It is essential that the concepts of warehousing and distribution centres replace outdated notions such as the 'godown' concept.
--BY ANUJ KUMAR GEHLOT
The last few decades have seen the waves of globalisation reaching Nepal. Nevertheless, the global supply chain is one of the many aspects of international trade where the country is left untouched, at a time when economies are competing with each other and demonstrating that they have excellent products and cost-effective service delivery with an endeavour to establish international business benchmarks by attaining agile, extended and lean Six Sigma supply chains.
Transport and logistics play essential roles in any supply chain system. At present, Nepal is striving for good infrastructure. Manufacturing industries are the potential agents of change and socio-economic growth but firstly, issues related to logistics and organised transportation routes need to be addressed.
The global logistics industry is estimated to be worth USD 15.5 trillion in 2023 in terms of value and 92.1 billion tonnes in terms of volume. While the logistics industry has come a long way and has always been striving for reduced operational costs, improved delivery, and better customer service, the industry is still plagued by rising operational costs and a shortage of talent. In Nepal’s context, GDP has increased to 85,785 NPR Million in 2017 from the record low of Rs 34,055 million in 2001. Similarly, the share of the manufacturing sector in the country’s GDP has risen to Rs 52,408 Million in 2017 from Rs 36,364.03 million in 2001.
The picture is palpable. Whatever rate the manufacturing sector is growing in, supply chain, logistics and a skilled workforce are not growing in the same proportion.
Therefore, it is the ideal time for the government to turn their focus towards this issue. Addressing it will not only fulfil the domestic demand and contribute to the nation’s growth but will also allow local talent to prove their worth on the global stage, which in turn will further add to the nation’s development.
Supply chain management is a vast field that encompasses procurement, demand planning, supply planning, warehousing, logistics, physical distribution, inventory management, vendor management and production planning. The world at large is shifting towards extended supply chain management, whereas in Nepal, stakeholders have not been able to organise and foster logistics, which is one of the key operational sectors of supply chain management.
The dynamics of the country, and by extension, the manufacturing sector are changing. However, the change will remain temporary unless supply chain practices are applied in parallel. It is essential that the concepts of warehousing and distribution centres replace outdated notions such as the 'godown' concept. Similarly, organised and efficient logistics must take over from the traditional transportation model. Intangible costs can be monitored through supply chain practices and the development of a supply chain skill through training and education will gradually reduce those costs over time if the concepts mentioned above are implemented. Over time, these practices will lead to profit.
The author is the Head of Supply Chain at Vishal Group. He can be reached at [email protected].