Companies in India are ramping up regional suppliers and production facilities to become less vulnerable to disruption. Per a research by Accenture, by 2026, 63 per cent of companies in India intend to buy most key items from regional suppliers, up from 34 per cent currently. The report “Resiliency in the making” said that 77 per cent organisations in India are planning to produce and sell most of their products in the same region by 2026, up from the current 29 per cent.
According to the report, leaders are prioritizing proximity-based hubs that concentrate production facilities and sales within the same region to streamline logistics, improve inventory management and accelerate response to market demand. Companies, it added, must also increase their digital maturity and need to invest in data, AI and solutions like digital twins. Having more mature capabilities in these areas helps companies build reconfigurable supply chains and autonomous production.
Sandeep Dutta, Senior Managing Director and Lead – India Business, Accenture, said, “Our research shows that only 13 per cent of companies in India have near real-time alerting mechanisms for supply chain and production process disruption. To fuel the next phase of India’s economic growth, it is critical to invest in digitizing engineering, supply, production, and operations processes for better visibility and control. It is here that digital, data and AI, can help companies to improve sustainability, customer and employee experience while optimizing costs and improving revenue.”
On average, companies in India are investing $70 million in 2023 to digitize, automate and relocate supply and production facilities, which is expected to increase to at least $2.3 billion in 2026, according to the report.
While the disruptive events ranging from geopolitical shifts and extreme weather to technology breakthroughs and material and talent shortages, have surged in recent years, few businesses sustained their resilience and long-term growth amid the turbulence. In 2021 and 2022, globally companies missed out on $1.6 trillion in additional annual revenues because their engineering, supply, production or operations were disrupted. At the same time, the 25 per cent most resilient global companies achieved 3.6 per cent higher annual revenues than the 25 per cent most vulnerable companies.
Vinod Kumar, Managing Director and Industry X Lead for Accenture in India, said, “As disruption becomes a constant, embracing resiliency is no longer a choice but a necessity to gain competitive edge. In today’s fast-paced consumer and tech-driven world, digital technologies, and solutions such as gen AI and digital twins can help companies unlock new value and adapt faster to sudden changes based on data-driven decision.”
As part of the research, Accenture developed a model to measure engineering, supply, production and operations resiliency on a 0-100 scale. On average, companies in India achieved a score of 51 compared to the global average of 56.
The report recommends three areas companies should focus on to increase their resiliency:
1. Visibility: Companies should make supply chains and production processes more predictable and autonomous.
2. Resiliency in design: Moving activities earlier in the development process allows companies to get products, processes and ways of working right the first time.
3. New ways of working: Businesses must upskill the workforce in data, AI and other digital technologies so they can use predictive and visualization tools to make data-driven decisions at the frontlines of business. Today, only 25 per cent of companies in India have such a multi-skilled, digitally literate workforce; 67 per cent plan to have one by 2026.