New technology adoption is key to building operational competency in Indian logistics

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India’s logistics industry, estimated to be worth $160 billion, is considered an important cog in the wheels of the nation’s economic machinery. Almost 15% of the country’s GDP and a quarter of the jobs generated annually are linked to the sector.

However, the industry’s patchy cost-efficiency track record has impeded its capacity to realize its optimum potential. India’s logistics cost as a percentage of its GDP stands at a staggering 14% as compared to the average 8% spent by other emerging market (EM) economies. A manpower-heavy and labor-intensive framework compounded by a fragmented structure has impeded the Indian logistics structure from attaining its optimum potential.

The high logistics cost is often considered a major drag on the country’s overall economic growth, blunting the nation’s competitive edge in the global marketplace. The government is currently working on a roadmap to reduce the logistics cost to around 10% of the GDP, and that may land a 2% uptick in economic expansion.

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However, traditional means may not be effective in achieving this change trajectory. Rigid business structures which come in the way of acceptance and implementation of changes will need to be discarded. Logistics businesses will need to imbibe new strategies and practices which are largely tech-driven.

As disruption becomes the new normal in the post-pandemic world, technology and digitalization will be the pivots around which the growth story of Indian logistics will unfold. Logistics players will need to invest in new-age digital tools to boost the functional competencies of supply chains. Integrating technologies like Artificial Intelligence (AI), Internet of Things (IoT), and robotics into core supply chain processes holds the potential to provide substantial cost and scale benefits to the logistics sector in the country.

AI can boost the efficiency of logistics through improved transport forecasting, planned real-time route optimization models, and streamlined cargo movement through efficient route planning. IoT facilitates improved business outcomes by leveraging the power of data-driven logistics and ensuring transparency over the whole cargo transportation cycle. By harnessing big data, technologies like Predictive Analytics can optimize shipping schedules, estimate demand through data tracking and help in minimizing shipping risks.

Digital technologies can transform the functional dynamics of modern-day warehousing. The logistics industry is witnessing the rise of technologically superior warehousing models by facilitating improved inventory accuracy and efficient inventory management. Smart warehousing can seamlessly enable optimization of various fulfillment functions with warehouse automation becoming a core part of warehouse management systems (WMS).

As an increasing number of functional proficiencies within the logistics domain become digitized, key job roles will require sustained training and reskilling. The emergence of new work models would be the new normal with online interfaces facilitating connectivity from remote locations. Logistics personnel will be required to play a supervisory and monitoring role with core processes and functions operating in digital mode.

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Future workforces will need to boost their digital preparedness and gear up to face the challenges brought on by a tech-driven ecosystem within the logistics domain. The speed and agility with which the Indian logistics sector adapts to technology and digitalization will determine its global competitiveness and status as a global logistics player.

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Shalabh Raizada
Shalabh Raizada
Shalabh Raizada, Chief Information Officer, Stellar Value Chain Solutions.

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