How is the Lockdown in India Disrupting the Supply Chain

With the entire nation under lockdown since 25 March, it has been over 50 days since the citizens were forced to take drastic measures to fight the ongoing pandemic. We are all experiencing just how difficult and disruptive the actions have been. And while all aspects of life have been hit, many learnings can be gleaned from the lockdown as well. While the idea was to keep the supply chain functioning, as usual, to help with the provision of essential services, several unforeseen issues hindered the vision right from the jump.

There are a whole lot of ways in which the supply chain of the country as a whole does not quite have the systems in place to sustain and survive a lockdown. The weaknesses in the system have been exposed, whether we talk about the farming industry or the e-commerce businesses. The biggest issue is, of course, the lack of availability of products because they can’t reach factories in the first place.

1. Migrant workers and lack of a sturdy workforce

In a country like India, there is a mix of blue-collar workers and automated machines that make the whole industrial complex tick. The mass exodus of migrant workers has meant that the loading and unloading of products at warehouses has taken a hit. This, in turn, means that even though truck drivers may be willing and ready for transportation, the actual loading of goods is not possible. There have been huge delays in supply and as a result, the retailers and consumers have begun to hoard.

The logistics business has suffered enormous consequences due to the lockdown and it has only highlighted the obvious need to work with the state governments to compile a plan and ensure the prevention of shortage in essential supplies for all.

2. Inventory shortage

It tracks that if there are no workers present to do the manual loading and unloading of goods, supplies everywhere will run thin. If workers are absent from manufacturing plants and farms as well, then it hurts not only the process of manufacturing but also the entire supply side of the supply-demand graph.

Not only does the lockdown hurt the supply, but it has also exposed the complete lack of preparedness for such an emergency. Big warehouses are limited in stock and a lack of intra-state movement of vehicles has crystallized the supplies even further. For the most part, industries cannot have access to goods from plants in specific regions and e-commerce businesses are only able to fulfill demands for local brands. In contrast, large national brand products remain at points of origin.

3. Need to create a centralized logistics data stack

A way to deal with something like this in the future would be to create a centralized database that can be accessed by the entire supply chain machinery in the country. Think of it as a logistics stack similar to the UPI system for online transactions. The need and lack of data to help with crucial supplies are critically hit areas have been exposed and in case of another emergency, we would clearly not be equipped to do better than now.

The result has been that a huge number of the commercial vehicles used for the supply chain have stopped working as the drivers are no longer available. Those that are available are constantly facing obstacles and denied movement by the police to deliver products and supplies. With a thinning supply chain workforce, consumers will have to wait longer and there is an increased tendency to hoard, as was mentioned before. But all is not doom and gloom. The lockdown has also helped us identify the many issues the supply chain currently has and presents an opportunity for building a national infrastructure that will prevent a supply choke in the future.

 

4. Paucity of collated and reliable data

The distribution system dictates logistics for every business. This means that the need for concise and correct data is critical. The local businesses that are part of the larger supply chain generate tons of data that helps identify demand and supply hotspots. If all of that data could be collated by private companies and shared with the government, a public database could be created and shared with everybody. There is currently a lack of data-based logistics currently, and even the automated warehouses and plants are struggling as there are no workers to help with movement and loading.

Currently, the insights of such data are privy to only individual businesses. Also, importantly, the data is not real-time. Any such endeavor in the future needs to ensure real-time information data so that the supply of essential goods is not at the cost of poor and hard-to-reach sections of the country.

The crisis in the supply chain that the lockdown has created is not without its pros, though. The various industries that depend on the supply chain can invest in the upgrade and expansion of the supply chain and utilize datasets better. There is no way to predict how the current situation will evolve, but it does point at the need to be better prepared for the future and the urgent need for smarter planning in the supply chain system. A new direction is needed and it needs to be addressed posthaste.