Previous

Page - 10

4.2.1. Infrastructure

(See Exhibit 4 - International comparative on perceived infrastructural bottlenecks)

(i) Transportation

The constraints posed by poor infrastructure, especially transportation, pose a unique challenge to the direct transferability of the standard lean principles. It introduces inefficiencies and
unreliability in the supply chain increasing the total inventory costs, damages in transit, ordering and overhead costs.

According to a recent KPMG study on manufacturing in India, companies in two of the six 'high FDI' states in India report a high level of transport bottlenecks, with 43 percent or more of businesses considering transport to be an obstacle to growth. There are delays at two levels: delays in inland transportation and delays at the ports. All six of the 'high FDI' states experience around the Indian average in customs delays in ports, from an average of 7.1 days in Karnataka to 9.6 days in Delhi. Moreover, the lack of large fleet owners and the unavoidable dependence on the broker community for truck placement further increases the uncertainty in the inter-location travel times. India needs transport companies with larger fleets of trucks to make distribution effective and controllable.

How does a poor transportation system pose a challenge to implement lean manufacturing? Freight is neither the only nor the most important cost that a poor transportation system creates for implementing lean manufacturing. To understand the impact, we would need to define what we need to take an integrated view of the total logistics cost incurred by a firm.

Next

* Contributed by -
Amandeep S. Bedi & Namit Puri,
Indian School of Business (ISB),
Hyderabad.