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Last mile delivery of goods has become more important than ever. As India grows, its cities will expand and new cities will emerge.
The Indian demographic will go through significant changes that will drive unique supply chain complexities, says research firm McKinsey & Company.
Research by McKinsey Global Institute suggests that by 2030, there will be 68 cities, each with population greater than one million (up from 42 cities in 2008). This is nearly 60 per cent growth over two decades.
Cities will cater to a significantly large population.
By 2030, around 590 million people will live in Indian cities, and around 200 million rural Indian living in the proximity of cities will depend on cities for growth.
By 2030, the per capita disposable income in urban India is expected to grow four-fold.
Around 100 million households will move up to the middle class.
This is based on annual income between Rs 2 lakh and Rs 10 lakh. McKinsey in a report on Supply chain evolution: Managing the new normal released, at the Logistics Summit 2012, said that increasing demand from across the country will drive significant network complexity.
Logistical hubs and new innovations in delivery will evolve to manage service levels and last mile delivery.
The increasing sales of sub-one tonne commercial vehicles point to the improvement in last mile delivery, where these smaller vehicles are utilised.
In addition to below par transport infrastructure, increasing costs and planning complexity need to be better managed to serve the growing consumer base in India.
Third-party logistics providers have a significant role in optimising the supply chain performance and costs where stand alone supply chains cannot be economical and fruitful partnerships cannot be created.
The other major trends that McKinsey identified in the supply chain industry include channel innovation, consumer differentiation, volatility, near shoring and talent scarcity.
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