Top 12 Challenges Facing India in the Decades Ahead – 08 – Poverty

As per our last post, India is poor. Really poor. By far the poorest of the BRICs with 2/3rds of the population poor by any reasonable definition of poverty. Just how poor is India? In just about any ranking that matters, it’s not well off. When it is compared to the 16 countries outside of sub-saharan Africa that are poorer than it, India is in the lower half of the rankings at best, and near, or at, the bottom in a few cases.

For example, let’s start with some of the leading social indicators (Source: An Uncertain Glory, p 49):

  • Life Expectancy at Birth: 9th
  • Infant and Under-5 Mortality Rates: 10th
  • Access to Improved Sanitation: 13th
  • Mean Years of Schooling: 11th
  • Literacy Rate: 9th for Males, 11th for Females
  • Proportion of Children Under 5 Undernourished: 15th

And this list includes Afghanistan, Bangladesh, Burma, Cambodia, Haiti, Krygyzstan, Laos, Moldova, Nepal, Pakistan, Papua, New Guinea, Tajikistan, Uzbekistan, Vietnam, and Yemen!

Consider the sanitation metric in particular. In Bangladesh, which is considerably poorer than India, only 8.4% of the households practice open defecation. However, in India, 55% of households practice open defecation. How can you become a first world country if you can’t even provide your citizens with toilets? (Or even outhouses?)

The metrics are even worse when you compare it to the BRICs. Worst life expectancy. Worst mortality rates. Least access to sanitation. Worst literacy rates. Most undernourishment. In addition, it has the lowest immunization rates and the lowest health care expenditures as a percentage of GDP.

With respect to health care, India did launch the National Rural Health Mission in 2005-2006, but allocated it a measly RS 10,000 crores per year for the fist five years. Given that almost 70% of India’s population is still rural, if two-thirds are poor and likely in need of the program, that’s about 560 Million people who could use help from the program. If you do the math, that’s less than 1 rupee per five people! Plus, it seems to be going down a road of privatization, relying on private institutions and private insurance, with public transfers for the poor who make the BPL (Below Poverty Line) cutoff and qualify, and this is a direction that has yet to work successfully for any major country. In almost every country with good health care, a good public system preceded a good private system.

SI could go on, but you get the point. While India is increasing its GDP at a relatively rapid rate, it is still poor (and the poorest of the BRICs) and the average person is really poor and needs a lot of social assistance to even reach the same standard of life that poor people have in China, Brazil, and Russia. With about 800 Billion people who could use some form of government assistance, this is a huge burden in a country that collects, on average, 1 US dollar for every 3 citizens in tax revenue.

Some Things Should Be Autonomous, But Automobiles?

As per this recent K@W article, automakers are working hard to advance the state of the automobiles, and that’s a good thing, but should the ultimate goal be autonomous, driver-less vehicles?

While park-assist, remote control parking, trailer assist, construction site assistant, blind spot monitor and the pre-crash occupant protection system and other safety systems are a good thing, there’s a difference between adding technology to alert a driver to danger and creating a car that drives itself in an effort to remove the human element. While human error is the leading cause of accidents, it’s not the only cause of accidents. Sometimes an animal, or human, jumps in front of the vehicle or an object falls in front of the vehicle, sometimes something breaks and the vehicle can’t be stopped, and sometimes a natural disaster happens.

If there’s not enough time to stop, a computer is not going to be able to stop the car; if something breaks, a program can’t fix it; and if an unexpected event occurs, will the algorithm know how to deal with it? For example, even if there’s no time to stop, a human might be able to take evasive action and avoid hitting a person who steps in front of the vehicle without warning. But if the only choice is hitting a person or hitting a building, will the algorithm make the right choice? (Cars and buildings can be fixed, dead people can’t). Or will it keep calculating to infinity in hopes of finding a collision-free path of action, and hit the human in the process. What if the failure causes a disconnect between the core processor and the brakes? What if an earthquake happens? Will the algorithm be able to interpret the readings correctly?

But more importantly, what if the system crashes? The average car already has more lines of code in its operating system than in an average computer operating system. As per this article over on the MIT technology review, many cars have a hundred million lines of code in their operating system. For comparative purposes, Windows 7 has about 40 Million lines of code. How many lines of code is it going to take to create an operating system that can drive an autonomous vehicle that performs well enough for a government to consider allowing it on the road? Hundreds of Million, if not a Billion. That’s a lot o code. How do you adequately test that much code? You don’t. You can never guarantee that the code is error free and that system won’t crash. You can only test until the probability is high enough for you to accept as likely to be error free in practice.

And what happens if an unexpected event happens at 70 MPH on the highway and the system crashes? Nothing good.

But the real concern is what happens when the OS is hacked? Your computer gets hacked, you lose your personal and confidential information and the computer becomes inaccessible to you until you unplug (and reboot) it. If your car gets hacked, it becomes inaccessible to you until you cut the power. You can’t do that at 70 MPH, and since all cars are being built with 4G, bluetooth, wifi, etc. — if a hacker gets control of it while you are on the road, he can crash your car into another and there will be nothing you can do.

And if the hack is the result of a bug in the OS that allows for a massive zero-day exploit, a hacker could take control of all cars on the road on the same communication network, and cause them all to accelerate until they hit something. If tens of thousands of vehicles were hacked and subverted all at once in a zero-day exploit, the widespread damage that could be caused would be hundreds or thousands of times worse than most terrorist groups currently achieve when they manage to hijack a plane or blow up a single building.

In other words, removing the human completely from the picture doesn’t increase safety, it decreases it. If we must have autonomous vehicles, then they better all come with an old-school code-free manual override switch that, in an emergency, will let us turn the computer off so we can drive home safely and tell those darn kids to get off our lawns.

The (Board) Gamer’s Guide to Supply Management Part VII: Upon a Salty Ocean

SI is almost radiating rainbows now that it’s resurrected it’s one-of-a-kind blog series that will help you take your Supply Management career to the next level by giving you new and interesting ways to hone your supply management skills. Still more fun than reading about the latest study on the daily migration patterns of the three-toed sloth, but now that you can hone your skills while challenging your peers, it’s three blasts and a half.


It’s 1515, and you are a merchant of Rouen. You invest in ships and city buildings in an effort to not only get rich, but be the richest when Francis I comes to visit the city in an effort to win his favour. The city’s wealth is dependent on fishing and the trading of salted fish, herring and cod in particular. Every week, ships full of salt barrels leave Rouen for the fishing grounds of the Atlantic Ocean and, upon their return, sell their fish in the market.

Upon a Salty Ocean is a turn-based work-placement game that consists of 5 turns, where each turn consists of 3 phases: an event phase, an action phase, and a turn end phase. The event phase determines weather and market conditions which affect fishing and the cost of fish and salt. In the action phase, a player chooses to either take a city action (in which she can buy salt or buildings), a navigation action (in which she can take her ships to the open sea and fish or return to Rouen), a harbour action (in which she can move goods to or from her storage depot or build a ship), and a market action (in which she can buy to or sell from the market).

Sounds simple enough, right?

It would be except for the fact that:

  • the event that happens at the start of the phase can bring stormy seas, which will decrease the amount of fish that can be caught; pirates, which will damage the ships and decrease the amount of fish that can be held; market dips, which will lower the selling price of fish and/or salt; and/or market surges, which will increase the selling price of fish and/or salt
  • actions in the action phase are consecutive, each player can only take one action at a time, and every time an action is taken, it gets more costly for the next player — and all purchases and sales affect the market price
  • you begin the game with a small amount of money, have a limited credit line, and interest charges rack up quickly if you go into debt
  • if you prosper, you must invest in a bank to safeguard your money, or you will lose some of it at the end of the turn
  • each building investment provides different advantages
  • a strategy only works if there is limited competition in that strategy, or
    you luck into the right timing

Just like in the real world,

  • shipping is subject to stormy seas, pirates, and other calamities
  • no one can take two actions at the same time in the real world, w.r.t. the markets in particular, and every action taken increases or decreases the cost for everyone else
  • your resources are always limited, debt is costly, and too little cash flow can bankrupt you (and prevent you from taking any more actions for at least one turn)
  • the more you have, the bigger the target you become for thieves and the more you have to invest in security
  • different capabilities in Supply Management give you different advantages, some tactical, some strategic, some innovative, etc.
  • not everyone can corner a commodities market, a CPG segment, etc.

It’s a real supply management market conundrum. Do you try to conquer the seas and get the most fish? Conquer the market, buy low, sell high, and make your riches off of trade? Or do you acquire the most buildings and make money off ship building, banking, and building the church? Played properly, all strategies can win, including the fishing-free market strategy. Played wrong, and bankrupt you will go. Just like the real world.

Supply Management Has a Long Way To Go To Get to The Top!

The ISM and BravoSolution (who want to align Sourcing with the rest of the organization) recently released the 2013 ISM Survey of Procurement Executives on “Procurement & Sourcing: Moving from Tactical to Strategic” which summarized the responses from 545 Supply Management executives at the Director level and above to a detailed survey created by BravoSolution and administered by ISM last July and August.

These executives were given a list of 24 topics identified to be of recent concern to procurement and sourcing executives and asked to identify their top organizational priorities in 2013. The top priority of improving cost reduction and savings should not be a surprise to anyone since most companies have been laser-focussed on cost-reduction and savings since the major financial crisis in 2007-2008, to the detriment of just about every other important goal. However, what should be surprising is that cost reduction and savings is not only the top priority in 60% of companies but still twice as important as the second most common business priority of revenue growth and profit improvements despite the fact that most organizations expect their cost reduction efforts to yield less than 10%!

The time of near-zero inflation is at an end and with hyper-inflation a strong possibility in many commodity markets and a few countries, and, despite the opinion of some experts, we could be looking at a return of stagflation in some global economies. And even if we don’t see stagflation, the rapid rise in costs across a number of raw material and commodity categories should be enough to convince the average Supply Management professional that savings will not be possible in many categories and the best one can hope for is cost avoidance — unless other opportunities for savings are identified. Opportunities that revolve around process improvement, raw material substitution, value-add, and non-value add service removal. This means that more effort should be spent on supplier collaboration and innovation, supplier performance and sustainability management, and raw materials, but the first two of these options were only listed as priorities by 19% and 23% of the respondents, respectively, and the third option didn’t even make the list of the 9 topics that were selected by more than 10% of respondents.

It was nice to see that 30% of respondents recognized that a key capability of properly performed Procurement is the delivery of revenue growth and profit improvement, but this doesn’t happen without the proper focus on efforts that can lead to revenue growth and profit improvement, which include efforts like the Procurement Perfect Order (which will make your organization a more attractive supplier), improvement of working capital (which will allow Finance to reduce interest and penalty payments, take advantage of early payment discounts, and possibly even earn money on short term investments), improving customer loyalty (as it costs less to keep a customer than to acquire a new one), improving the strategic nature of trading partner relationships (as this can lead to joint efforts to take cost out of products and services and increase sales), and more spend under management (which permits better spend and opportunity analysis). However, from this set up of options, only two — getting more spend under management and improving working capital — were selected as priorities by more than 10% of respondents. Without appropriate priorities, profit and revenue goals are just pipe dreams.

There’s a fair amount of analysis in the 23 page report, but the bottom line is that Supply Management has a long way to go to become the strategic powerhouse it should be. It’s just like Angus, Malcolm, and Bon said back in 1975 — It’s a Long Way To the Top (If You Wanna Rock ‘n’ Roll). A long, long way …