Preparing for GST – Are you missing something?

One nation, one tax and one market, GST is staring in our faces. The supply chain folks are busy solving the puzzle of IGST/CGST/SGST and doing maths on the various costs in the upstream & downstream value chain. Most companies have already prepared a blueprint of the supply and distribution network that would require fewer but larger distribution center facilities. It would translate into expansion of the existing warehouses, closing some of the existing ones and opening warehouses in new locations. Some of the questions that are on top of everyone’s mind are:

  1. How to manage services levels from fewer facilities that would result in increased distances and response times to customers? Would 3PLs and transport companies pitch in to create an efficient network with hub and spoke model to fill in the gap?
  2. Given the fact that warehousing facilities will become larger, there would be a business case for automation of facilities. Can companies move from dedicated contract warehouses to shared facilities to create economy of scale?  Would 3PLs invest in the automation without passing on the cost impact?
  3. How to handle increase in rentals and other costs at the locations that appear in almost every company’s blueprint?

gst-challenges

However, amidst these priorities, something very important is being missed out that may hit companies at a later stage. And, this missing piece is developing competency of people engaged in managing and handling logistics operations. Currently, most logistics professionals handle small manual facilities and deal with small time local operators. A typical scene in a warehouse would be labor all over the warehouse, trucks parked in haphazard manner and supervisors shouting at the top of their voices to control everyone.

Now imagine the new scenario, for example, managing a 200,000 square feet facility with multiple zones, with reach-trucks or order-pickers or other sophisticated equipment, dispatching thousands of orders every day. These facilities would require robust process discipline that is independent of the memory and experience of the individuals running the show. Any small error or mistake can quickly snowball into a bigger problem. One can compare the operations in these facilities like that of factories. The logistics professionals will need to develop the competencies of managing people, equipment, throughput, safety and cost efficiency, similar to that of factory managers & supervisors.

The logistics service users would now have to deal with larger and professional service providers. The ability to develop & nurture long term relationships, getting appropriate commercial agreements and managing performance would be the key deliverable. Apart from these skills, the logistics practitioners would need to develop competencies on network optimization, warehouse layout design, transport route optimization, fleet mix optimization and technology interventions to continuously improve the efficiency and reliability of the supply chain.

The period of transition from the existing to new footprint could be very painful and severely impact the business unless the logistics team are well prepared to handle this situation. The skills that would be required to ride over this turbulent phase would be effective planning, program and change management.

The competencies that would be required in the post GST scenario, can be classified as below:

gst-competencies

gst-competencies-1

Do you have a plan to assess and address these gaps in your logistics teams? If not, you may add this to the list of priorities that may need to be addressed sooner than later. Competency building takes time and requires sustained efforts. If you need external help in this initiative, you may reach out to us at contact@advanchainge.com 

We follow a proven approach of sustained engagement and develop interventions that have all the components of 70/20/10 model of competency development. We break down the entire initiative into small bursts or modules. Each module starts with classroom training followed by assignment of on the job projects with measurable deliverable and coaching & mentoring of learners to deliver results. Only when the desired objectives of a module are achieved, the next module is taken up.  This approach ensures that the competencies developed are sustainable and both individuals and organizations benefit from the initiative.

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