Supply-Chain Recovery: Globalization To Regionalization
The pandemic will continue to impact projects and supply chains in 2021. In response product manufacturers as well as the construction companies are changing strategies to adapt to the new work scenario.
The lockdowns and trade restrictions have created disruptions in the regional, domestic, and global construction resourcing including availability of labour, plant, machinery, materials, capitals, etc. Gurjot Bhatia, Managing Director, Project Management- India, Middle East, North Africa, CBRE expressed, “There’s no denying that the pandemic has had a negative impact on construction activity. On time delivery of equipment and material are becoming a challenge as delayed projects open back up and new construction activity is gradually starting.”
Atul Desai, CEO & ED, Prism Johnson Ltd, RMC India agreed, “The supply side disruption means raw materials shortage, labour shortage, and transportation problem. Many manufactures are not able to create enough raw materials for the industry demand and requirements, but we will have to embrace change and develop new business models for the future.”
Mario Schmidt, Managing Director, Lingel Windows and Doors Technologies Pvt Ltd said, “As a manufacturer with global footprint, we have an advantage, but present situation also include local challenges of availability of local workforce and managing local transport as well as compliance with local health safety norms. .”
Shabbir Kanchwala, Sr. Vice President – Project Co-Ordination, Purchase, Contracts & Billing, K Raheja Corp mentioned, “Unavailability of materials was the major issues faced by everyone. We need to localise or regionalise the supply chain process. International products, technologies and equipment will continue to find place in Indian construction. However, the industry has also woken up to similar quality products available right here in India.”
Tikam Jain, President- Procurement, Lodha Group explained his strategy, “We can divide supply chain in two parts – the material component and the labour component as most labourers had gone back to their villages. With gradual unlocking, we brought back the workers on site, providing proper sanitized environment, food and stay facility. Next, we planned our need for the materials in advance so that the work should not get affected. As there was problem in getting imported raw materials we explored regional markets.”
Srikanth Srinivasan, Group Head- Procurement, DLF Limited added, “To call last few months challenging would be understatement. We involved ourselves with local material providers as they can easily visit site and can provide materials according to our requirements. In the face of present challenges, we are expanding our local suppliers list.”
Given the limitations of capital, resources and necessary health protocols, project owners, contractors and manufacturers will have adopt clear strategies to build resilience and safeguard projects from future emergencies.
PREPARING FOR THE FUTURE
By embracing innovation in the form of various technologies and agility as the business mantra, the construction sector is all set to face the challenges in the times to come. Tikam Jain said, “The opportunity of improvement in supply chain has been recognized. There’s an increasing trend among many companies to promote the Supply Chain-as-a-Service (SCaaS) business model.”
Atul Desai said, “For a sustained cost reduction, quality becomes a fundamental factor, in terms of initial and maintenance cost. If raw materials are procured locally, transportation costs reduce. Additionally, high performance construction materials not only offer superior quality but also durability and eco-friendly characteristics too.”
Shabbir Kanchwala stated, “Even before the pandemic, there was a shift towards newer technologies and construction software to reduce cost and time in production. The pandemic has accelerated the trend. Also, green products and projects are in demand especially in commercial realty segment as the occupiers understand the significance of a eco-friendly green project from health point of view. In residential sector though, consumers need little more awareness to understand this. “
Mario Schmidt agreed that sustainability was becoming a big demand in 2021. “We as a company look at the amount of carbon footprints in the projects. We have collaborated with a regional NGO to plant significant amount of trees. Consumer also needs to be aware that environment is important and should look at sustainable development while choosing a project.”
Gurjot concluded stating that, “At the project level sustainability has become the major component for future developments. Supply-chain agility and adaptability is another tren that is fast catching. In terms of technologies, large-scale automation, along with machine learning will take things to a whole new level, making the construction process more streamlined and efficient.”
Indeed, the future holds a lot of promise. The year 2020 crisis has left us with lot of new learning and the Indian real estate has well adapted to the “new normal” by changing in sync with the times. The challenges continue but slowly and steadily with global and domestic productions inching towards normalcy, the material procurement is reaching normalcy.
“One central point of consideration in the supply chain today is green products. Trends have shown an overall shift among the broad customer base towards a more eco-aware business model.”