Tech firms can cash in on inventory management deals in defence sector

Tech firms can cash in on inventory management deals in defence sector

New Delhi: The canteen stores department, a government-run chain of 3,600 discount stores across the country for Armed Forces personnel, has no way to track sales, inventory or even monitor if the products are sold to the intended buyers.

To address this, the department has finally started an ambitious project to automate its stores and create a technology backbone that will connect the front-end and the back-end for a holistic inventory management system.

“Almost all government departments and ministries, be it the public distribution system or the railways or the defence, have either already put in place such projects for internal resource management or are in the process of doing so," said Guru Malladi, partner at audit and consulting firm Ernst and Young (E&Y).

The Centre for Railways Information System rolled out a crew management system (CMS) in 2007 to automate daily staffing, by managing the more than 100,000 train drivers, assistant drivers, guards and other employees of the Indian Railways.

The CMS team has created a robust software to provide information on crew availability by linking home stations and creating daily duty rosters. Biometric verifications minimize the problem of proxy reporting by crew. CMS also uses text messages through mobile phones to inform the railways crew.

Similarly, the army recently awarded a contract for a computerized inventory control project (CICP), expected to be worth Rs600-700 crore. While an earlier phase of the project automated the army’s central depots, this phase is to create a backbone to link all of them together. The project is not only expected to lead to significant cost savings and efficiency, but is also considered critical to the country’s war readiness. CICP aims to provide responsive operational logistic support to the army with real-time sharing of information within and outside the Ordnance Corps. This will include inventory management of items such as clothing, armaments, wireless equipment, nuclear, biological and chemical equipment, ammunition, missiles, explosives, vehicles and even aircraft.

The Indian Air Force (IAF) is undertaking an e-maintenance project, expected to cost Rs2,000-2,500 crore over 10 years. The project will span across 170 base stations, 550 squadrons and 70,000 users, and is aimed at increasing fleet availability. The project will also connect critical aspects such as guided weapon systems, air defence radars, safety equipment, communication systems, ground support equipment, armaments and mechanical transport. The navy is implementing an integrated logistics management system on similar lines.

While such projects lead to operational efficiencies for these departments, both in terms of improved functioning and cost savings, they are also providing a huge opportunity to information technology companies, especially in the defence sector.

While analysts’ reports peg the size of these opportunities at thousands of crores, several concerns exist. The foremost is delays in awarding projects after they are conceptualized.

“If we look at the use of technology by India’s government and private sector, it is far ahead of China," said Chandan Chowdhury, chairman and managing director of Invigorare Solutions Pvt. Ltd. But he added that China is fast catching up and may soon have an edge over India. “Their adherence to schedule is commendable," Chowdhury said.

Malladi of E&Y raises another significant worry: of the lack of an overall vision. “Almost all departments and ministries are implementing projects that are piecemeal in nature and hardly holistic," he said. Such big projects, he added, are often on account of initiatives by individuals and not of the department as a whole, making the future of these ventures dependent on those particular people.

Still, some government departments are clearly faring better than others in deploying technology. While the oil and gas, power and defence sectors have been proactive in adopting technology, the railways and transportation sectors are clear laggards.

“What is needed is a comprehensive policy framework to address the technological gaps and a time-bound approach," said Malladi.