COLLABORATIVE COMPETITION

It is ironic that while technological advancement can shrink space and cost, innovation need not always depend on nanotechnologies. In developing countries like India, where land and financial resources are major hurdles in the development of infrastructure, space- and cost-shrinking need not always be through a technological marvel—it is often possible to achieve it by thinking through optimum capacity utilisation. One such innovation is using shared assets. Both space- and time-division of assets are possible depending on the activity.

One such activity that has emerged with considerable success is shared telecom towers. Whatever the political side effects of the telecom revolution may be, the industry has been quick in adopting cost-effective solutions (not to be confused with the most advanced technologies), and that has resulted in a revolution in itself. With the (much delayed) entry of 3G into India, telecom towers need new infrastructure. Having a separate telecom tower operator—the first mover being Quippo—not only provides the flexibility for a telecom service provider to have ‘passive infrastructure sharing’, as the company calls it, but saves costs: it is more cost-effective to rent or lease space on a shared tower works than investing in a company-exclusive tower. The idea works similar to sharing bandwidth and time on a satellite. Indeed, the transformational Telecommunications Act (1996) in the United States mandates the use of shared telecom infrastructure for better user manoeuvrability and interoperability, arresting monopolies, and fostering economy of scale. Passive infrastructure sharing is becoming a norm around the world.

Extrapolating this concept to other industries is more than possible. As one of our experts tells us in this issue, solar thermal power plants are an example of how units can run twice or thrice the present six to eight hours by sharing BoP and other units. Similarly, to manage a project that involves several companies, shared project updates and information online can keep the stakeholders on the same page, ensure clean transactions, and help each other in case of overruns-causing bottlenecks.
Now that the government has declared cold storage as infrastructure, and has called for more private participation, the segment is likely to receive an additional boost from the industry. However, the fact remains that the segment will continue to be one of relatively low returns. Cost management and increasing efficiencies are at the top of business agendas today, but this is especially so in agricultural warehousing and cold storage, given the social and highly subsidised nature of the business.
Encouraging shared infrastructure may be a solution that can cut costs and therefore improve returns. A presentation on “Future Supply Chain 2016” emphasises the need for “collaborative physical logistics” as one of the key drivers of change in time to come in logistics management. Such collaboration would include shared transport, shared warehouse and shared infrastructure. Infrastructure can take a leaf of IT’s book of innovations—whereby companies have been moving from silo-based to shared IT infrastructure and are able to cut out inefficient systems in their data centre, reduce costs, and improve the company’s ability to quickly adapt to changing business needs. Like in IT and telecom, this new kid on the infrastructure block could witness companies providing shared infrastructure.

The need for innovation in warehousing, and in cold storage in particular, is clear and present. Indeed, innovations are a big part of the kind of partnership the government seeks from the private sector.