Levers to Improve Economic Performance
This section provides a brief look at some levers that help boost economic performance. We will be examining some of these points, especially those related to supply chain, further on in this report.
Although it is imperative to maintain lean costs to boost economic performance in the current market scenario, what is oft forgotten is the need to maintain lean cash. By this we mean:
- Cash tied to inventory: by improving service levels through delivery and turns
- Improve working capital flows: this will help unlock the potential of this one-time cash
- Rationalize the operational CAPEX: this can help in reduction and postponement of CAPEX expenditures
Under the maintenance of lean costs we need to look into the following key areas:
- Departmental costs: optimize the all division costs; be it HR, Legal,
Finance, Public Relations and so on
- IT: find new ways of automating processes and reducing manual human interventions
- Supply chain: companies might want to outsource non-core activities and stop reverse logistic processes like returns, damages etc
- Service levels: reduce extra service costs like warranty
- Product development: improve productivity & efficiency with focus on lowest costs
- Manufacturing: adopt lean measures
- Reduce indirect procurement: such as travel & healthcare
- Organization streamlining: reduce management layers and improve span of controls
Facts About India & its Supply Chain
India's diverse economy ranges from traditional village farming, modern agriculture, handicrafts, to a wide range of modern industries, and a multitude of services. Services, however, form the major source of economic growth, accounting for more than half of India's output with less than one third of its labour force.
About 60% of the work force is still in agriculture, leading the government to focus on improving the lives of the rural poor by developing basic infrastructure, and boosting the economic performance. The government has also reduced controls on foreign trade and investment; for example it has raised the limits of foreign direct investment (FDI) in key sectors, such as telecommunications.
The Indian logistics industry is also poised for a significant leap forward in the coming years because of the view that India would become the leading global hub for manufacture of automobiles, auto ancillaries, pharmaceuticals ,high technology electronics, processed foods, textiles etc. as well as the services sector like IT, tourism, health services, finance, education, BPO's etc .
In the early 2000s, when companies undertook supply chain management studies of a large magnitude, the top objective of leading supply chains was to increase profitability – while, at the same time, reducing costs and improving quality. Now, companies are moving away from a direct focus on cost reduction to put increasing focus on customers, by putting responsiveness and customer servicing within its set of three top objectives.