“When COVID-19 hit us, we changed the inventory norms as it helped us to manage the business continuity in better ways. For supply chain resilience, we had to go for a diversified supply chain for overall continuity of business. The reasons ranged from geopolitical, hurricane, Make in India, to better control over inventory. We opted for near-shoring or multi-sourcing, whatever appeared feasible from India or nearby countries. The stocks graduated from cost to business continuity and it was because of this we didn't go for shutdown or degrowth. It may not work in smaller perspectives but for us it did strategically," says Preetosh Shrimali Deputy Head - Supply Chain Management, Fluorochemicals Business, SRF Limited. 

 

"Among the key changes we are implementing is shifting from forecast based supply chain to demand based supply chain. We will develop a system where we will track the real time consumption for planning in advance for demand catering. In our case, it is not just supplying but we have a reverse supply chain and have to ensure quality in bringing back the empty cylinders and cans. We are tracking them real time globally, making us more competitive globally,” commented Preetosh Shrimali. 

 

Preetosh Shrimali was speaking at the panel discussion on ‘Building future ready resilient supply chains,’ at the Indian Chemicals and Petrochemicals Conference (ICPC) 2021 organized by the Confederation of Indian Industries (CII). 

 

"The supply chains hit a rough patch during COVID-19 and as a result companies struggled to ship their products. At the same time, they learnt the need to de risk their supply chains and are being reconfigured. The strength of Tamil Nadu has been that the crisis gave us the opportunity to showcase our connectivity with global supply chains. We have seen the relocation of FDI of a couple of billion dollars. Tamil Nadu was the only state with a positive 1.5% growth rate when the national growth shrunk by 3%. The manufacturing industries became important during the pandemic and also highlighted the need for physical presence of people to keep the supply chain going. Software and technology has gained prominence and came to the fore. We have 80 plus fortune 500 companies globally operating here. With 3 ports in Chennai and 1 at Tuticorin and 5 international airports, the good connectivity has helped the state in keeping the supply chains intact. We have 2,500 factories in the state and the local manufacturing of polymers, textiles and consumer goods has a large thriving consumer market in the state itself. The coastal connectivity has helped to cater to close by urban markets in other states. We are now in a far better position to continue the supply chain,” says Pooja Kulkarni, MD & CEO, Guidance, Government of Tamil Nadu.

 

“We have seen an acute shortage of containers during the last 6 months. There has been a hike in ocean freight 10-12 times. The shipping line has introduced new charges that have impacted the business. It has led to an increase in the cost. Sea way priority tariff has been added. The containers are only available only if you agree to the tariff. I have never witnessed such an unprecedented situation where even big container companies are renegotiating the price despite the open LCs. This resulted in acute shortage of raw materials and everybody had to source from local markets. Since the manufacturers had made commitments with big auto players, they were compelled to keep production lines open and buy from any available source. While there has been a decrease of 10% in freight charges in December, 2021, the initial increase was 10-12 times and therefore, this improvement is marginal. The volatile prices are adding to the risks,” says Vikas Garg, Managing Director, Forace Polymers.

 

“Reducing the dependency on China is critical. 85% to 90% of API, basic chemicals, agro-intermediates used to come from China. Major imports are API in pharma where cost plays a huge role. Chinese competition killed Indian API manufacturing business a few decades back but recently the Doklam issue prompted the Indian industry to think about local sourcing. COVID situation made us further realize the importance and later the shipping problems from China have firmed the resolve. Indian consumers started buying from local manufacturers. This resulted in over 5% reduction in imports from China. Trade with other nations and new agreements besides the PLI scheme has helped in encouraging the industry. A lot of companies are trying to reduce their dependence on China. Deccan Chemicals was 60-70% dependent on China and then in 2021 we are at 47% dependence and in the future, we will bring it to 24%. Government has helped us and the IICT developed technologies. The companies such as Balaji Amines are developing amines, Deepak Phenolics for fluorochemicals, Aarti Drugs and Granules India are developing APIs. Many companies have gone into the CRAMS. There are a lot of queries from overseas. In the area of agrochemicals, companies such as Insecticides India Limited are developing new molecules. We are becoming globally relevant,” says Balakrishnan Iyer, Chief Procurement Officer, Deccan Fine Chemicals India.

 

“There is a huge supply demand gap in the chemical industry. Container costs hike was a result of higher freight costs determined by four companies that decide everything. Maritime shipping is the backbone of world trade; it is estimated that 80% of all goods are carried by sea. In terms of value, global maritime container trade is estimated to account for around 60% of all seaborne trade, which was valued at around US $14 trillion in 2019. Among the major trade disruptive events in 2021 were Winter Storm Uri in February, 2021; Ever Given-one of the largest container vessels got stuck in Suez Canal for 6 days in March, 2021; Shenzhen and Guangzhou port get closed due to COVID-19 cases during July, 2021 which resulted in congestion of 361 vessels. In August, 2021, Hurricane Ida made landfall in Louisiana, United States. All these events led to the price escalation,” says K. N. Mehta, President, Meghmani Organics Limited.

 

“From a reliance point of view, most industries have gone through the pain and have been impacted differently. The readiness of their supply chain has been different for each as one size fits all approach doesn't work here. The customization of response is necessary as the both internal and external vulnerabilities have to be understood. There were a few types of strategies we applied. The capacity buffer was the easiest one. The additional capacity creation helped in running operations when supplies from China dried. To have the plant and product harmonization, we had several raw materials coming from different companies. We tried the inter chargeability of raw materials by adopting from different sources - both multi shoring and near shoring. From plant perspectives, we had multiple technologies in various plants. If the ecosystem can pool in to build their capacities, we can achieve a lot,” says Ramit Mahajan, Head of Supply Chain Enablement, Henkel Adhesives Technologies India.