Author: Shashank Verma | Head Supply Chain & Order Management | Maier+Vidorno
First published in August 2015
Foreign companies usually struggle with Indian bureaucratic and operational formalities (for legal compliance, accounting, import and supply chain management in India), especially during market-entry in India. Hence, they are often busy finding out about regulations and Indian ways of doing administration – without being able to focus on their core business in India.
Foreign companies enter the Indian market to increase their overall revenue. Whereas, they are generally in a position to perform sales and marketing activities in India on their own, knowing how to register a business or set up a supply chain in India requires specific expertise. Due to our many years of assistance to foreign companies in India, we have often witnessed that a lot of energy and commitment at the beginning of a company’s business activities in India are completely spent on understanding and then establishing administrative teams, structures, and processes, as well as overcoming problems with customs, taxes and logistics.
We, at Maier+Vidorno, feel that though a well-run back-office might not necessarily guarantee higher revenues, a sloppy, chaotic back-office might very well ruin successful sales work, for example, due to delayed shipments, incorrect pricing, ignoring local characteristics in taxing, or inefficient warehousing and inventory management. Establishing a smooth administrative organization requires both time and resources, and particularly at the beginning of business activities in India, foreign companies usually do not generate enough revenue to afford such an adequate administrative system on their own. However, foreign companies generally face difficulties – particularly at the beginning of their India activities – in the area of administration, because India’s legal system and bureaucracy are very complicated and for foreign companies, they are downright obscure and incomprehensible. This because cross-border trading, accounting, controlling, and human resources management in India cannot and should not be compared with their equivalents in Europe or North America.
Supply Chain Management in India – C-Form, H-Form, F-Form?
In many cases, Supply Chain Management in India can be a bureaucratic nightmare. For instance, interstate trading within India requires proper C-Form documentation; interbranch stock transfer needs to be documented in F-Forms; exporters must issue customs declarations, the so-called Form H, to the consignee; and buyers in Special Economic Zones (SEZ) need to document their transactions with I-Forms.
Besides in-depth knowledge of the current industrial and commercial laws in India, as well as documentation prior to, during, and after order processing, transportation, storing, and customs clearance, there are a lot of factors foreign companies must consider – accordingly, there is a lot that can be done wrong. When shipping goods within India, for example, one should take into account the poor infrastructure in India and always use appropriate packaging. In general, logistics and transportation in India should be calculated carefully so that there will be no additional costs or unnecessary delays due to unscheduled interim storage or because of problems with road permits. It is not uncommon that transportation via truck from Kolkata to Chennai takes up to twelve days – for a distance of less than 1,700 kilometers.
Moreover, foreign companies must be aware that payment morale in India is rather low, and settling invoices can therefore require repeated inquiries and ongoing contact with the customer. From experience, it is definitely helpful to actively maintain personal contact with partners and customers; however, clear rules and reporting measures must be defined to regulate distribution and accounting – so that, if need be, necessary measures like order cancellation or even legal notices can be issued.
Sales Order Management in India
External Sales Order Management (SOM) teams on-site in India can support the exchange of goods by means of precise and cost-efficient actions. To prevent potential problems and additional costs, SOM teams supervise documentation already in the product’s country of origin – so as to ensure that there emerge no unexpected delays or additional costs during import (e.g. unscheduled storage charges, re-export abroad, labeling, possible additional customs fees etc.). Hence, the entire process of Supply Chain Management in India – right up to warehousing – is provided for.
With the principle of outsourcing the areas of administration and coordination – plus the corresponding expertise – Maier+Vidorno has developed a reliable and successful solution for financial processing and management of the tasks of the Chief Financial Officer (CFO), as well as order processing in the areas of the Chief Operation Officer (COO). While our experienced personnel manage all commercial, operational, and administrative affairs, foreign companies can completely focus on developing their core business, as well as distribution and After Sales Service in India. Moreover, outsourcing the responsibilities of COO and CFO, including Order Management, is not only far more efficient, transparent, and thorough – but, in fact, less expensive and more economical. Since, the administrative body of a company is usually a substantial part of the overall organization, the required efforts and costs for these personnel are accordingly very high.
We at Maier+Vidorno will be happy to support your back-office in India by integrating these areas in our established and functional system which has been specialized in such processes in India – feel free to contact us!