If you own a logistics company in India, you must know that it is riddled with issues. Even though the industry is projected to show immense growth after the introduction of the National Logistics Policy (NLP), it still faces continual challenges that diminish its competitiveness. Knowing these logistical issues and their solutions can empower any business or fleet owner to make the best in this $200 billion industry (expected to grow to $350 by 2025). Let’s go through the blog to know the bottlenecks and ways to maximise your profits.
Top Logistical Issues Faced by Logistics Companies in India
Rising Transportation Costs:
Rising transportation costs are a major logistical issue for businesses operating in India. Factors like fluctuating fuel prices, toll charges, and vehicle maintenance expenses contribute to escalating transportation costs, making it one of the biggest challenges faced by logistics companies in India. A leading FMCG company had to revise its product pricing due to the impact of rising diesel costs on its distribution network. Whereas, for small and medium enterprises — this issue is a serious dent to their pockets, as they rely on third-party logistics providers and face challenges in absorbing these increasing costs.
Finding the Best Routes for Faster Delivery:
When it comes to logistical issues, finding the best routes for faster delivery is a significant challenge. India’s road network, while extensive, suffers from poor quality and inadequate maintenance. According to a report by the World Economic Forum, India ranks 63rd out of 141 countries in the quality of road infrastructure. Therefore, it slows down transportation and increases operational costs for logistics companies in India. Dynamic traffic conditions and diversions can add significant time to deliveries and waste up to 30% of driving time.
Effectively Managing Customer Expectations:
In recent years, we have witnessed an exceptional rise in e-commerce. Companies including Amazon, Flipkart, and Blinkit have created unrealistic customer demands. According to a report by RedSeer Consulting, in 2022, over 40% of online orders faced delays because of logistical issues, resulting in poor customer satisfaction, increased return rates, and a loss of business. What they fail to understand is that roughly two days are spent managing loading and unloading because of inefficiencies at the recipient’s end. Even though this is a complex issue, it can be resolved using modern tracking technology. This issue results in widespread dissatisfaction and negative reviews which cause a major revenue loss to logistics businesses.
Inventory Management Challenges:
Companies across various sectors struggle to synchronise logistics supply chains with inventory management, leading to inefficient inventory tracking, forecasting, and stock level optimisation. Further, it leads to issues such as overstocking and stockouts, resulting in excess carrying costs, traffic violations, and potential obsolescence. Stockouts, on the other hand, result in production delays and missed sales opportunities. In 2018, KFC was forced to close around 450 UK branches due to supply chain disruption. This disruption led to 255 people losing their jobs and the company losing approximately $1 million a day. Thus, highlighting the need for process improvements and technology adoption to ensure consistency in inventory operations.
Regulatory Compliance and Customs Issues:
India’s strict regulations and customs procedures can be a nightmare for logistics companies. Imagine a shipment of perishable food items rotting at the port because of delays in obtaining clearance from various food safety authorities. This scenario, unfortunately, isn’t uncommon. Clearing customs can be a nightmare, with a report highlighting that consignments spend an average of seven days at major Indian ports awaiting clearance.
Theft and Pilferage:
Theft and pilferage remain persistent problems plaguing the Indian logistics industry. According to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian logistics sector loses approximately ₹13,000 crore annually due to cargo theft and pilferage. Tata Motors, India’s largest automobile manufacturer, reported a merchandise theft incident worth ₹1.9 crore that occurred during a transit in Maharashtra. The incident has resulted in production delays and increased security costs for the company. It also highlights the serious impact of cargo theft on even the largest companies in India.
Leveraging Technology to Battle Logistical Issues in India
As mentioned above, the logistics companies in India are grappling with numerous issues. It hinders smooth operations and efficient supply chain management. From poor road infrastructure and rising transportation costs to inventory management challenges and regulatory hurdles, the obstacles are manifold. However, the Internet of Things (IoT) presents a ray of hope in overcoming these logistical nightmares.
Battling Rising Transportation Costs:
Fuel theft and inefficiencies can significantly inflate transportation costs. A solution like a Fuel Monitoring System can provide real-time fuel level data, allowing companies to detect pilferage and optimise fuel consumption through route planning. Logistics companies are saving up to 25% on fuel costs by identifying unnecessary idling and unauthorised fuel usage.
Finding the Best Routes, Faster:
India’s road woes are well-documented. GPS-based Vehicle Tracking Systems provide real-time location data and insights into traffic conditions. This empowers companies to optimise routes dynamically, reducing delivery times and fuel consumption.
Managing Customer Expectations:
E-commerce thrives on timely deliveries. Real-time tracking platforms provide customers with constant updates on their orders, fostering trust and managing expectations. Now an e-commerce platform with complete transparency on delivery timelines. Furthermore, it leads to happier customers and fewer complaints!
Combating the Lack of Visibility:
Blind spots in the supply chain can lead to chaos. Inventory management systems provide real-time data on stock levels. It allows companies to optimise inventory, prevent stockouts, and reduce carrying costs. Fleet owners can also provide real-time information to their customers to improve customer satisfaction.
Securing Cargo and Minimising Theft:
Cargo theft is a persistent nightmare. Digital locks with GPS tracking capabilities provide real-time location data and tamper alerts. Therefore, it deters theft attempts and ensures cargo security. Now you have an e-commerce company securing deliveries with digital locks, minimising pilferage, and building customer trust.
The Road Ahead: Embracing Technological Solutions
These are just a few examples of how technology can revolutionise India’s logistics landscape. By embracing these solutions, companies can achieve greater efficiency, cost savings, and improved customer satisfaction. As India continues its economic growth journey, a tech-driven logistics sector will be the engine propelling it forward.