Talk on Global Supply Chain: Resilience, Digital Transformation & Sustainability

The VIF under the S&T series organised a talk on “Global Supply Chain: Resilience, Digital Transformation & Sustainability” by Dr Arshinder Kaur, Professor at the Department of Management Studies, IIT Madras, on 9 September 2024. The meeting focussed on the importance of understanding and developing resilient, sustainable, and socially responsible supply chains in the context of geopolitical issues and global vulnerabilities. The participants discussed the need for understanding the global supply chain situation with regard to India and develop its own supply chains. While there was a focus on the geopolitical context of supply chain management, particularly China’s dominance. The possibility of setting up regional supply chains and connectivity which passes through South Asian countries or Middle East countries, the Chabahar port or International North-South Transport Corridor, etc. were discussed where India can play an important role.

Director, VIF, Dr Arvind Gupta, who chaired the session, in his remarks set the tone for the discussion on global supply chains which have been undergoing a dramatic reconfiguration. Dr Gupta highlighted the disruptions in the global supply chain management during the Covid-19 and provided the emerging geopolitical context to it. He underlined the growing merchandise trade imbalance between India and China, despite the Covid-19 and the Galwan incident; and, a wide range of concerns arising out of China’s dominant role in the global supply chains. Senior government officials, representatives from the industry, academia, and members from the strategic community participated in the discussion.

In a typical supply chain, there is flow of goods, money, services and information. In the modern supply chain, the customer is very well connected and aware of buying the products over e-commerce, through omni-channel. The modern supply chain is focussed on integrating logistics and inventory to serve customers ordering from various platforms. The focus of the supply chain is to improve the efficiencies of supply chain either by achieving economies of scale or by distributing in batches. So, the focus is always on cost cutting efficiency and the fast customer service. Importantly, the modern supply chain has significantly transformed because of the internet e-commerce. The changing expectations in supply chains include visibility, resilience, and sustainability. Supply chain operations involve planning, sourcing, manufacturing, distribution, and managing returns. The performance is measured by visibility, digitization, resilience, intertwined supply chains, and sustainability.

In the global supply chain, there is emphasis on cost reduction, competition for new markets and the best supplier try to reach even to the remotest parts of the world to get the best and provide to its customer. This is the reason why one goes for global supply chain, but as one moves global, it’s a lengthy supply chain. And, lengthy global supply chains are prone to risks and threats, such as disruptions and geopolitical issues. It is important to categorize global supply chain risks into preventable risks, strategy risks and external risks for better managing supply chains. There are also heat maps, methods, and models that are available to assess the risk. If the risk assessment is not enough, developing resilience supply chain is a solution. Resilience is about creating the ability for the supply chain to continue operating in the face of a risk event or disruption. It means zero trauma which is not vulnerable to risks, do not fail in the face of disturbances rather they adapt. So, to adapt being flexible and responsive in this dynamic situation is resilient. Enhanced network visibility, modern collaboration platforms, and a common composable architecture are key for a resilient supply chain.

Now, the changing expectations are more of visibility, resilience, and sustainability. So, supply chain needs to be more visible, so that customer has to be aware of where his product is by tracking and tracing. This should be made available and it is only possible with the new technologies. Therefore, the emerging technologies like Artificial Intelligence (AI), Machine Learning (ML), Blockchain, Internet of Things (IoT) are shaping global supply chains. Blockchain technology can help answer questions about the ethical and traceable nature of products in the supply chain. While the AI tools have been embedded across all supply chain entities. AI and ML can help in tracing the whole of supply chains.

The new aspect of supply chain is responsibility of each entity in supply chain to take care of sustainability, environment, recycling and remanufacturing. For social sustainability, empowering micro suppliers and distributors are important aspects of a socially responsible supply chain. There is now a robust startup culture, entrepreneurship in India, but need to intensify that into more rural sector, more remote sector to empower micro suppliers as producer, micro distributor. The retailers or the companies can have shared values of achieving profits along with creating socially responsible supply chain. It would be a win-win for all. However, the main challenges by low-income strata to participate in supply chains are: lack of access to finance, lack of access to market, and, low productivity. So, achieving social sustainability, there is need to empower micro suppliers and distributors in the supply chain.

In her presentation, Prof Arshinder Kaur also highlighted the research themes of supply chain contracts, network optimization, visibility and sustainability that she works with her team. Their ongoing research on industry focus areas include agri-food, automotive and logistics sector. It was emphasized that for creating resilient and sustainable supply chains, the supply chain has to be designed and redesigned to be flexible. There is need to have what if scenarios. What if scenarios are not new, but if these scenarios can be embedded with digital twins. It was suggested to explore the possibility of having alternate suppliers in place and maintaining relationships with them. It was also suggested to improve visibility in the supply chain network through advanced tracking technologies. The importance of implementing modern platforms to enhance communication and integration across sectors were underlined.