and floor
would have to work very closely with local contractors (supplemented by Western experts) to
accomplish such a project. Just pouring a concrete floor that meets accepted Western construction
standards requires very close supervision. As a result, it is not uncommon to find high-throughput
facilities with recently poured floors that are riddled with cracks. One person described a retail
warehouse that was less than six months old and already had cracks so large that a lift truck had
become stuck in one of them.
When it comes to facility design, foreign companies in India tend to adopt one of two extremes
neither of which is advisable. Some want to replicate their Western buildings. But a regional
distribution center should look different in India than in Western Europe or the United States, as
India has its own, unique set of constraints and strengths.
At the other extreme, some companies think that because labor in India is so inexpensive, they can
forgo automation and technology. The danger of this viewpoint is illustrated by a meeting with
Mukesh Ambani, head of Reliance Industries and India's wealthiest man. When a company revealed
its plans for distribution centers that would serve his new retail business, there was hardly any
automation in the solution. Ambani expressed his concern. "You Western experts always tell me that
automation isn't justified here because people are so cheap," he said. "After you tell me this and you
fly home, two years later I have to rip everything out and automate for quality."
When the facility is very small and not overly complicated to manage, it is acceptable to rely on manual
labor and assume that local managers and warehousing employees can figure out how to store and
forward the product. This is unlikely to work, however, when a firm attempts to put together a large
operation. Operations management experience is not nearly as well-developed among Indian
warehouse managers and employees as it is in the West. The dearth of warehouse management
expertise combined with the great complexity of a manual but high-volume operation seems destined
to lead to service failures.
It is recommended to adopt a "middle of the road" approach for high-volume facility design, using
some warehouse automation but still relying on workers for a majority of the less complicated tasks.
Software can help to ensure the quality of the operation because it can impose discipline and provide
data for measuring productivity. Warehouse management software, for example, can influence and
improve workers' performance. When warehouse workers get instructions from a computerthe
computer, not a human being, directs the pace of instruction and tracks the pace of completionit
minimizes cultural issues that may arise because of differing expectations and priorities.
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This same approach should be used with material handling equipment. For example, in high-volume
facilities, conveyors are necessary to get products and cartons where they need to be on time. But
companies do not need to use an expensive motorized conveyor with complex controls and automatic
diverts at the chutes. Instead they might consider employing a simpler, domestically manufactured,
motorized conveyor and having workers manually divert the products or cartons.
This strategy helps to keep costs down in other ways. At the present time, it is very expensive to bring
material handling equipment into India from overseas. Any imported forklift, conveyor, rack, or other
piece of equipment is subject to at least a 30-percent import duty. This, of course, encourages
companies to source equipment from Indian suppliers. Sometimes it is also feasible to bring in less
complex equipment (such as racking) from China. Chinese products generally cost a little less than
domestically produced equipment, even with the duty added, and they cost much less than U.S. and
European equipment.
Exhibit 1: The High Cost of Importing Warehousing Equipment into India

Source: The Progress Group
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Staffing Strategies
The challenges do not end once the facility has been designed, built, and fully equipped. Indeed, it is
noteworthy that the largest market for logistics consulting services in India is not for designing
warehouses and distribution centers but for helping to teach people how to operate them.
In a country where the average worker makes US $500 a year, it's tempting to follow the U.S. practice
of recruiting warehouse personnel from the less educated tiers of society to save money. The skill gap
between educated and uneducated people is much greater in India than it is in the West. Some
concepts and equipment that Western businesses take for granted, like computers, are totally alien to
the uneducated segment of the Indian population.
That is why it makes more sense to hire college-educated personnel to handle standard warehousing
tasks, even though they may demand more compensation. College-educated workers will possess the
basic knowledge needed to operate a computer or a lift truck.
Another reason to hire young, college-educated workers is that it minimizes cultural clashes. Indian
culture historically has emphasized hierarchies and social status. These cultural beliefs can be inhibiting
to Western companies that are used to a more open style of decision making, in which employees
discuss work problems with upper management. Young workers, however, are more willing to adapt
to this style of management.
Transportation Challenges
Looking beyond the four walls of the distribution center, companies will need to design a distribution
network that takes into account the realities of India's transportation infrastructure. India's supply
chains must contend with slow transit networks and insufficient infrastructure. For example, 70
percent of India's seaborne trade is handled by just two of the country's 12 major ports. The rail system
is also constrained when it comes to freight movements. Historically, the country's rail capacity was
restricted to passenger traffic, and people protested the use of rail for freight haulage. Only recently
has the Indian government begun efforts to promote rail shipments.
Most commercial shipments in India make their journey aboard a truck (although it's not uncommon
to see goods being hauled through a city on a handcart). Hiring a motor carrier means working with a
small trucking company, as the country has no large, national transportation companies and only a
handful of medium-sized carriers. A recent study of the Indian trucking industry conducted by the
consulting firm Orkash Services Pvt. Ltd. found that the majority of carriers had fewer than five trucks
in their fleets. The fact that the largest trucking association in India, the All India Motor Transport
Congress, says that it represents 4.8 million truck owners is further evidence of the preponderance of
very small operators. These carriers do not have specialized equipment like refrigerated trailers. A
company that plans to enter the Indian market and needs specialized services may therefore want to
consider working with a large carrier that can partner with local trucking firms.
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The trucks themselves typically are 24-foot-long vehicles that can transport 12 standard Grocery
Manufacturers of America (GMA) pallets, which are 48 inches long by 40 inches wide. The 53-foot
trailers that are common in the United States are unheard of in India and wouldn't be able to make it
through the crowded, narrow city streets to pick up or drop off goods.
Scheduling deliveries and pickups also can be tricky. At present, most warehouses are located in the
heart of Indian cities, and many municipalities prohibit large truck movements during daytime hours.
It is possible to negotiate special exemptions in some places, but generally shippers must plan on
nighttime movements. Another option is to unload large shipments at a cross dock outside the city
and transfer orders to smaller vehicles for delivery.
Transit times are slow and unpredictable compared to those in Western countries. A 1,000-mile trip
from Kolkata (formerly Calcutta) to Mumbai could possibly take as long as seven to 10 days because
of delays at state borders and poor road conditions. In fact, the Orkash study reported that a typical
truck in India covers an average of just 300 kilometers (approximately 186 miles) a day. The average
truck in a country with a better road system can travel 800 kilometers (approximately 497 miles) in a
day, the researchers found. Furthermore, technology that often is used in the West to mitigate transit
variability is not yet common in India. Indian trucking companies are just beginning to issue drivers
cell phones that they can use to call in shipment status, and global positioning systems (GPS) are
virtually nonexistent.
To reduce the impact of variability caused by poor logistics infrastructure, suggests Abraham Joseph
of the consulting firm Chainalytics, companies should adopt inventory strategies similar to those used
in small-parts service industries. Service-parts industries use inventory to buffer against demand
variability rather than against transportation variability, but the resulting network structure is the same.
Companies will need to stage inventory throughout multiple levels, or echelons, of the network to
reduce the impact of transportation variability and high transportation costs. Thus, instead of shipping
from a regional distribution center in one state to wholesalers in several states and cities, a company
might still need to maintain a small amount of inventory in each state to maintain service levels.
Plan to Act Now
Clearly, one of the biggest challenges facing any company that wants to develop a supply chain in
India is learning to serve customers well despite the challenges and roadblocks to efficiency discussed
in this article. That said, the government has started to invest heavily in such areas as transportation
infrastructure and regulatory reform, and these future improvements will bolster companies' efforts
to run an efficient supply chain in India.
It is a popular belief that a company can reasonably expect to spend at least five years setting up a
distribution network in India because of the complexity of navigating those challenges and complying
with India's laws and regulations. But the opportunity to serve the world's second fastest-growing
economy and a rapidly expanding, educated middle class is not to be missed. If companies act now
and begin drawing up their supply chain plans, they will be well-positioned to participate in India's
prosperity.
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Supply Chain Executives See India as Top Emerging Market for Growth
Logistics and supply chain executives see India as the top emerging market with the most growth
potential, according to the latest 2016 Agility Emerging Markets Logistics Index. It is the first time
supply chain professionals surveyed by Agility ranked India in this top spot, beating out China.
Chinas economic slowdown has taken a hit on this years ranking, Agility pointed out. No longer are
manufacturers automatically turning to China for low-cost production. China is also competing with
nearby markets in Malaysia and Vietnam. Conversely, Indias economy is expected to top Chinas
through at least 2020.
Survey respondents revealed that the slowdown seen in Chinas economy has undermined its position
as the most attractive emerging market, with India replacing it at the top of the rankings, the report
said.
Economic growth was voted the top factor in deciding what country was most likely to become an
emerging market, with 31.1% of respondents voting for this. More than 12% of respondents said
foreign direct investment was the top factor and 8.4% selected growing trade volumes.
Supply chain professionals in the Agility survey did share some concerns about India. About 42% of
respondents said India needs to enact more reforms to continue growth. More than 20% also said
India needs more than just economic reform if it is to succeed as an emerging market.
Still, nearly 17% of respondents ranked India as the top emerging market with the most growth
potential. China came in second. Brazil came in third, according to the index, with 9.9% of
respondents selecting the South American country. Indonesia came in fourth (5.4%) place and
Vietnam was fifth (4.8%).
Survey participants are also not optimistic China will retake the top spot among emerging markets in
the near future. About 55% of respondents said the Chinese economy has significant structural
problems and will face major challenges in the next two to three years. The economic conditions in
China have led about 38% of the respondents to reassess their emerging market strategies.
Along with China, Russia, Turkey and Thailand were other countries that slipped on the 2016 index
for emerging markets with the most growth potential. Russia, which was ranked seventh on the 2015
index, came in this year at No. 9 a drop blamed on an increasingly isolated economy that began
once Russia started backing rebels in eastern Ukraine. Turkey fell three spots from its 2015 ranking,
due to slowing growth, fewer imports and continuous instability along its southern border. Thailand
experienced slow economic growth rates in 2015 and weaker-than-expected exports among other
factors.
Supply chain executives were also asked to identify the countries with that least potential as emerging
logistics market. Syria and Iraq topped that list and Ethiopia, Libya and Iran rounded out the top five.
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War and terrorism and overall instability in the Middle East and North Africa region dragged down
optimism in these countries.
In the World Banks biennial measure of international supply chain efficiency, called Logistics
Performance Index, Indias ranking has jumped from 54 in 2014 to 35 in 2016. While Germany tops
the 2016 rankings, India is ahead of comparatively advanced economies like Portugal and New
Zealand. In 2016, Indias international supply chain efficiency was at 75% of top-ranked Germany,
said the report titled Connecting to Compete: 2016 Trade Logistics in the Global Economy. This is an
improvement over the 66% efficiency when compared to the leader (again Germany) in 2014.
The Logistics Performance Index analyses countries across six components: efficiency of customs and
border management clearance, quality of trade and transport infrastructure, ease of arranging
competitively priced shipments, competence and quality of logistics services, ability to track and trace
consignments, and the frequency with which shipments reach consignees within scheduled or
expected delivery times.
On the other hand only 69% of shipments from India meet the quality criteria, compared to 72% for
China and 77% for Kenya. It takes two and three days to clear shipments, without and with inspection,
respectivelynumbers comparable to China but longer than what it takes in top-ranked Germany.
Similarly, India has an average of 5 forms required for import or export, compared to 4.5 for China
and 2 for Germany.
The Goods and Services Tax (GST) Scenario
The Goods and Services Tax (GST) has the potential to revolutionize the transport industry in India,
said Capt. Uday Palsule, former managing director of Spear Logistics Pvt. Ltd. Inter-state travel time
will be drastically reduced if the hurdle of checking documents at every state border is done away
with, he said. It will also help boost the returns of the trucking industry and feed into better
performance of the logistics sector, added Palsule.
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Exhibit 2: Potential Savings in a GST Scenario

Source: http://www.chainalytics.com/how-to-reap-the-supply-chain-benefits-in-indias-gst/
Based on Chainalytics experience, companies save between 2.2 to 8.5 percent in logistics costs in a
GST environment. Couple those savings with the corresponding reduction in safety stock of 3.5 to
10 percentdue to lesser stocking locationsand you may very well have a massive savings story to
tell!
A consolidated network also enables more accurate inventory stocking levels at warehouses, reduced
stock-outs, higher fill rates, and less disruption to the upstream supply chain. And on the
transportation side, the new GST tax regime would improve lead times by 30 to 40 percent, due to
seamless transfer at state borders, according to Denis Medvedev, senior country economist for India
at the World Bank.
Most enterprises today have high growth projections for the next three to seven years. So a host of
other factors become relevant for companies that want to design their networks around real demand
and constraints, rather than inefficient tax structures:
Land will remain a state matter. Hence, companies will need to evaluate states that offer better
land deals for siting plants and warehouses. Establishing a single green field warehouse can
take upwards of six months with uncertainty around availability, negotiations and legal
processing.
Resource availability water, electricity, etc. as well as labor law reforms will have a big impact
on site selection.
Connectivity via major highways, railway and waterways will boost options.
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Additional, immediate changes include:
Manufacturing realignment along with the distribution network changes, with the option of
looking at larger truck containers and cheaper modes like rail and inland waterways
Exploring sourcing alternatives, since the change in manufacturing footprint means sourcing
decisions and contracts may need to be revisited
Making warehouse operations more efficient, with the possibility of implementing automation
systems
Supply Chain Management in India: Can we organize them better

As per the year 1999 reports by both Geneva-based World Economic Forums (WEF), Global
Competitiveness Report (GCR) and the Laussan, Switzerland-based International Institute for
Management Development (IMD), World Competitiveness Yearbook (WCY), India still continues to
remain firmly stuck near the bottom of the list in the company of virtually unknown and failing
economies. India has been ranked 52 by the GCR out of 59 countries and 39 by WCY out of a universe
of 47 countries. This enviable image is despite the fact that India, the fifth largest country in terms of
Gross National Product (GNP) and Purchasing Power Parity (PPP) (World Bank, 1999), constitutes
one of the fastest growing market in the world and is also counted among the richest in regard to
cheap skilled labor, scientific and technological resources, and entrepreneurial talents.
Product
Quality
India
41.08
Brazil
52.39
Thailand
63.00
South Korea 60.71
Canada
68.13
USA
59.67
Japan
92.68
Germany
92.50
France
55.94
Netherlands 72.89
Parameters
Product
Design
34.05
56.62
58.50
4S.57
5S.06
69.84
81.46
71.39
66.96
63.1
One-time
Delivery
30.27
36.34
57.00
59.29
62.19
62.62
93.17
88.06
44.64
69.78
After Sales Service

41.08
39.15
54.00
47.14
62.50
57.70
89.76
78.61
45.56
68.44
Managing
Distribution
52.43
51.83
66.50
57.14
66.45
74.43
72.20
75.83
66.09
74.76
Exhibit 3: International Comparison of Customer Orientation

Source:
http://www.iimm.org/ed/index.php?option=com_content&view=article&id=43&Itemid=107
Supply Chain 2025: Trends and Implications for India
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By 2025, the Indian economy will have grown multifold and consumers will have become much more
heterogeneous, presenting organizations with a unique set of opportunities and challenges. The supply
chain will be impacted by various evolving macro-factors for which organizations will have to prepare.
Within this context, the Council of Supply Chain Management Professionals (CSCMP) and
A.T. Kearney undertook a joint study to determine the major trends that will shape Indias supply
chain by 2025, and the impact these trends will have on organizations. While numerous wild cards
are likely to shape future supply chains in India, the paper highlights six trends that we believe will
have the biggest impact and discusses how organizations should prepare:
More mega cities. A growing population and urbanization will lead to several cities becoming
mega demand centres. Increased congestion and space constraints will require organizations
to create a different supply chain model to serve these cities. Going vertical, common carrier
deliveries, use of electric vehicles, and flexible unloading are some options to consider in
designing supply chains for these cities.
Proliferation of segments. Increasing consumer segments, the emergence of new channels,
and a greater number of products will lead to the creation of multiple new segments.
Organizations will need to customize activities across their supply chains to deal with different
segments, and move away from todays one size fits all approach.
Improved supply chain infrastructure. With planned investments in infrastructureroad,
rail, and portsthe supply chain is expected to become faster and more connected across all
modes. The increased size of the multi-modal network will drive larger and more consolidated
facilities.
Better regulatory climate. Regulatory changes are expected but the timing will continue to
remain uncertain. GST, fiscal incentives, and sustainability and activism are some of the factors
that are likely to change. Scenario-based planning will help in preparedness.
Increased globalization. India will become more connected globally with larger numbers of
imports and exports and an increased share of global trade. More organizations will have a
regional manufacturing footprint. Managing risk, traceability, compliance, and responsiveness
will be critical to success.
Affordable technologies and big data. Decreasing costs of technology will lead to more
data and information on supply chains. Organizations will need to build up their technological
and analytical capabilities to leverage and benefit from this data.
While many changes will occur by 2025, some aspects of the supply chain will remain as they are today.
For example, volatility in supply and demand will continue, making risk management and scenario
planning critical. Business pressure to deliver more with less will not change anytime soon, forcing
supply chains to further increase efficiencies and balance customization with consolidation. And skill
gaps in talent will likely endure, moving organizations toward selective automation, skills development,
and better working conditions.
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Points to Ponder upon

How is India different as a supply chain destination?
What are the teething problems in India Inc.s supply chain?
What are the changes needed to make India Inc.s supply chain more
efficient and responsive?
References
1. http://news.elementum.com/make-in-india-reinventing-indias-supply-chain
2. http://www.supplychainquarterly.com/topics/Global/scq200901india/
3. http://spendmatters.com/2016/02/01/supply-chain-execs-see-india-as-top-emergingmarket-for-growth/
4. http://www.livemint.com/Politics/aqBXOSWqMObUMUAffuGH6I/India-jumps-19places-in-World-Banks-logistics-performance.html
5. http://www.chainalytics.com/how-to-reap-the-supply-chain-benefits-in-indias-gst/
6. http://www.iimm.org/ed/index.php?option=com_content&view=article&id=43&Itemid=
107
7. http://www.atkearney.in/paper/-/asset_publisher/dVxv4Hz2h8bS/content/supply-chain2025-trends-and-implications-for-india/10192
24th October 2016
27th October 2016 2200
hrs IST
Last date for Submission of Case in PowerPoint format for India Finals
7th November 2016 2200
hrs IST
First Round Declaration of 5 qualifiers (+2 standby teams)
10th November 2016
2200 hrs IST
Live in person or web presentation (outstation teams) by 5 teams at 19th November 2016 after
NMIMS Mumbai and shortlisting of 2 teams for presentation at NMIMS lunch
Mumbai - India Country Finals - qualifier round Optitude 2016
India Country Finals to present and be India winner India runner-up at 20th November 2016
NMIMS Mumbai
hrs IST
th
Final Global Case Competition Round entirely online (Las Vegas, NV, 10 December 2016
USA)
Online team registration and payment begins
Release of Case Study to bonafide registered teams begins
Register teams at appropriate link queries if any on mail at india@scnext.org

16 | P a g e
1. The team size will be minimum of 2 members and maximum of 3 members. Member #1 while
signing up will act as Team Leader and all communication with the team will be through the Lead.
This person should also be the one sending out the solutions to us
2. All the members must be from the same institute - organisation B-School
3. This is the India Country Finals - qualifier round for the final global case competition.
4. Final Global Case Competition Round: Dec 10, 2016: Las Vegas, NV, USA. entirely online
5. Two winning teams in the India Country Finals - Qualifier Round will advance to the global final
round and a chance to win a 1000 USD for team and free global online training certification Certified Supply Chain Analyst- CSCA / Certified Demand Driven Planner (CDDP) certifications from
ISCEA for each global winning team member.
6. A member cannot register in more than one team
Format of Submitting the Case

1. The Case should be submitted in a maximum of 12 slides, except the Title Slide and the Thank you
slide. Executive summary slide is compulsory and is included in the 12 slides. You can have as many
appendices as you want
Title slide must have ISCEA India logo (approximately 1.25 x 3.75 cm) in right hand top corner.
2.
3.
File name (ppt/pdf) Format: PtakPrizeAsia2016_ISCEA_India_TeamName_B_School

Subject of the Mail: PtakPrizeAsia2016_ ISCEA_India _TeamName_ B_School
All submissions will be property of ISCEA and can be used for appropriate causes.
Full rules and regulations, schedule for participation are circulated separately and applicable for India and
online global rounds.
Email solution as above on or before 7th November 2016 2200 hrs. to india@scnext.org
17 | P a g e

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ISCEA Ptak Prize Global Supply Chain

Case Competition 2016

19th & 20th November 2016

My definition of FDI is 'First Develop India'

Exhibit 1: The High Cost of Importing Warehousing Equipment into India

Exhibit 2: Potential Savings in a GST Scenario

Additional, immediate changes include:

Supply Chain Management in India: Can we organize them better

After Sales Service

Exhibit 3: International Comparison of Customer Orientation

Points to Ponder upon

Register teams at appropriate link queries if any on mail at india@scnext.org

Format of Submitting the Case

File name (ppt/pdf) Format: PtakPrizeAsia2016_ISCEA_India_TeamName_B_School

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