The logistics industry in India is a key driver of the economy. In 2020, the Indian logistics market was valued at $215 billion and is estimated to reach $320 billion by 2025. This growth is being driven by a number of factors, most notably- the rise of e-commerce, the domestic manufacturing boom, and the government's focus on infrastructure development. The industry currently contributes around 13 % to the national GDP, and the government is keen on bringing Indian logistics on par with global standards by facilitating solutions through policy. One of these solutions is implementing a unified platform approach.
What is a Unified Platform for Logistics?
A unified platform is a single system that integrates all aspects of the logistics process, from planning and execution to tracking and monitoring. Instead of using separate systems for fleet management, supply chain visibility, record management, resource allocation, and finances, a unified platform connects all stakeholders and processes together in one place.
How are Indian Shippers and Carriers Affected?
The logistics industry in India operates within a fragmented landscape, with numerous stakeholders working in isolation. This poses significant challenges, and limits the potential growth and efficiency of both shippers and carriers. Therefore, there is a pressing need for a unified platform approach that brings together all participants in the logistics ecosystem. This section will discuss the challenges arising from the fragmented logistics landscape in India and how a unified platform approach addresses these limitations.
1. Inefficiencies and Operational Challenges:
The fragmented logistics landscape in India often results in inefficiencies and operational challenges for both shippers and carriers. Shippers struggle to find reliable and cost-effective carriers due to the lack of a centralized platform for connecting with transportation service providers. As a result, they may result in poor routing decisions, higher transportation costs, and difficulties in managing multiple carrier relationships.
On the other hand, carriers face underutilization of their assets, including vehicles and warehouses, due to the absence of an integrated network. This leads to wasted capacity, increased fuel consumption, and operational inefficiencies.
2. Lack of Visibility and Transparency:
Transparency and visibility are critical for successful logistics operations, but the fragmented landscape in India often hampers these aspects. Shippers often face challenges in tracking their shipments and obtaining real-time updates on their progress. This lack of visibility increases the risk of delays, loss, and damage to goods.
Additionally, carriers struggle to gain visibility into customer demand and available shipping requirements. Due to inadequate coordination, poor communication and mismanagement, carriers often have empty or partially loaded vehicles on the road, leading to wasted revenue potential and higher costs. This inefficiency not only impacts their profitability but also contributes to unnecessary traffic congestion and environmental concerns.
3. Limited Access to a Wider Customer Base:
Without a centralized platform, carriers often find it challenging to reach potential customers beyond their existing networks. Traditional marketing and sales efforts can be time-consuming and expensive for small carrier companies to carry, and keeping up with the e-commerce demand in the country is no small task. This limitation hinders their growth prospects and reduces opportunities for business expansion.
Similarly, shippers face difficulties in identifying reliable carriers that meet their specific requirements, resulting in limited options and potentially compromising service quality and cost efficiency.
4. Coordination and Communication Challenges:
Efficient coordination and communication are vital for successful logistics operations. However, the fragmented landscape in India often leads to coordination challenges between shippers and carriers. The lack of a unified platform makes it difficult for these parties to collaborate seamlessly, share information, and align their processes. This can result in miscommunication, errors, and delays in the supply chain, negatively impacting customer satisfaction and overall operational performance.
The Problem-Solving Power of a Unified Platform Approach
Implementing a unified platform approach in India's logistics industry offers a comprehensive solution to the above mentioned challenges posed by the fragmented landscape. By bringing together shippers, carriers, and other stakeholders on a centralized platform, this approach addresses the limitations and unlocks numerous benefits:
1. Streamlined Operations and Improved Efficiency:
A unified platform streamlines logistics operations by integrating various processes and functionalities into a single system. This integration eliminates the need for multiple vendors and enables seamless data flow between different parts of the supply chain. Real-time updates and access to relevant information empower stakeholders to make better-informed decisions, resulting in improved efficiency and optimized resource allocation.
2. Enhanced Visibility and Transparency:
By implementing a unified platform approach, shippers in the Indian logistics industry can benefit from enhanced visibility and facilitate a robust Transportation Management System (TMS). The unified platform can provide real-time updates on the status and location of shipments, enabling shippers to track their goods throughout the supply chain. This visibility ensures transparency and helps in providing accurate and reliable information to customers. Additionally, the integrated TMS streamlines transportation processes, allowing shippers to optimize routes, consolidate shipments, and efficiently manage carriers.
Similarly, carriers in the Indian logistics industry can leverage a unified platform approach to enhance visibility and integrate an Enterprise Resource Planning (ERP) system. The platform offers real-time tracking and visibility features, enabling carriers to provide accurate shipment updates to shippers. This visibility builds trust and strengthens customer relationships.
The ERP system centralizes various aspects of carrier operations, including fleet management, resource allocation, inventory control, and financial management. This integration optimizes resource allocation, reduces empty trips, and enhances overall operational effectiveness.
3. Expanded Reach and Business Opportunities:
A unified platform approach expands the customer base for carriers by providing access to a broader network of shippers. Carriers can showcase their services, capabilities, and performance metrics on the platform, making it easier for shippers to find reliable transportation providers. This expanded reach opens up new business opportunities for carriers, promoting growth and market expansion.
4. Improved Coordination and Communication:
A unified platform fosters seamless collaboration and communication between shippers and carriers. By providing a centralized system for sharing information, it reduces miscommunication, errors, and delays. Stakeholders can efficiently coordinate their activities, share real-time updates, and align their processes, leading to smoother operations and improved customer service.
5. Harness the Power of Data and Analytics
A unified platform approach facilitates the gathering and integration of vast amounts of data from various sources within the logistics ecosystem. This includes data related to shipments, routes, carriers, inventory, customer demands, and market trends. By centralizing information and leveraging advanced analytics tools, a unified platform enables more informed decision-making and resource optimization.
Furthermore, a unified platform can employ predictive analytics algorithms to forecast future demand accurately; for example, shippers can proactively adjust their inventory levels, optimize warehouse capacity, and plan their transportation needs based on these demand forecasts. This helps to minimize stock-outs, reduce inventory holding costs, and enhance overall supply chain responsiveness.
A Unified Platform Approach is the Next Logical Step
A study by Gartner found that companies that use a unified platform for logistics can achieve a 10% increase in efficiency and a 5% decrease in costs. Another study, by Aberdeen Group, found that companies that use a unified platform for logistics can achieve a 20% increase in revenue. The same study also found that these companies are better able to expand into new markets and grow their business. Therefore, it should come as no surprise that a unified platform approach for logistics in India has the potential to significantly improve the efficiency and effectiveness of the country's logistics sector. A study by the World Bank found that India could save up to $150 billion per year by improving the efficiency of its logistics industry.
The unified platform approach is not a silver bullet by itself, but it is a promising solution that has the potential to make a significant impact on India's logistics sector. Through a unified platform approach, logistics companies in India can drive efficiency, improve collaboration, enhance visibility, and adapt to the changing landscape of the industry.