Why 2025 needs India to focus on building a green supply chain now

Why 2025 needs India to focus on building a green supply chain now
Apr 2016 , by , in ARTICLE

The Indian cement industries which can trace its beginnings back to 1914 has come a long way since. The first cement plant commissioned in India had reported an output of 1000 tons/annum and now the country has developed into the second largest cement producer in the world. India is the second largest market globally ~390 mt annual capacity (approximately 8% of world capacity)—US consumption 2013 report. Fueled by strong economic growth, rising population and rapid urbanization, the construction sector is one of the fastest growing sectors in India today.

Second only to the agricultural sector, the cement industry currently employs 33 million individuals, with an incremental workforce requirement of about four million people per year. The Indian cement industry today, is comparable to the best in the world in respect to quality standards, fuel and power consumption, environmental norms, use of latest technology and capacity. The productivity parameters are now nearing quality improvements with the use of alternate fuels and raw materials, which have not only ensured improvements in productivity but have also been able to reduce production costs. Effective environment management continues to play a key role in the efforts of the cement industry to operate in a sustainable manner.

Logistics planning involves efficient integration of suppliers, manufacturers, warehouses and stores and encompasses the firm’s activities from the strategic level through the tactical to the operational level. However it also been observed to playing a vital role in making the finished product conform to customer requirements.

The effective planning and management of a logistics and supply chain is a challenge for most countries. Like in the case of the Nigerian cement industry, the supply chain cannot rely on the rail system due to the obsolete railways system, therefore they are purely based on roads (i.e. use of trucks), which contributes to the increase in pollution levels. To bring the railways back into operation, new infrastructural developments would have to be put in place, which can lead to cheaper, less polluting and more efficient system for an effective supply chain process in Nigeria. This country is a prime example of steady economic growth, facing the risk of losing such a position if such prime economic indicators, as an efficient railway system continue to develop at snail’s speed.

The cement industry in India too faces challenges in terms of developing its logistics system. There is a lack of IT implementation, which at present is developing at a slow pace due to the implied additional costs. On the other hand, India has the largest railway network in Asia, which should have been the preferred means for bulk transport instead of using the country’s road systems for a more effective usage of the present infrastructure. However since the rail network, rolling stock availability and last mile connectivity are major bottlenecks, road transportation on account of better road infrastructure, varied fleet mix and service requirements has become the preferred mode of transportation for the cement industry.

Going green is not a one-time proposal, but a continuous effort to recognize ways to diminish a company’s environmental impact and improve business standards. Considering the obstacles faced by the cement industry in the country, companies should aim at designing a supply chain which would ensure usage of the same amount of fuel for more products transported, covering more distance. This would enable the resulting savings to be passed on to the customer as well. Also adequate monitoring and acquiring data is a fundamental way of making a supply chain more effective and safer for all stakeholders involved. Simple technologies can go a long way in achieving this goal such as installation of Radio Frequency Identification Device (RFID) and Global Positioning System (GPS) in all vehicles.

RFID and GPS together can ensure better visibility of trucks with complete transparency in the process, by tracking the historical data of trucks and time taken from Gate In and Gate Out of the plant. These modifications can help reduce waiting time for trucks, which is one of the main challenges of time efficiency and it also helps reduce hazards such as high accident rate on the road, product wastage and traffic congestion on the highways.

In the next decade, the Indian economy will have grown multi-folds and consumers will have become much more heterogeneous, presenting organizations with a unique set of opportunities and challenges. The supply chain will be impacted by various evolving macro-factors such as mega cities, increased consumer segments, increased global trade and more importantly affordable technologies. Therefore there is a need for a green supply chain system which can reduce the ecological impact of industrial activity without sacrificing quality, cost, reliability, performance or energy utilization efficiency. It involves a paradigm shift from an end-of-pipe control aimed at simply meeting environmental regulations to adopting measures which succeed in not only minimizing ecological damage, but also leading to overall economic profit.

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