Overcoming Local Supply Risk Factors: A Regional Story, Indian Style

We often approach the topic of supply risk from a uniquely Western perspective. In other words, we're primarily concerned with how disruptions at different points in the supply chain from supplier bankruptcies, natural disasters or other occurrences can impact our ultimate ability to keep production lines open and customers happy. Yet locally, especially in developing countries like India, supply risk can take on many additional elements. And risk factors can manifest -- becoming disruptions -- more frequently, owing to greater uncertainty and visibility in the overall supply chain and inconsistent levels of infrastructure. Consider a recent article from the Economic Times, an Indian publication that provides some great stories from the supply risk trenches and frontlines in India.

Starting with a quote from one retail executive with multiple battle scars from operating in the region, the article brings the topic alive by noting that "seven years ago, when India's Future Group retail giant sent shipments from Mumbai on the country's west coast to Kolkata in the north-east, the products took 10 nervous days to arrive...'You sent the goods, and until you received them, you just prayed...There was just a black hole until they finally reached the destination.'" Today, the journey still takes multiple days thanks to "shoddy roads, minimal cold storage capacity and a myriad of state regulations and taxes."

Compounding risk related challenges for global companies wanting to sell into the Indian marketplace, the article suggests, are local sourcing requirements that require organizations to patronize local suppliers -- and integrate local and global supply chains together. For organizations not used to managing supply risk factors in developing countries, the facts can speak for themselves. Consider with fresh fruits and vegetables, how "around 30 percent of India's vast...production goes to waste due to a traditional supply network that uses hand-pulled wooden carts more than refrigerated freight wagons and keeps fresh produce highly regionalized."

Said another way, if you don't want to end up wiping a rotten tomato off your hands and your books, then it's essential to focus on both global and local supply risk management focus areas. This is clearly a lesson we can apply not only in India, but nearly all of the fastest growing economies in the world.

If you're interested in the topic of supply risk management, check out our free research on the topic:

Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR

Supply Risk Management – Segmenting the Technology and Content Landscape and Choosing the Right Category of Solutions

Beyond Basic Scorecarding – Supplier Performance and Development Approaches to Drive Competitive Cost and Risk Advantages

Supplier Management Market Observations: Recent Trending, Musings on SAP's Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid

- Jason Busch