India Emerges as a Powerful Contender in Global Supply Chain Diversification, But Isn’t a Panacea. Here’s What You Need to Know.
India's rise as a supply chain alternative comes with significant trade-offs that companies must carefully weigh before committing resources
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Key takeaways
India's rise as a supply chain alternative comes with significant trade-offs that companies must carefully weigh before committing resources
The global supply chain is currently undergoing several seismic shifts. Having now surpassed China as the most populous country in the world, India is emerging as a strategic alternative for multinational corporations considering diversification from a China-centric approach. Combining software and manufacturing prowess with competitive pricing, India now stands as a strong contender in the China Plus One strategy.
India now stands as a strong contender in the China Plus One strategy.
However, the decision isn’t solely based on cost-efficiency and when other nearby regions are looked at. Along with the type of services that they can be useful in providing, India still stands out as the top contender. But a very critical factor for any supply chain's ecosystem is its maturity. Despite India becoming a desirable destination for global production, China still leads in this area and has for many decades. Still, taking the time to understand each unique international market is vital to how companies should make their decisions now and in the future.
Gurumurthi Ravishankar is a Professor and the Faculty Director of the MS Supply Chain Program at the University of Colorado Boulder. He has an in-depth understanding of international supply chains. His insights into the dynamics of the global supply chain also sheds some light on these complexities and provide invaluable guidance. Ravishankar stated that there are a few important things to take into consideration when looking to India for production needs. He added that such things like the particular market or industry makes a difference. In addition, shipping times and whether a locale can be the sole base for production should be considered.
Ravishankar's Thoughts on the Global Supply Chain
"India has a unique combination of software and manufacturing labor and skills in both those areas, and all of that is available at very competitive rates. Good morning, my name is Ravishankar. I’m a professor of supply chain management at the University of Colorado’s Leeds School of Business in Boulder. A lot of companies are thinking about a China plus one strategy, and India is also a location that’s in the running. But there are three primary things that need to be considered in making this choice.
India has a unique combination of software and manufacturing labor and skills in both those areas, and all of that is available at very competitive rates.
— Gurumurthi Ravishankar, Professor and Faculty Director of the MS Supply Chain Program at University of Colorado Boulder
"The first thing depends on the geographic market that you’re coming to address. If it’s India, Southeast Asia, the Middle East, or Europe, India makes perfect sense. Very simply, it’s about 20 days for a container to make its way from India to Rotterdam. In contrast, it’s about 27 days to make its way from China.
"The second thing that needs to be considered is the kind of product or service that you are selling. India has a unique combination of software and manufacturing labor and skills in both those areas, and all of that is available at very competitive rates. It has that edge over both Vietnam and China. So ideally, if your product requires both, then India would be a great place.
"The last thing, and also very important, is what does the supply chain ecosystem look like? That is the current edge that China is offering. One-stop shop for your supply chain manufacturing needs. So, how developed is the supply chain ecosystem in India for the particular product or service that you are trying to sell or considering moving there becomes very important to think about."
About the author
G. 'Ravi’ Ravishankar is a faculty member at the Strategy, Entrepreneurship and Operations Division at the Leeds School of Business. He is a veteran of supply chain, lean transformation, implementing product innovation strategies and technology transfer from national laboratories. His career has spanned a wide range of operating roles from president, CFO to engineering manager and director of innovation. He has worked in four continents on lean manufacturing, supply chain, logistics, product development, factory start-up, and business strategy. His industry experience includes, semiconductors, machinery, medical devices, food and beverage, chemicals, consulting and not-for-profit organizations. He is passionate about education and teaching students how to apply theory to everyday challenges in business. Ravi has advanced degrees in materials and chemical engineering from MIT and University of Cincinnati respectively. He also has an MBA from MIT’s Sloan School of Management. He is a Six Sigma Black Belt, holds 8 patents and is a speaker on a variety of operations management topics.
