Logistics is the most critical component of any supply chain. It can draw parallels from no less than a battle zone where precise plans and timings are of utmost importance, yet the best-laid plans may go awry at any moment. Within the supply chain, those dealing with cold chains have a much harder time maintaining the complex network that keeps products safe until the last mile delivery is complete.
Cold chain logistics refers to the transportation and warehousing of temperature-sensitive products from the point of origin to the point of consumption in such a way that the product's shelf life is maintained to prevent spoilage. With the advent of the pandemic, the logistics and supply chain industries faced unprecedented challenges and broke down completely in some instances. Within this milieu, the cold supply chain segment was the worst hit. The entire country was hit by a lack of reliable, sustainable, and effective cold chain solutions. Suppliers were left to grapple with the massive problem of delivering goods to individual doorsteps. It has been a herculean task for the logistics and SCM experts who worked relentlessly through the pandemic to ensure that customers received their shipments on time and the demand for essentials and non-essentials goods are met, more so in the cold chain segment.
Cold chain arrangements are the mainstay of the Indian pharmaceutical industry. India caters to over 50% of global demand for various vaccines, 40% of generic drugs demand in the USA, and 25% of all medicines in the UK. Despite the hurdles, the sector is expected to grow by 2025 rapidly. According to the Economic Survey report, the country's logistics industry is growing at a CAGR of 10.5% and the logistics industry alone employs more than 22 million people.
Be it a vial of vaccine or everyday essentials, delivering goods in a sustainable manner and at the right temperature has become a bigger challenge that needs to be urgently tackled. The key issues faced by the cold chain supply chain can be summarised as follows:
High transportation costs - The single biggest problem facing the logistics industry in recent times is the high transportation costs which often is 50% of the product's value.
Shortage of drivers - Another problem that stares at the logistics industry is the shortage of drivers. Their jobs are demanding, and there aren't enough drivers to fulfill the logistics industry's needs. Adding to this problem are government regulations forcing companies to rethink their hiring decisions.
Adoption of new technologies - Logistics companies are in dire need of adopting innovative technology solutions that will increase productivity and reduce costs. Adopting information technology gives real-time data of various supply chain stages and thus enables operators to plan further action.
Improving cooperation between partners - To be a successful logistics company, there is a greater need to talk to partners and suppliers and create beneficial agreements for all stakeholders.
Emphasis on training & hygiene - Social distancing and maintaining hygiene will be the norm in the near foreseeable future. To this effect, companies need to train employees concerning handling materials, understanding social distancing norms, cleanliness. Proper training on hygiene will help gain customer confidence as also retain customers.
The need of the hour is innovative business models geared towards solving the industry's pain points and helping the industry flourish in this new world order.
According to experts, the solution lies in embracing and using technology to one's advantage. The modern supply chain will essentially depend on lean operators who can achieve impeccable service at short notice.
Indian and global investors well-versed in supply chain asset investments are beginning to pay attention to the sector. Rising demand and the adoption of cost-reducing technological advancements have worked to maintain the thrust in an emerging market scenario. Rapid technological advancements, changing consumer preferences are the key drivers of the Indian logistics network.
The cold chain infrastructure problem is being effectively discussed in various forums to provide innovative solutions. There are now reasons to be optimistic that India will soon find a way to deal with the problems effectively in the near future.
It remains to be seen how the industry functions in the new normal that demands contactless and doorstep delivery. The spotlight is on the logistics sector and how it copes with the sudden pressure to scale up and operate in a more efficient and cost-effective manner.
Author - Rajat Gupta, founder and chief executive officer, TESSOL