Creating a supply chain hub

Sunday, 17 October 2010 22:55 -     - {{hitsCtrl.values.hits}}

By Subash Ranawaka

From ancient times Sri Lanka has been a country and island which has drawn both wanted and unwanted attention, basically due to its geographical location.

One of the best examples that could be provided to prove this is Ptolemy’s map which was known to the world in the 15th century. There, Sri Lanka has been highlighted as a large island, naming it Taprobane.

Sri Lanka may have been drafted as a large island in Ptolemy’s map, due to the popularity it had gained even by that time among sea farers and the empires. It is vital to know why Sri Lanka was geographically crucial to the international community.

It is obviously due to the fact that Sri Lanka is situated very close to world renowned sea route Silk Road, which is the most famous and vital sea route located in the trade world map.

In recent times it is clearly visible how the international community has been focused on the status and stability of Sri Lanka and specially the Western community, knowing that Sri Lanka is a critical and important location with regard to their tactical defence strategies and as well as trading activities happening across Asia.

Those factors had been clearly comprehended by the ancient kings who successfully ruled the country and fought to safeguard the sovereignty of the motherland.

Even from good old times we have heard about the merchants who visited Sri Lanka like ‘Thappasu and Balluka,’ and how Sri Lanka had been critical to trade. The most vulnerable areas in the Sri Lankan map were Talaimannar and the western/southern coastal line, since those were the areas foreigners used to capture parts of Sri Lanka and govern. Those empirical attacks disturbed the kingdom of Sri Lanka and thousands of lives were lost, in addition to causing huge damage to the economy.

Supply chain hub

Supply chain hub has become the talk of the town in Sri Lanka and the only fact that has to be focused on here is how we can become the most efficient, effective and economical supply chain hub in Asia and perhaps in the competitive world of the West.

The main advantage of being a supply chain hub has already being granted by Mother Nature: the Silk Road which runs few a kilometres away from the Hambantota area and to be more specific, very close to the developing harbour there. This main sea route is used by hundreds of vessels bypassing Sri Lanka everyday and if the country could facilitate the needs of those vessels, that will be a major breakthrough in the country’s economy.

For us to achieve this target, some essential criteria must be met:

1.A highly sophisticated harbour with modern technology.

2.A highly attractive airport with close proximity to the above said harbour.

3.A continuous supply of energy sources.

4.A broadly spanned road network with state-of-the-art facilities.

5.A railway network connected with other harbours and air ports.

6.A high degree of skilled labour; especially armed with IT/engineering and Supply Chain Management (SCM).

7.Committed entrepreneurs with considerable investment capability.

8.Close interaction and coordination with supply chain giants in the world.

9.High level of security, stability and intelligence, which helps attract business.

10.A combined transport network with modern facilities.

11.Other infrastructure development: e.g. water supply, drainage, health services, markets and public services.

Development of the essential criteria

As we all know the proposed harbour is now in progress and Stage 1 of the construction is already accomplished. However, it is vital to inquire in to the other criteria mentioned above and it is critical to have them intact to face the drastic changes which may arise in the coming years in the field of supply chain due to the new harbour project.

It is quite satisfactory to note that the airport at Mattala is being constructed and it is essential to have a simultaneous development of the airport parallel to the harbour. That is because in the concept of a supply chain hub, it is always important to have the airport also nearby to meet the demand of combined transportation system.

If we take world’s busiest hubs like Dubai or Singapore, they emphasise the competitive edge they have retained over the other similar sites in the world by having seaport and airport side by side.

In world trade activities, it is clear that some parts of the world consist of inland countries and they do not have seaports, hence their only mode of transport will be by air or land. Therefore, the cargo which is moved to those locations might be transported by sea to the nearest location and from there it will be transported to the inland site through air or land transport modes. If Sri Lanka wants to realise its dream of being the giant hub in Asia, then still the situation will remain unchanged, since some countries in South Asia are also landlocked.

The energy need has been always increasing and by the time Southern Province is upgraded with the harbour and airport, the requirement may be three times more than the existing since it could be expected to be equipped with many facilities like larger cranes and cargo handling equipment plus industries which would eventually come up. Here energy means not only hydro power electricity but types of fuel, wind power and perhaps power generation by sea waves.

When considering the road network, one is reminded about the East-West and North-South Corridor which India has developed over the years. This was eventually constructed to be used as a substitute for sea transportation around the sub continent, in order to save time and money.

In Sri Lanka also it is vital to have a highway across North-South connecting the important cities like Jaffna, Kilinochchi, Vavuniya, Anuradhapura, Dambulla, Matale, Kandy, Gampola, Nuwara Eliya, Haputale, Embilipitiya and Hambantota. Likewise Colombo, Ratnapura, Haputale, Badulla, Mahapya, Ampara, Batticaloa, could be connected by a West-East Highway.

This will eventually build up the transportation network all over the other cities linked, with whilst cultivating a long-awaited cultural relationship in this country. This highway network could be developed by using the existing roadways. Whilst developing the roadways it is very important to have a complete railway network since it is the most economical mode of transport existing in any part of the world. The most recent example we could quote from Sri Lanka is that oil transportation was handed over to the Railways through an initiative taken by the Ministry of Petroleum and Transports to minimise the huge cost expended in truck transportation. When speaking of the railway network, it is very important to develop it further with the proposed improvement plan. The most important railway line would probably be the Kelani Valley track which must be extended up to Magamthota Port.

At the same time the southern track (Matara-Kataragama project) will be connected to Kelani Valley track at the proposed Hambantota station. If this could be done, then it will be a historical event since it will be the first time the two railway tracks meet. With regard to transportation, this may provide a cheaper way for the people and organisations who need to move their goods between Colombo and Hambantota.

Government body in SCM education

One of the most critical needs in Sri Lanka is an organisation which could provide methodical education about Supply Chain Management (SCM). It is noted that Government interference is essential in this context since the said institute should be affiliated to local and foreign universities, enabling them to gain higher studies in SCM since that will certainly cater the demands in the relevant field with the upcoming southern development.

On the other hand, that would be a long term investment since SCM experts are the people who are responsible in managing two thirds of an organisational budget. In other words, they are the intellectuals who would convert the cost centre into a profit centre. As such it is necessary to consider and develop SCM education, since the Government is highly committed to developing the country.

Environmental screening

As in modern management systems, environmental screening is very important. This concept was developed in order to minimise the disturbance to nature with ongoing projects or proposed projects.  The tables elaborate inter-related global screened graphs, which show the sea routes and temperature of sea waters. This is directly related with the biodiversity of Mother Nature and that is one area which all of us should be aware of when doing feasibility studies for large-scale development projects.

As far as the Hambantota Harbour project is concerned, it is a known fact that nature has been given priority. It has already been named as a green project. However, there must be post-evaluation criteria to assess how nature reacts towards each project implemented.

Therefore, considering the fact that building a supply chain hub is a collaboration of all the essential criteria mentioned above and whilst doing the same, it is vital to safeguard the rights of the public simultaneously.

This is where Government intervention is necessary and as Sri Lankans, the day we could be happy and proud of ourselves is no longer far away in the event we work together towards the same goal and contribute in whichever way we are capable.