The covid-19 pandemic is a uncommon calamity the place the manifestations have lower throughout nationwide boundaries. The necessity for implementing social distancing to cease the unfold of the virus has seen lockdown throughout a number of international locations, impacting over half the worldwide inhabitants. Steps have been taken to position extreme restrictions on financial actions barring ‘important providers’. Early evaluation of the influence is indicative of a downward strain on the most important contributors of the Gross Home Product (GDP)—non-public consumption, funding, and exterior commerce—resulting in a possible world financial despair. It will influence India’s financial system severely, and necessitate pressing strategic measures focused in direction of adoption processes which are extra resilient to future shocks.
Provision of important providers throughout this era stays one of many main issues of the federal government. These providers are broadly outlined as ‘providers the interruption of which might endanger the lives, well being, or private security of residents’. An necessary a part of important providers are the provision chains for crucial commodities corresponding to meals and drugs. Inside these provide chains, the federal government would wish to ascertain an oversight on the manufacturing, motion and availability of products, in addition to guaranteeing authenticity, high quality, and provenance throughout distribution.
Shortages in provide of Private Protecting Gear (PPE) and different crucial medical gear in India and overseas display the necessity for a strong provide chain administration system. The lack to ramp up manufacturing to desired ranges is being attributed to ‘challenges in importing uncooked materials as a consequence of provide chain disruptions’. The Covid-19 Containment Plan launched by the Ministry of Well being and Household Welfare (MoHFW) states that the containment of a cluster, lasting for 1-2 months and having a inhabitants of 100,000, would require about 2,000,000 triple layer face masks; 200,000 gloves; 100,000 N-95 masks and 50,000 PPE kits. In addition to tenders for procuring such gear, large-scale imports from international locations like China are additionally being explored. For India to ramp up home manufacturing would require pressing sourcing of machines just like the ‘sizzling air seam sealing’ machines which must be imported with estimated lead time of upto 12 weeks.
For companies and governments to evolve methods for assembly demand for important items throughout such a disaster would require visibility of suppliers and their particulars—or established ‘provide chain visibility’ practices. Whereas companies usually have a transparent image with regards to their ‘major’ or ‘tier 1’ suppliers, it will get opaque for suppliers additional upstream within the provide chain. Because of this, steps taken for diversification are meaningless if dependencies of tier 1 suppliers (and tier 2 or three suppliers) aren’t considered. Establishing this visibility will be very difficult, given reluctance of suppliers to share info concerning sources and costs, for concern of shedding their aggressive benefit and misuse of information. This was noticed by NITI Aayog in the course of the implementation of a pilot in ‘observe and hint’ of medicine within the pharmaceutical provide chain.
Within the absence of data relating to varied tiers of suppliers, it is rather tough for producers additional down the provision chain to totally recognize the dangers and rewards of such an association. Second, a lot of processes in provide chain administration are nonetheless managed on paper, necessitating bodily contact, which makes it costlier and harder to plan effectively. Additional, in instances the place there’s digitization, info is exchanged primarily between the 2 events concerned in a particular ‘commerce’, by means of siloed proprietary techniques, thus limiting visibility for different events. These issues are usually restricted to companies, however in instances of disaster they turn into more and more necessary to governments as nicely, notably for manufacturing and provide of important gear like check kits, PPEs, masks, and so forth.
It’s posited that blockchain know-how might supply a technological means for assembly these challenges, and enabling potential steps for enchancment. This theme has been explored by NITI Aayog in its just lately launched paper, ‘Blockchain: The India Technique’, which explores the potential and challenges in making use of blockchain within the case of a pilot challenge on pharmaceutical provide chain.
A ‘non-public’ blockchain might be used for 2 necessary features, particularly to function a trusted frequent platform that might facilitate interplay between the massive number of IT techniques in a fashion that maintains privateness by means of stakeholder particular accessibility controls; and secondly, to function a possible supply of information concerning total provider dependencies to allow methods for danger mitigation. The blockchain platform additionally lends itself to making sure high quality assurance by means of monitoring the provision chain and compliance with norms for transportation and storage (temperature, and so forth) with minimal handbook intervention. Onboarding varied tiers of suppliers of varied provide chains onto a typical blockchain platform would thus allow companies and authorities to type an information pushed view of their provide chains, and assist reduce disruption attributable to future disasters. BMW, Tesla, Walmart, Nestle, and the World Transport Enterprise Community (GSBN) are among the main organizations exploring this method.
Consortium-driven ‘blockchain networks’ could also be facilitated by the federal government by means of regulation. However they might require a shared possession mannequin that allays fears of centralization throughout provide chain stakeholders. Clear incentives should be created to make sure the participation of a number of tiers of suppliers in order to make the initiative successful, with particular care taken to make sure that companies belief the system. It might be argued that these steps are untimely for addressing the current disaster, however performing shortly within the aftermath of the pandemic is crucial to keep away from related conditions sooner or later.
As different companies and governments look to diversify their sourcing methods to scale back dependence on China, steps to extend home provide chain visibility can also be crucial for enhancing the attractiveness of India as a possible different manufacturing hub. These measures will complement the varied initiatives taken in direction of enhancing the benefit of doing enterprise, as additionally enhancing logistics, which in flip may profit from adopting a distributed system. NITI Aayog within the second a part of the ‘Blockchain: The India Technique’ suggest to suggest methods to develop such a platform throughout sectors and use instances.
Anna Roy is senior adviser and Tanay Mahindru is a younger skilled in NITI Aayog. The views are their private.
