Making of a Smart Logistics Network

Shrirang Bapat, General Manager - Marketing, UPS IndiaThe last few years have been one of changing business and economic dynamics in India, which presents an opportunity for local businesses to grow internationally and for international businesses to enter and expand in India. India has emerged as a huge consumer market and supplier to world markets. It has the distinction of becoming the sixth largest economy in the world by overtaking France. By 2025 India is expected to be the third largest consumer economy with consumption estimated to reach US$ 4 trillion.

According to a report by PWC, over the past two decades, India’s gross domestic product (GDP) has risen by more than US$1tr, in the process bringing millions of citizens into the fold of an emerging middle class. Therefore by 2021, India’s emerging and middle-class segments combined will comprise nearly 900m people— which will open up new opportunities for growth and business. It is therefore not a surprise that the really large international consumer and e-commerce companies are anchoring their presence in India. What this also means is that global supply chains will play a critical role in connecting these products, people and enterprises.

Being an enabler of global trade, UPS recognizes, that a shift such as this requires an effective supply chain to be well positioned at the intersection of connectivity, technology and efficiency to provide a Smart business network to enable businesses to reach consumers and markets. A Smart logistics network is about digitally and physically connecting facilities, fleet and information systems. Using data, Artificial Intelligence and technology tools you can optimize tracking, processing of packages and transportation.
Visibility, Predictability and Connectivity are the cornerstones for creating Smart supply chains and technology is at the core of it. Technology is changing every aspect of how logistics companies operate. Digital readiness is a prerequisite for delivering on all three indicators of an efficient supply chain.

Visibility is a key area of focus in the industry especially where products cross service provider boundaries. Advanced technology tools help mitigate inherent risks, to a large extent. State of the art infrastructure, Just In Time, Time to Market are some of the requirements that are intrinsic for Indian SMEs to be part of a Global Value Chain. It is about building efficiencies in the supply chain. It is about relooking at business strategies.

Predictability in an increasingly VUCA environment seems like a paradox. However Smart supply chains help build a predictable environment to allow businesses to plan specific import and export movements almost six months or more in advance. This requires three key capabilities – 1. Focus on planning and consistency which is possible in a network and key touch points that are owned by the logistics company 2. Integration with technology and real time information flow 3. Deeper reach of the network.

Smart technology must help improve the ability of businesses to respond to changing market demands. Drones is a technology that needs to be further harnessed for the future both for commercial and humanitarian purposes. For example, in March this year, UPS announced a groundbreaking new logistics service to deliver medical samples via unmanned drones through a collaboration with Matternet, a leader in autonomous drone technology. The program is taking place at WakeMed’s flagship hospital and campus in the Raleigh, N.C., metropolitan area, with oversight by the Federal Aviation Administration and North Carolina Department of Transportation. In 2016, UPS created a global partnership with Zipline, a robotics company, and Gavi, the Vaccine Alliance, to explore using drones to transform the delivery of life-saving healthcare products like blood and vaccines around the world.

A Smart supply chain also helps in enhancing competitiveness and maximizing efficiencies for companies. India has a thriving auto component industry, that has emerged as a key supplier to the auto and aviation industry internationally. According to IBEF, it was worth US$ 51.2 billion in FY 2017-18, accounts for 2.3 per cent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly. The need for parts sent from a factory in India to reach the production line in Europe at a stipulated time – neither before and definitely not after, is fulfilled due to the emergence of supply chains that are designed to support such precision requirements where visibility, connectivity and technology work in tandem .

Finally, last mile delivery is emerging as a crucial differentiator for international logistics companies. Customers demand convenience for shipment pick up and visibility which has led to innovations and collaborations. By collaborating with locally entrenched companies, customers of global companies can drop or collect their shipments at a location closest to them. UPS has gone a step further and invented a tool called UPS My Choice®, in the US. For shipments sent to the US, UPS My Choice® lets you schedule your deliveries as per your convenience and location of choice. You can also ask your favourite retailers to include UPS Access Point locations as part of their shipping options or change the delivery address while the shipment is in transit. Once a retailer has incorporated the UPS network into its order processing platform, you can choose to ship to a location near you at checkout. It is these innovations, attuned to customer requirements, which has helped UPS maintain its leadership position in ecommerce globally. After all the fundamental reason why people buy online is for convenience. Recognizing this basic consumer requirement, UPS has expanded UPS My Choice service to 96 additional countries and territories bringing the total to 112 served, including countries and regions in Africa, Asia Pacific and the Indian Subcontinent, Caribbean and Central and South America, Middle East and Oceania, and an expansion in Europe.

Overall, our focus needs to be on not just business consolidation but also how we can partner our customers in growing their businesses by connecting them to the international marketplace in the most smartest way possible.