Indian Organized Retail's Supply Chain problems

by Deepak Sharma on Wednesday, December 12, 2007

While the organised retail market in India will more than double in the next three years to touch 30 billion dollars from 14 billion dollars at present, the Indian Retailers are struggling with less than optimized Supply Chains. The supply chain in India is underdeveloped, so says the report titled, "Winning with Intelligent Supply Chains" by FICCI and Ernst & Young.

According to the report, which was released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young, “the most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain”. Commenting on traditional supply chain networks, it says that the chain, a partially informed push/ pipeline model with a unidirectional flow, is expected to transform into a fully informed network model with bi-directional flow of information.

The report also points out to the huge shortage of experts in this area, coupled with the fact that only 64 per cent of organisations have a full fledged independent department to manage the supply chain.

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The report calls for informational and technological intervention to tackle the current bottlenecks by using supply chain technologies like Radio Frequency Identification, barcode scanners, Point Of Sales terminals, handheld devices and software packages. It reveals that 85 per cent companies use IT to capture and analyse real-time information for effective decision making.

The other challenges that the Retail Industry in India faces include:

- Inadequacies in infrastructure such as lack of high quality road networks, power shortages and insufficient storage spaces

- With availability of retail space serving as a key enabler, the current rise in property prices and rentals may render a few retail business models unviable

- The retail industry loses to the tune of US$120 to US$130 million every year in frauds, thefts and employee pilferage, shop lifting, vendor frauds or inaccurate supervision despite using standard and modern security features

- Multiple taxes at the federal and state level

- Lack of clear policies (especially on the entry of foreign retailers)

- The industry also faces a huge shortage of experts in areas such as supply chain and store management

- The most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain

2 comments

Hi,
You may wish to go through my blog logbizindia.blogspot.com which is on the supply chain and logistics business in India, and not just focused on retail. I would welcome your feedback. Email contact is logbizindia@gmail.com.
Thanks & regards
Editor, Logbizindia , Mumbai, India

by Logbizindia on 12:22 AM. #

Indian supply chain is suffering from its inadequecy of infrastructure for warehousing facility. The skyrocketing real estate cost adds the mess to it. Other points needed for efficient supply chain is the use of IT technology. A good example in Indian context would be Mc Donald, which has a entire range of perishables coming from different parts of country and still never faces any shortage of products, the burgers(containing lettuce, potato etc) are always fresh.
India should look forward to work under the efficient supply chain model of ZARA and Metro.

by Deepak Jha on 9:59 PM. #