Procuring yield directly from farmers can help eliminate issues such as high logistics costs, risk of contamination or food wastage, loss of valuable time and resources, and other major disruptions
New Delhi: Survival of the fastest is the new norm in Indian retail, as the market demand is driven by convenience. According to a study by Deloitte, customers want access to healthy and fresh products at ease, but they want it at their convenience, which has ushered in a stronger need for retailers to meet this demand quickly and effectively. However, addressing this need for speed presents a formidable challenge due to existing gaps in supply chains encompassing logistics, infrastructure, and technology. Fragmentation in the supply chain introduces hurdles related to product consistency, quality, and overall customer experience.
Functioning in siloed structures, decision making and interconnectivity between various customer-and-production-focused data results in lost opportunities. Perhaps that is why Indian retail is being undersupplied. A recent report by Clasp revealed that only 10% of agricultural produce makes its way through cold storage facilities. The uncertainties in supply chains can have adverse effects on the revenue generated by grocery retailers. A recent study by Economist Impact showed that businesses ended up losing 10% revenue due to inconsistencies in the supply chain.
Supply Chain Challenges
Infrastructure has perpetually been a major challenge in the smooth functioning of supply chains. Rising disposable incomes in urban India pose a unique opportunity for growth in the infrastructure sector and is directly responsible for many concurrent industries like grocery retail to flourish. India’s growth in the next 25 years, depends primarily on the transportation and logistics sector. Presently, Indian road transportation caters to over 60% cargo movement, over 30% depends on rail, while shipping and air cover the rest.
Despite India’s competence on the global map given the high freight traffic, infrastructure bottlenecks still exist. Heavy influx of traffic on roads, ports and stations pose a hindrance in an otherwise potentially smooth supply chain. It often results in the loss of two most important elements—time and money—especially when the urban Indian customer demands fresh, healthy and exotic products, as soon as possible.
The availability of such items, considering the long distances involved and their limited shelf life, demands enhancements in technology, a skilled workforce, and adequate storage facilities. As retailers in India address these challenges, the need for new strategies to manage existing supply bottlenecks becomes evident. A fully backward-integrated approach is key to planning for many of these contingencies.
Building resilient supply chains
A fully integrated seed-to-plate model is a great way to iron out supply-chain inefficiencies, especially for premium retailers. It ensures that the demand and supply gaps are constantly monitored and adjusted with ease. Such a model allows retailers to guarantee fresh, exotic and healthy produce to be readily available, while also addressing contingencies including gaps in distribution and warehousing.
However, not all retailers follow this model and must handle the supply gaps. They can counter contingencies by establishing direct contact with farmers and aiding them with necessary equipment so the process of sourcing fresh produce is smooth. Delivering their yield straight to retailers can help eliminate issues such as high logistics costs, risk of contamination or food wastage, loss of valuable time and resources, and other major disruptions.
Revamping India’s supply chains requires collective action from both the government and businesses. The Indian government’s initiatives like National Logistics Policy and Gati Shakti, aimed at eliminating the instabilities in the Indian supply chain completely are a step in the right direction. However, its implementation still seems to be a challenge and requires a seamless interconnection within all stakeholders.
Public-private collaborations in this case can work best, ensuring better infrastructure, technologically equipped transportation and warehouses, cold storage for perishables, skilled workers and more. Such collaborations also result in greater flexibility resulting in better outcomes for all stakeholders.
Changing customer demands of modern India is putting the discrepancies of the Indian supply chain on display, especially for grocery retailers who have a lot at stake. Businesses and stakeholders can effectively address these challenges with a few strategic steps. Shifting attention from the traditional distribution channels to a seed-to-plate concept has the potential to revamp the entire market, putting the growth of grocery retailers on an upward trajectory.