Business

Movement of essential goods hit by disruptions

Fewer trucks plying with supplies, demand rising quickly; Ministry order to allow movement not percolating down

With the country witnessing largescale disruptions in transportation network and supply chain on account of the COVID-19 spurred lockdown, the logistics sector is likely to face more hardships as current reserves are depleting and manufacturing is yet to pick up.

“The situation does not seem to be improving. Demand for movement of essentials goods is increasing frantically, but supply is not even close to matching it,” said Abhishek Gupta, MD, Prakash Parcel Services Ltd.

“We are most likely entering a phase where supply will be disrupted very soon. Instructions from the Ministry of Home Affairs to allow trucks to operate has not percolated down yet in many places. Warehouses and factories, to unload trucks, have not been asked to open,” he said. “The driver count per 100 trucks is now below 15 as compared to 58 before the virus outbreak. Not more than 10% of trucks are running and drivers are finding ways to return home,” he said.

“In the short term, there is significant disruption to supply of all essential commodities and medicines, visible from the depleting stocks at various shops across India,” said Pankaj Poddar, CEO, Cosmo Films, which supplies packaging materials to all top FMCG firms. “But there is always inventory lying at various stages, which is getting consumed. The government has allowed food processing and pharma firms to operate, though they, in turn, are dependent on their raw material and packaging material suppliers. Their suppliers too are dependent on their supply chain,” he said.

He said this entire supply chain is broken with shortage of labour, packing material and trucks, and that the Centre must react quickly to this situation. “Or else we may have serious supply shortages by the third or fourth week of April,” he added. Manufacturers, on the other hand, are waiting to see how things move forward.

“The government is taking all the necessary steps to ensure they curb the widespread of this deadly virus. Once there are signs of a revival, companies should increase production and adopt an aggressive go to market strategy,” Amit Kumar, MD & CEO, Pratap Snacks, said.

“Though we are facing some loss in revenue in the current quarter, we have met our targets in this fiscal and are expecting double-digit growth which was our initial target for the fiscal,” he said.

Analysts said if the lockdown persists, the supply chain would be disrupted owing to low capacity utilisation due to lack of labour and restriction on people and material movement, running down of inventory and profiteering by unscrupulous firms and middlemen since they have the first-hand information on supplies.

Rohit Chaturvedi, CEO, Transport Hub, an IOT-based logistics firm, said, “Even a temporary disruption may be amplified due to middlemen’s behaviour. To deal with this, the authorities must identify categories for which supply restriction may matter.” “They need to understand supply side constraints such as the number of days of inventory left , replenishment rate for essential and desirable goods,” he said.

He said the authorities have to deploy predictive analytics to forecast demand pattern in the current scenario and identify supply clusters to fulfil demand.

“They should connect consumers with producers directly with the help of technology and take help from e-commerce players like Amazon to understand the demand pattern and use their supply expertise,” he said. Some experts have called for the need of deployment of Artificial Intelligence (AI) and other technologies to deal with the situation.

Raj Saxena, Founder & CEO, LogisticsNow said “Artificial intelligence (AI) will be crucial to the next generation supply chains, integrating long haul to last mile capacities with product demand, supply and the markets seamlessly. AI enabled supply chains will also help in faster and better response to emergencies and pandemics, saving lives.”

In a report titled “The COVID-19 War: How India can win faster leveraging its supply chains and logistics?” LogisticsNow said under the current circumstances supply chains and manufacturing have to be supported to ensure optimized throughput while being in close sync with demand with joint effort from corporates and the concerned government departments.

“Inventories of essentials already in the chain need to be unlocked immediately so while manufacturing and transport (inter-State) get back on track, local inventories with distributors are made available to retailers as required,” the report said. As transport capacities have been disrupted by stranded trucks, there is likely to be a need for thousands of trained drivers to move essential supplies.

“Options, including the Army Supply Corps, the Railways, Concor, Freight Marketplaces and Freight Intelligence networks, along with large fleet owners / truckers who can provide transport capacity from long haul to last mile will enable an effective response,” it said.

A quick way to build last-mile transport capacity would be to partner with e-commerce companies and online pharmacies, other online delivery players which have built distribution capacity and focus this entire capacity on distribution of essentials with curfew passes enabled by mobile technology, the report said.

It emphasised the need to build AI-powered Citizen Information Systems (CIS).

“We can learn from China’s use of multiple data sources to identify and pro-actively isolate touchpoints of infected patients. China used image recognition, data feeds from millions of cameras, social media feeds, online payment / transaction data powered by cohesive AI algorithms which helped identify individuals and communities most at risk, to direct the containment efforts in this fast spreading pandemic,” the report said.

It said India created the India stack for payments and more, resulting in the digital payments revolution unprecedented in our history. A similar digital logistics revolution is required to power our supply chains and transportation with intelligence, visibility and agility.

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Printable version | May 26, 2020 9:45:13 AM | https://www.thehindu.com/business/movement-of-essential-goods-hit-by-disruptions/article31241198.ece

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