The Indian growth syndrome
Skyrocketing growth rates. Opportunities everywhere you look. A highly fragmented market, an uneven regulatory landscape and lagging infrastructure – in India, the rate of change is a curse as well as a blessing. DHL juggles the opportunities and the hurdles, helping customers and the company cope with dynamic growth.
Chaos in the cities
Whatever kind of business they are in, one 'problem' firms face in India is massive growth. International pharmaceutical firm Pfizer produces and sells goods in India. But it uses many different distributers in each state, which are hard to keep track of.
A local Indian company, ITC, grew rapidly from a tobacco company based in Kolkata to a multimillion conglomerate, selling goods from cardboard and packaging to IT and hotels. ITC uses many local firms to meet its distribution needs, which can get costly.
Then there's Galaxy, another Indian firm which imports and exports chemicals and raw materials for firms like Unilever and Procter & Gamble. It expanded quickly in the past thirty years and its supply chain became complicated.
These firms are DHL customers, and the Group finds ways to help with their complex logistics needs. But it is not easy to bridge the gaps between rapid growth and the aging infrastructure. Ships and planes wait a long time at ports and airports. Average truck speeds are low. The regional tax structure is complicated and has led to complex supply chains. A recent KPMG study said logistics bottlenecks slow GDP growth in India by 1 to 2%.
What can DHL do?
"To help Pfizer, we brought in a model that has worked in Australia, called order to cash (O2C)," explains Prithu Srivastava, Director Strategy, South and South-East Asia, DSC Asia Pacific. He and his team help companies address the particular problems of growth.
They found a different solution for local firm ITC. "As the retail industry matures, lots of foreign players are joining the market. Indian firms need best-in-class practices to compete," explains Oscar De Bok, SVP South Asia and Indochina, DSC. That could mean upgrading warehouse security, or streamlining a transportation network. Srivastava's team analyzed ITC's logistics set-up and provided some advice.
For Galaxy, Srivastava and his colleagues coached the firm to measure its transportation differently. "The focus is on creating new solutions to cut the cost of their logistics. We took a cross business unit approach," says Vikas Anand, Chief Operating Officer (COO) DSC India.
If growth is rapid, so is change. In India, taxation varies form one state to the next, but when the new Goods and Services Tax (GST) is introduced, companies will streamline their supply chains, and the DSC team are helping Pfizer and others get 'GST ready.'
As limited warehousing space is available for rent, DPDHL is building multi-user warehouses: one will open in Mumbai this year, and another is planned for Bangalore.
The business units are managing to match and surpass the rapid pace of development. Their collaboration efforts are guided by the corporate Grow India program. Growth in India a problem? Not when DHL is involved.