A customer, on average, pays Rs 14 as a logistics cost for a bar of milk chocolate they buy for Rs 100 in India. Due to the automation of supply and delivery, this cost stands at Rs 9 in developed countries like the US.
Tech experts say that for a chocolate company client there is a potential to save Rs 5 for every Rs 100 and automatically make the product cheaper for a common buyer.
This highlights the critical role that the Internet of Things (IoT) can play in the supply chain. Sanjeev Malhotra, CEO, NASSCOM Centre of Excellence says that real-time visibility of products in the supply chain allows the user to plan their inventory even more accurately which will reduce the overall cost of production.
“For perishable commodities transportation, IoT can make possible the real-time temperature monitoring and control, thereby preventing the wastage and maintaining the quality at receiving end,” Malhotra says.
He adds, “These will allow the farmers to realize a higher price for their products. Real-time tracking of shipments can also allow the customers like retail chains to divert the shipment to different stores where the products may be required more urgently.”
Young tech-entrepreneurs, who have entered into the supply chain automation business, say the automation of the supply chain process can save billions for Indian firms in terms of logistics cost, which consists of three elements – transportation, warehousing and administrative.
Sanket Sheth, 33, started Elixia Tech after returning from the US in 2011. He says that the use of technology will simultaneously reduce the cost of the goods and services for common consumers.
Another tech entrepreneur Raghvendra Vishwanathan, 31, from Freight Bro feels that the Indian supply chain has been highly traditional, and digitalizing the process right from the factory till a product reaches the retailers is a huge business opportunity.
Sheth also credits some new government policies to boost startups. “Kilometres of serpentine truck queued on state-border check-posts are history now, courtesy the introduction of E-way bills since February 2018.”
E-way bills ensure that the state taxes are deposited digitally in the government accounts instead of check-posts.
“Digitalization saves time and money. Our supply chain process is automated with the help of Artificial Intelligence (AI), Machine Learning, and IoT (Internet of Things). Every process is tech-enabled right from dispatch planning till the product reaches to the distributors via the transport and warehouse,” says Sheth.
Viswanathan considers the availability of adequate infrastructure as a prelude to the automation process of the supply chain.
“First, we need to fix the infrastructure. SEZs, industrial hubs, and manufacturing units need to be hyper-connected with railways, highways, airports, and ports. Then comes the automation process of the movement of goods and services. India is on the path of reducing logistics costs in the coming years to below 10% of the total GDP in the next decade,” says Viswanathan.
SCL Managing Partner, Ashutosh Mayank says that besides all other things training for supply-chain tech startups is equally helpful in fine-tuning the sales and client business process.
“India needs more quality mentoring programs. In the coming years, we hope that accelerators will start looking beyond metro cities. They would be able to make their presence felt in small towns and cities and groom new-age entrepreneurs in suburban and rural towns,” Mayank said.
He added that SCL has now announced Cohort 2020 under which it will mentor and handhold 11 startups that are solving a wide range of supply chain problems across a diverse set of industry verticals.