Impact of GST on supply chains

Abstract

With the roll out of GST due in April 2012, it is bound to effect the distribution of companies in a major way. At present the distribution network design is not a purely logistics problem but heavily biased due to tax considerations. Even though the Central Sales Tax is being reduced from 4% to 2% for the year 2011-12 it plays major role in which the companies look at their supply chain. The manufacturing centres and distribution centres are designed primarily to take advantage of tax benefits. The competition by different states to give tax holidays and craftily engineered schemes have distorted the structuring of supply chain sourcing, procurement and distribution operations. The dual GST, which is the most favoured form of GST would significantly affect supply chain right from procurement to distribution. The companies which are nimble and ready to take advantage of the impending roll out are going to benefit most from the network reengineering exercise.