Letter to BS: How new GST regime could make supply chains faster, simpler

This refers to “Creating more agile supply chains” by Indrajit Gupta (March 8). This is the most relevant topic from a competitive advantage point of view from micro (company) level to the macro (national) level. Redesigning the supply chain systems started in India by leading multinationals such as Hindustan Unilever Limited (HUL) in the early 90s to improve the servicing standard to its customers at optimum cost as was being done by companies worldwide. India had multiple markets in one country in the pre-Goods and Service Tax (GST) era. Moving into one market ensures that industry moves where efficiency lies and stocking points are decided by optimisation rather than state tax laws.

 

In supply chain systems, two important parameters are, the route the material takes from generation point to consumption point and how often the material travels in that route. Introduction of GST has ensured that efficient companies look for a close-to-straight-line route by opening warehouses at the right locations. More than transport cost, the real saving is the unlocking of unproductive capital to an extent of two thirds by reducing stocking points.

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Dr Sanjeevi  Chennai

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