Value creation and the impact of policy interventions: Indian LPG supply chain case study

Abstract

PurposeThe purpose of this paper is to demonstrate the development of key supply chain capabilities in the Indian public sector-run liquefied petroleum gas (LPG) supply chain. This case study has relevance to emerging markets grappling with problems caused by monopolies and subsidies. Furthermore, this case study not only aims to improve operations of the LPG supply chain, but also re-designs its supply network to meet customers’ expectations. It illustrates value creation through growth in non-domestic sales, a reduction in consumption of subsidized LPG as a consequence of better understanding of customer needs and customer diversity, process re-engineering and deployment of ICT systems, and change management and capability building across various LPG stakeholders.Design/methodology/approachAn interpretive research methodology is applied, using an illustrative single case study of the Indian public sector-run LPG supply chain. The research methodology is iterative and exploratory in nature, consisting of a back and forth process between extant literature and the field, as well as in-depth discussions/interviews with senior management, distributors, and consumers.FindingsKey supply chain capabilities of an integrated and seamless ICT system, detection and blocking of duplicate/ghost connections, the capping of entitlements, and coordination and collaboration across various stakeholders result in value creation for all stakeholders. When such collaboration across stakeholders’ spans both vertically and horizontally through the supply chain, change management and capability building drive value creation through policy interventions and initiatives.Practical implicationsThis study provides an illustrative example of meeting customers’ expectations, increasing consumer convenience, and improving service levels, amidst the complex subsidy challenges in LPG distribution in India. The economic and environmental benefits, as well as increased customer satisfaction, from policy interventions regarding value creation in supply chains, have implications for similar public sector-run schemes.Social implicationsAs a result of the various policy changes, the LPG subsidy was restricted to legitimate customers, reducing the fiscal burden on the Indian Government. Furthermore, seamless ICT-introduced efficiencies for government, distributers, and customers were attained.Originality/valueThis research articulates the capture, creation, and appropriation of value through the deployment of new supply chain initiatives in a large, complex environment, in particular the public sector-run LPG supply chain.