Leaders Opinion

Supply Chain: The New Competitive Edge

January 31, 2025 5 min read

Dr Ashish Negi

DHL Supply Chain, Vice President - Service Logistics

Supply Chain

As India strives to realize its ambitious economic goals, including achieving a GDP of US$5.5 trillion by 2027 and realizing Viksit Bharat @ 2047, the creation of resilient, world-class infrastructure across the social, financial, and digital sectors is a key enabler of the country’s strategy.

One of the key tenets to achieve these goals is, and will continue to be, supply chain playing a pivotal and strategic role in organizations and the country. The Indian logistics industry is currently valued between US$250-300 billion, with a growth rate of 10-12% CAGR over the next five to seven years. This sunrise industry currently employs over 22 million people and contributes to over 15% of the GDP. While the current costs of logistics as a percentage of GDP remain between 10-12%, India has improved its Logistics Performance Index (LPI) ranking from 44 in 2018 to 38 in 2024. Various government initiatives – such as the National Logistics Policy, Gati Shakti, dedicated freight corridors, and incentives for manufacturing – have played a significant role in this progress and aim to bring logistics costs down to a single-digit percentage.

Until the pandemic, traditional supply chains primarily addressed and fulfilled a relatively stable demand. They worked in silos and were plagued by inefficiencies due to manual decision-making, inaccurate forecasting, and fractured data availability. These led to poor service delivery, delayed product availability and consequently, loss of business. Additionally, these supply chains had preset priorities focused on balancing cost, quality and service.

However, in the aftermath of the COVID-19 crisis and its economic impact, cross-border conflicts, wars, waterways disruptions (such as the Suez Canal) and trade wars have exposed the vulnerabilities of today’s global supply chains. These disruptions, now more frequent than ever, have severely impacted countries and regions worldwide, putting supply chains in the spotlight. As a result, supply chain leaders have gained boardroom attention, recognition, and the mandate to drive organizations toward success. This marked an unfamiliar position for supply chain professionals before the pandemic. The shift in market dynamics, changes in customer behaviour (demanding faster and quicker deliveries), and rising expectations of service models (such as direct-to-customer) have further added to the complexity and the risk of supply chain management.

In this new era, supply chain leaders have become change agents in how business is conducted. They are now expected to drive transformation, making supply chain management a new competitive advantage for organizations globally. This transformation brings together a few more dimensions that would lead to success: supply chain resilience, agility and sustainability. Together, these elements contribute to building a robust, connected, and integrated supply chain.

Supply Chain Resilience now plays a critical role in ensuring future success in both current scenarios. The risks we face today – be it geopolitical, financial, or social – are not only real but recurring. At times, these risks can be so severe that they lead to irreversible failures and even the collapse of companies.

The complexity and diversity of risks require intelligent tools and techniques, such as heat maps, to assess potential disruptive events and proactively mitigate such risks.

Organizations worldwide are restructuring their supplier base strategically, improving product quality and balancing shipping and workforce costs. The shortage of supply chain talent has also accelerated the adoption of automation, including collaborative robots (COBOTS), which can work collaboratively alongside human workers.

Organizations that can rapidly move or reorganize their assets across the supply chain in response to unanticipated supply shocks will continue to grow profitably in the future.

Supply Chain Agility - In the post-2019/20 economy, organizations face new and complex challenges. As consumer expectations shift, organizations have less control over demand variability. The emergence of new, often disruptive players is changing the retail channels, especially marketplaces and e-commerce platforms, by increasing and expanding available choices. This makes the need for speed and precision in execution paramount. Quick adaptation to an economic environment that is changing faster than ever is equally essential. Combined with the complexity of regulations, managing a diverse portfolio of brands and products, the shift towards direct-to-consumer (D2C), and the rise of quick commerce, the stress on supply chains continues to intensify.

Transforming a supply chain crisis into a legacy-defining moment can secure the future supply chain for the business. 

Agility and resilience must be highly complementary, while an agile supply chain is fundamentally more resilient.

Supply Chain Sustainability – With global warming causing disruptions through natural disasters, consumers increasingly prefer products that emphasize sustainability and purpose. Organizations compromising on this aspect may risk regulatory penalties and reputational damage as governments enforce stricter norms. As a significant contributor to carbon emissions through transportation, the supply chain industry plays a central role in reducing emissions and creating a strong baseline impact for the organization. Circularity is expected to grow with an increased focus on sustainability.

Beyond cost reduction, supply chains must work towards decarbonization and ethical sourcing as part of broader environmental, social, and governance (ESG) initiatives. While much remains to be done to make supply chains sustainable, it is necessary to start these initiatives with strong commitment and urgency today.

These new priorities – resilience, agility, and sustainability – must be embedded in the foundation and considered in every aspect of supply chain design, organization, and operation. The biggest challenge companies will face integrating these measures is fostering a mindset shift at the top that blends risk, agility, and sustainability goals alongside traditional deliverables such as cost, capital usage, service, and quality.