India is a land where ancient culture meets modern technology — and the country’s retail sector is a reflection of that. The two main retail formats are modern/organized retail and traditional/unorganized retail. The former is defined as large-scale chain stores or e-stores that apply modern management techniques and principles to business, while traditional retail includes local department stores, street vendors, and markets that follow informal business practices.
Retail supply chain management, however, is essential to both these formats. It is the process of delivering goods to consumers as fast as possible, preferably without paying an outrageous amount. It must be optimized to be as efficient and affordable as can be managed.
In this blog, we aim to give you an insight into supply chain dynamics in the Indian retail industry, with an emphasis on challenges and complications faced by retailers, the role of technology in logistics, and the importance of collaboration.
What are the Main Challenges and Complications in the Retail Industry?
India is witnessing continuously changing lifestyles, increasing income, and rapid urbanization, resulting in insatiable customer demand. Although several advantages come with having access to such an enormous market, the retail industry does face its challenges.
Increasing competition
It’s a dog-eat-dog industry, and the massive increase in competition between similar or identical products and brands attests to that. To retain profitability and resilience, businesses are relentlessly trying to find cheaper goods and services, which often compromise quality.
Large corporations vs. smaller retailers
Another challenge is the undeniable advantage larger corporations have over smaller retailers, solely due to access to a huge amount of funds. This is unfortunate as although our beloved local mom-and-pop stores constitute the major portion of the Indian market, they are unable to maintain large inventories, use proper warehouses, or ensure quick delivery timings. This frequently results in larger companies swooping in and putting the local stores out of business entirely.
Network and transportation issues
Poor road network facilities and unavailability of regular transportation to remote areas also adversely affect both the retailers and customers. Since over 75% of people in India live outside cities and depend almost solely upon the small general retailers, both supply and demand remain unsatisfied.
Communication complications
Although communication services have improved tremendously over the last few years, a lack of information and awareness still exists in certain areas. This can lead to the selling of expired products, unhygienic storage facilities, and ineffective delivery and return systems, all symptoms of a failed supply chain.
The Effect of Modern Technology on Logistics
We are in the midst of the tech era, with new innovations appearing almost daily. One industry that has been transformed by the storm of new technology is logistics. In a short amount of time, it has helped streamline and improve daily business processes and supply chain management.
The rise of 3PL and 4PL
One of the main benefits of technology in logistics is that it has improved efficiency and transparency by leaps and bounds. Third-party logistics providers (3PLs) and fourth-party logistics (4PLs) providers use wireless technologies and cloud computing to automate systems and improve accuracy. The use of Customer Relationship Management (CRM) allows 3PLs and 4PLs to streamline their client supply chain activity and improve client relations.
Technology in shipping
Technology in shipping comes in the form of radio-frequency identification (RFID) tags. They can be tacked onto inventory, allowing it to be traced through the entire process. Blockchain technology, a decentralized public ledger system that stores transactional records, documents all changes to a record in real-time, making it difficult to hack or cheat.
Reduction of human error
Technology provides nearly impeccable data-capture which improves processes, identifies faster routes, pinpoints bottlenecks and mistakes, and provides analysis on areas of improvement. It reduces labor costs, manual errors, and streamlines data-capture and management.
Having access to real-time information across the entire supply chain has been a game-changer, allowing companies to track their current operations and forecast business expectations.
Collaboration in Logistics: Building a Future Together
COVID-19 has shown us how vulnerable businesses are to disruptions in the supply chain. Hence, collaboration has become more important than ever before. It goes hand-in-hand with effective communication, ensuring efficiency and optimization of a supply chain.
Building an agile network
Collaborations include improving communication between and working with both internal stakeholders as well as external organizations. Businesses have realized that building agile networks and channels will allow them to navigate any sudden changes in their operations and environment.
An increasing number of organizations are reviewing their strategies and process, and have realized it is vital to build systems and teams that are flexible and able to adapt to a different world.
Sustainability through collaboration
With the rise in awareness and the need for sustainable and ethically-sourced products, businesses are also engaging with companies and individuals that help them reduce their impact on the environment.
Improving communication
In addition, collaboration is essential for strategic workforce management, helping employee productivity and boost morale. It helps personnel to feel more connected to the entire process, which increases the feeling of fulfilment. All this boils down to better customer service and increased satisfaction.
Suffice to say, for all businesses to stay up and running, it all comes down to how effective their supply chain management is. Government assistance, incorporation of modern technology, and continuing innovation are vital to successfully maintaining the unique Indian retail sector.