Standardised B2B digital infrastructure: The next logical step in India's digital journey

Standardised B2B digital infrastructure would streamline processes, cut down transactional costs, optimise inventory and resources across the network, reduce capital expenditures, and enhance the traceability of goods and services

Updated: Jan 3, 2024 05:42:52 PM UTC
Image: Shutterstock

India's digital journey has been monumental, marked by groundbreaking initiatives such as Aadhaar — the unique identity number; UPI — the Unified Payments Interface; GSTN — the Goods and Services Tax Network; and ONDC — the Open Network for Digital Commerce. While these strides have primarily enhanced the experiences of the public and consumers, there is a pivotal need for a national public digital infrastructure for business-to-business (B2B) commerce.

B2B commerce forms the backbone of any thriving economy. In today's interconnected world, businesses are not isolated entities. They continuously interact with a multitude of partners, from suppliers and customers to governments and financial institutions. The effectiveness and velocity of these interactions significantly shape our economic landscape.

These networked systems are built on three foundational flows: the materials or services provided, the financial transactions undertaken, and the information exchanged. The information flow, which includes elements such as forecasts, purchase orders, delivery schedules, advance ship notices, and invoices, acts as the linchpin that drives the other two flows. For instance, purchase orders communicate customer requirements to suppliers, while delivery schedules establish the timing of deliveries. This information stream ensures that goods and services are delivered to the intended customer promptly and that the financial settlements follow suit.

However, the flow of such crucial information often encounters obstacles. Most businesses still rely on error-prone and inefficient methods, turning to proprietary document formats shared through channels like emails, portals, or messaging platforms. Such methods falter, especially when scaled up for large transactional exchanges.

Also Read: How digital infrastructure is transforming middle India

The leap towards a standardised B2B digital infrastructure could propel India’s industries to new pinnacles of competitiveness. This progression calls for the creation of a unified system for B2B information exchange, much like the transformative impact of UPI on financial transactions. Such a standardised protocol would significantly improve how trading partners interact, bestowing numerous benefits. It would streamline processes, cut down transactional costs, optimise inventory and resources across the network, reduce capital expenditures, and enhance the traceability of goods and services. This, in turn, benefits every link in the supply chain. Additionally, leveraging analytics in logistics could refine delivery routes, leading to a considerable decrease in total travel distance and, consequently, a substantial reduction in cost and environmental impact.

The implications of a digital highway connecting all businesses would also resonate beyond just the trading partners. It would touch wider segments like financial institutions, and governmental bodies. Aggregate-level data from these complex business interactions would provide policymakers with actionable insights, allowing them to make more informed decisions. This could enable them to swiftly tackle immediate challenges while also devising long-term strategic forecasts.

The GSTN has showcased, with its standardised approach, how streamlining can make the e-invoice and e-way bill processes efficient. A glimpse into the GST data reveals that in the fiscal year 2022-2023, about 9.7 million businesses issued nearly 298 million invoices each month on average. Yet, this is just the tip of the iceberg. Every invoice is the result of numerous prior information exchanges, with trading partners in the value chain, laden with both micro- and macro-level insights. Streamlining these other business communications could have a profoundly transformative effect.

Past efforts provide a blueprint for this vision. While UN/EDIFACT tried early on to standardise commercial documents, adoption was limited due to prohibitive costs. India's auto sector, through initiatives like autoDX, aimed to digitally enhance supply chain efficiencies. More recently, ONDC has been instrumental in addressing business-to-consumer (B2C) challenges, democratising online shopping experiences. Drawing on insights from these endeavours could guide the creation of a comprehensive digital B2B infrastructure, one that caters to businesses of all sizes, from industry giants to emerging SMEs. To put things in perspective, in 2022-2023, the Gross Value Add (GVA) of the manufacturing sector alone was $312 billion, as per NITI Aayog. Even a minor boost in efficiency, against this vast backdrop, can usher in transformative outcomes.

Also Read: As companies from Google to Paytm partner with ONDC, can it become the next UPI?

In conclusion, the next logical step in India's impressive digital journey is the establishment of a national B2B digital infrastructure. Such a universal platform could be the catalyst for unmatched business efficiency, sending positive waves throughout the economy. With the public and consumer digital realm already undergoing significant transformations, the time is ripe to focus on the very bedrock of our economy — B2B supply chains.

About authors: Sri Karumbati is the founding member of autoDX and Ramachandran S is a principal consultant at Infosys Knowledge Institute.

The thoughts and opinions shared here are of the author.

Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO2021. Click here for details.

Post Your Comment
Required, will not be published
All comments are moderated