Dow Chemical International Pvt Ltd, popularly called Dow India, is one of the major players in the country as far as manufacturing and supply of specialty chemicals are concerned. In an interview, Alok Gautam, Country Logistics and Supply Chain Leader, Dow India, explains to PK Chatterjee the current challenges of the Indian Chemical Logistics segment and how Dow India is tackling the same.
What are the major challenges in the arena of chemical logistics in India and how can we overcome those?
While the spend on logistics is about 4-5 percent of the revenue in developed countries, in emerging economies like India – we spend about 10-11 percent to reach similar scale and efficiency. This discrepancy can be attributed to challenges such as inadequate infrastructure as against increased scale of industries, intermittent adoption of multi-modal transportation, longer lead-time, demand variability, pilferage and theft, and absence of guidelines for storage and transportation of dangerous goods.
Recent government initiatives such as diesel de-regulation, thrust on building highways, dedicated freight corridors and adoption of GST will enable immense potential to bring logistics in the front-and-centre of business operations. Further, the industry collaboration for awareness and adoption of best practices and changing behaviour with warehousing and logistics partners for safety and compliance will pave the way for chemical logistics in the country.
What kind of change are you observing after GST implementation?
Over the last quarter, Dow India has worked closely with its partners and vendors to educate them about compliance requirements, cost advantages, warehouse consolidation and documentation to adopt the biggest taxation reform in a seamless manner.
So far, GST is delivering on its promise of redesigning supply chains and centralising hub operations to enable scale of economies. It is also aiding industry-efficient practices such as bulk-breaking and cross-docking from a central location. In the first month of the implementation, we have witnessed a decrease in transit-lead times, focus on consolidation of shipping points for the industry and ease of operations due to decrease in taxation and documentation.
Going forward, the chemical industry is collaborating with the government to ease teething issues as streamlining of e-challans for every state, service tax in freight, HS code requirement from fragmented industry etc.
What kind of innovation do you expect from the logistics service providers? How can technology help in improving the situation?
Over the last 3-5 years, our logistics service providers (LSPs) have moved to GPS enabled, ISO container trucks. We have also imposed stringent restrictions on transportation at night and work with our partners to ensure drivers are adequately rested on long journeys. These reports are shared by LSPs on daily basis to ensure safe movement on the road. We work with our associates to continuously educate their staff regarding the safety aspects of handling chemicals, especially dangerous goods.
Procurement, storage and transportation of chemicals and dangerous goods are rolled out in line with SOPs. Right from loading points, en-route transportation to unloading at customer locations, we have checks and balances across the entire chain. For hazardous goods specifically, we conduct Distribution Risk Review (DRR) and the entire route is mapped by experts for any new location. It also includes assessment of unloading facility and, if required, includes imparting training to personnel at different nodes.
It is this technological digitisation that is enabling us to create transparency across levels – right from shipment visibility, warehouse management, taxation compliance, to even enabling an emergency response mechanism at the ground level.
What kind of action the chemical manufacturers can take to improve the situation?
Nowadays, the scale of operations for manufacturing and chemical plants is growing. This means that globally the demand is met from fewer plants around the world. This has obviously, led to rapid increase in the amount of material flow worldwide and therefore, the volume of traffic as well. This has paved way for increased collaboration amongst partners, continuous training of the extended staff sharing and adoption of best-practices and collective pool of feedback to self-regulation.
The chemical industry has undertaken several strides to enable this. To give you an example – Dow India is one of the founding members of the Nicer Globe initiative. Nicer Globe is a voluntary chemical community initiative for transportation-safety under the Responsible Care umbrella by Indian Chemical Council. It is fostering collaboration on transport distribution safety, emergency response and transport security. It also routinely evaluates and improves transport safety capabilities while sharing the best-practices in the industry.