Supply Chain Risks in India - Essay Example

Assignment Supply Chain Risks in India In this research paper different supply chain risks and its impact on US based enterprise are discussed and analyzed. Governmental Different governmental policies can poses lots of supply chain risks for US based enterprises operating in India. Recently central government of India has increased entry tax of different raw material from one state to another (Basu and Wright, 56-62). It is directly impacting different US based company in terms of their pricing and profit abilities. Increasing taxes making supply chain management more and more costly. Imposing 1% extra tax by government can increase the prize of the products. US based enterprise must be prepared for this kind of government policies. It must keep some buffering place for its supply chain management to counter this kind of uncontrollable risks. Government of India has come up with lots of changes in terms of land acquisition and SEZ status. Modern changes in the land acquisition system creating lots of risks for US based enterprises. It reduces lots of facilities in terms of supply chain. Infrastructure According to Confederation of Indian Industry (CII), India looses almost $65 every year. India is a very large country. Infrastructural development in terms of Supply chain throughout the country is not at all very impressive. US based enterprises bear heavy brunt of these lapses. Poor infrastructure causes lots of problems like lead time of a project get increased, Perishable goods get perished due to dearth of Cold storages. Poor infrastructure of roads and connectivity across the country making it very difficult for the US based enterprise to manage its supply chain. Absence of modern storages and ware houses destroying inventories causing lots of loses for American enterprises. Technological infrastructure in terms of supply chain management is also having lots of limitations. It is very difficult to distribute any product in a remote village of India. Long distance trouble is a great problem for Supply chain management in India. It not only delays the work but also expensive in nature. US companies must go for larger distribution network and it must be cost effective. Infrastructure is a very serious threat for any US based company to maintain its supply chain management. Supplier Indian supplier has huge coordination problems in terms logistics, Inventory management, ordering and product designing. It can disturb the whole business process of any US based enterprise. Suppliers sometimes are very inexperienced in nature. In experienced suppliers are very risky for supply chain management. Skills of the suppliers are also missing some times (Lysons, Farrington and Kenneth, 78-82). These problems related to skills of suppliers sometimes making the final product faulty. Suppliers always don’t maintain the quality of the products. It can tarnish the brand image of any US based enterprise. Suppliers in India use very old technologies. Most of those technologies are out dated according to global standard. This can affect an US based company very adversely. Suppliers are some time very irregular in terms of maintain time for supplying raw materials. This makes it more difficult to manage Supply chain in India by an US enterprise. Enterprise must select its suppliers very methodical and have to measure the performance of different suppliers regularly. Marinating close Relationship is also can be fruitful for the US based enterprise (Boyer and Verma, 56-65). Logistical Logistic cost t is very high in India. Logistic cost contributes almost 14% of India’s GDP. Poor infrastructure is the main reason for high logistic cost. Supply of raw material from one part of the country to another part is very high. This extra cost is affecting the revenue of the US based enterprise. Extreme southern part of India is almost 3700 km away from extreme northern part of the country. Infrastructure as far as transportation is concern is not very good. It calls for lots of spending for an US based company in terms of its movement of logistics. High turnaround times are very high in terms of water logistics. Main port of India takes 2 times higher turnaround time than other nearby ports. It creates lots of problems for US based enterprise in terms supply chain management. Multiple check points in different part of the country slowing down the movement of logistics. It would affect an US based enterprise adversely in terms of on time delivery (Janat, 123-128). Terrorism Terrorism is a serious threat for supply chain in India. The country faces some terrorist problems from its neighboring country Pakistan. It also faces some internal Left wing extremism in some states. Terrorist’s activities like 26/11, Mumbai attack had caused lots supply chain related problems for US based enterprise. Mumbai port, Major Railway stations of Mumbai, Airport was sealed at that point of time. Supply of raw materials got hampered. That terrorist activity halted different activities related with supply chain. It causes lots of problem for US based enterprise in terms of their production. It causes lots of life risks of employees related with supply chain management, transportation and logistics. It interrupts the flow of production for any US based companies. Left wing extremism is generally speeded over the mining region of the Country. Due their terrorists activities often supply of coals get hampered. It can affect any US based company which are operating in the energy sector in India. Supply chain need to resilient, well managed and secure in nature. Natural Disasters Different natural disasters can be serious risk for supply chain management in India. From sides country is surrounded by oceans and other side is covered by Mount Himalya. Natural disasters are very regular in India. In 2004 Southern parts of the Country was hugely damaged by Tsunami. That time different US based automobile companies faced lots of problems regarding their Supply chain management (Kulkarni, 304-307). The most of their installations were situated in the southern state of Tamail Nadu. It faced lots of problem regarding road connectivity, Timely delivery of required raw materials from suppliers. Natural disasters are a highly uncontrollable risk in terms of supply chain management is concern. Natural disaster causes mass damages of existing facilities which affects supply chain networks of any US based enterprise directly and indirectly. Natural disaster like earth quake and flood causes lots of damages of raw materials. It increase the price of those raw material has direct effect on the cost of supply chain. US based enterprises can go for proper insurance to protect their supply chain. Accidents Accidents are also a serious risk for supply chain in India. Poor road infrastructure less developed anti accident technology and reckless nature of people causes lots of accident in the country. US based company’s supply chain faced lots of risks out of those accidents. Gyaneshwari train accident in the year 2010 blocked that rout for almost one month (Waters, 101-105). It was a very important route as far as supply chain is concern. After that accident an alternative route was selected it increased transit time to reach raw materials from one place to another place. It affected lots of US based companies which are involved in Indian energy sector. US based enterprises must design its supply chain network very wisely and anti accident technologies can be included in their supply chain network. Ethics Ethics of Indian suppliers is a serious risk for US based enterprises. Indian suppliers always don’t follows all ethical means related to its raw supply of materials. Sometimes they practice some unethical means for their profit abilities. ISO is an international certification. This certification is very important for maintaining international standards. It is often being noticed that suppliers in India practice different unethical means to get that international certification. This can affect US based companies very badly (Sinha, 78-85). It is apparently showing good quality and standard but the original raw material is not up to international standard. The Result of that is faulty quality of the final product made by US based enterprise. US based enterprise can provide some orientation programs related to ethics to its Suppliers to minimize this risk related to supply chain management. US based enterprise must do an extensive background check of each and every Supplier. It is very important for US based enterprise to do business with ethically transparent suppliers. Price Price is a serious supply chain risk in India. Infrastructure is not up to the mark. It takes lots of money to transport logistics from one part to other part of the country. Prices of raw material also vary from one place to other place. It causes lots of confusions for US based enterprise in terms of managing supply chain networks round the country. It affects the pricing strategy of the product also. As the price of land for setting up any business is very high lots of US based enterprises are facing risk in terms of making their new establishments. US based enterprises must be prepared for sudden price fluctuations in terms procuring raw materials and maintaining supply chain management. Works Cited Basu, Ron and Nevan Wright. Total Supply Chain Management. London: Routledge, 2010. Print. Boyer, Ken. and Rohit Verma. Operations and Supply Chain Management for the 21st Century. Mason: Cengage Learning. 2009. Print. Janat, Shah. Supply Chain Management: Text and Cases. New Delhi: Pearson Education India, 2009. Print. Kulkarni, Sarika. Supply Chain Management: Creating Linkages for Faster Business Turnaround. Bangalore: Tata McGraw-Hill Education. 2004. Print. Lysons, Kenneth, Brian Farrington and Lysons Kenneth. Purchasing and Supply Chain Management. . New Delhi: Pearson Education India, 2010. Print. Sinha, Ashok. SUPPLY CHAIN MANAGEMENT: Collaboration, Planning, Execution and Co-ordination. New Delhi: Global India Publications Pvt. Limited. 2009. Print. Waters, Donald. Supply Chain Risk Management: Vulnerability and Resilience in Logistics. London: Kogan Page Publishers. 2011. Print. Read More