“What I have seen is companies are looking much more favourably to outsource the logistics portion and focus on their core competency, which gives us more room for business growth.”
How did the transformation happen – your journey from professional CEO into Managing Director of an enterprise, as an entrepreneur?
It has been an amazing journey so far. Very challenging but really fulfilling as well. When I look back at my career, I was very fortunate to work with legendary companies in our industry. And most of the projects I handled have been like a start-up, they were turnaround assignments. So, it has really helped me to get the flavour of being in a start-up mode. For almost 20 years of my career I worked with multinational companies which taught me the importance of structure, process and corporate governance. Then I got exposed to the speed of excellence, speed of execution, agility and quick decision making from the large promoter companies. I really value the lessons I learned from the legendary leaders in our industry. All these put together instil a confidence in me that I should start something on my own in our space. So that is the genesis of co-founding this company.
What I had with me while starting this business was credibility in the market, strength of my core team, and a strong purpose to make it happen. My team is experienced in managing different formats in our sector in supply chain and logistics. So, that is really helping me to build a very strong organisation. The experience I gained in India, Middle East and while working with different sort of companies is really helping me now.
Let’s talk about business. Under manufacturing support, you offer an array of services like management of raw material, packaging, shipping, repackaging, and inventory control. Which are the businesses that use these services and how do they benefit by outsourcing all these operations to your company?
We are an integrated supply chain company with a strong focus on operational excellence. Our key sectors are FMCG, retail, auto, and we cater to the different segments of our industry. Our services cater to the 3 core pillars of logistics – storage, transportation, and value-added services. Our key capabilities include manufacturing support, exim consolidation, warehousing and distribution and transport solution. These are the key elements any company will look for in a service provider. When it comes to the specific value-added solution, it includes packaging, labelling, and other fulfilment centre services. So, we offer all these integrated solutions under one roof, combining that with technology as and when it is needed. Our guiding principle is single touch process, simplicity, speed of execution, and continuous improvement, because I have noticed that there is a gap between what service providers are committing to the customer and what they deliver. So, this is the gap which we try to reduce through the fulfilment of deliverables. So, this is our core area of focus and as you know, 3PL is going through a large transformation and we expect to capitalise this opportunity. So, in short, what we offer to the customer is cost-effective solution which will be much more technology based and reducing the interruption in their supply chain flow. This is our core deliverables. So, this is how we are positioned as an integrated supply chain company.
You mentioned about warehousing. What do you mean by warehousing solutions? Do you own these properties or operate an asset light model? Where are they located and which hinterland they serve?
Our current model is purely asset light and we don’t own any warehouse, but we have a strong connect with the warehouse operators, the landlords, wherein we can onboard the warehouse as per the need of the customer. Since our inception in 2018, we have grown to almost 4 lakh square feet footprint in India, and we have 4 warehousing centres in Bhivandi in Mumbai. We are in Nagpur, Gujarat, Bangalore and another one is coming up in NCR. As per our business model, we manage large digital distribution centres for the customer. For a customer based in Nagpur, we manage their RDC catering to their distribution operations in 5 different states. Similar RDC model we have for another customer based in Mumbai. So, that is one core pillar of our services, managing the regional distribution centre. The second one is we get into the secondary warehousing for the customers, like for city distribution.
You have a regional distribution centre and to make it much faster to the customer, they will have secondary warehouses. So, we manage the secondary warehousing aspect. The third one what we have is a warehousing zone which caters to the export/import cargo. And one more is, we work with new companies which are coming to India, who are setting up shop in India, helping them in their overall supply chain. Managing their B2B as well as B2C customers. So, this is our current footprint and our focus is to function as a satellite so that we can be nimble as per the need of the customer.
We probably talked about the verticals you are operating. Which are the majority of the commodities that you are dealing in your exim operations, and which are the global markets that you are connected to?
We are not into freight forwarding business, but we support all the landside logistics for the exporters and importers. One specific service which I mentioned to you earlier is our free trade warehousing zone. We are a unit holder in Mumbai free trade warehousing zone wherein we manage the large inbound customers. We manage their cargo consolidation coming from various global distribution centres, right from customs clearance to transportation, warehousing and value added services in the free trade warehousing zone. We also manage last mile distribution to their contracting sites.
Another service is export and import consolidation store. The first export consolidation store we opened up in Gujarat during COVID-19 times. Commodities from various manufacturing sites are moved to this distribution centre and we consolidate as we move it for exports. The advantage for the customer is they can be very close to the port and also you know how difficult it is now to get the containers when there is a shortage. So, from the port, it will be much easier to get the containers than from the inland areas. So, this is one new service which we have started as an export consolidation zone which will help the customer closer to the port and they can cater to the customer needs much faster than being in an inland location. We recently started working with a multinational company; it is coming to India for distribution. The model we have built for them is bring their inbound into free trade warehousing zone so that they can use that advantage of tax holiday and then have a secondary distribution in Bhivandi. So, you can manage the B2B and B2C very effectively.
So, in all these operations, what is the role of technology? How tech-enabled are you?
Technology and operational excellence go hand in hand. We are not imposing technology for the sake of technology and I believe technology should be an enabler for the better process optimisation for better control. So, right now, the technology is basis the need of the customer. But overall if you look at the way the digitisation is growing within the sector, like any other industry, if you see the macro trends like changing buyer behaviour or rapid rise of e-commerce, these are all making supply chain much more complex. So, digitisation and technology enhancement is the way forward and we are looking at bringing in more technology platforms into our solution offerings and if you look elsewhere, this technology has really helped in building a zero-defect process or it helped in increasing the productivity or even enhancing the health and safety of the workers. So, when you look around, there are certain areas where we can really emulate in our countries on the robotics. Robotics play an important role in processing the orders fast by taking heavy lifting or repetitive tasks. Another area where I have seen improvement happening in our industry is on wearable devices. This will help to increase efficiency, improve the health of workers and also improve the process optimisation. And then, you look at the IoT that is one area where definitely it is moving because it has the potential to connect virtually anything to internet and accelerate data driven logistics
COVID-19 pandemic has impacted almost every business segment. You mentioned that your company is more into landside operations, helping the supply chain. So, what was the scenario, how much of your operations got affected and what is the scenario now?
COVID-19 has really affected us. Being a start-up, we are in the third year of our operation. And you know how important the third year is for any start-up because all the efforts, all our business dialogues which we are pitching to the customer, all would have been much more fruitful in the third year of the business – where we got the impact. So, honestly, it has affected our flow, but what we have done in this time is (1.) To make sure our staff are being taken care well, because it is very important you keep them with you because we have not gone for any salary reduction even though we are a start-up. It is very challenging for us but we have, from the day one, till now when the operations have become more better, we support the entire staff with us. Second thing we did was looking at our entire costing model. We went to a zero-based budgeting and analysed if we could be better off in all our cost elements. By optimising our costs, we can offer a better cost-effective solution to the customer when things go well.
So, the 3 months of COVID-19 were difficult but later we got more familiar with how we could circumvent the operational struggle because the customer expectation will be the same whether you have COVID or not even though they understand it but then we can’t falter the operational part of it. So, there is a challenge but hopefully, I could see things getting better and we also have started getting new business leads and also the projects which we have delayed or which we have stalled for some time, they also have started taking shape right now. The growth is affected to a certain extent, maybe 6 months or one year of our growth which we had envisaged as a start-up, that is being affected shortly, but we are hopeful we can bounce back in 2021, 2022.
Keeping this 3 years of experience in view, what would be your future plans?
Supply chain and logistics is a very hot sector at this point. And we could see lot of improvements happening in this area. If you see warehousing as a sector also, the total 3PL warehousing marketing is approximately $60 billion and growing. More than 80% of this market is fragmented and unorganised. GST has really changed the 3PL space from being earlier tax efficient to a more supply chain efficiency. So, what I have seen is companies are looking much more favorably to outsource the logistics portion and focus on their core competency, which gives us more room for business growth. And the 3 demand drivers – manufacturing-led, or consumption-led and the exim-led, are also growing. So, overall warehousing demand in the country is also growing and you could see after the infra status being given to this sector, there is a huge amount of investment coming to the country, to the tune of close to $6.5 billion. So, warehousing as an investment and also 3PL as a service sector, both are growing quite fast and definitely we would like to consolidate our space and grow into a very strong technology-driven company with a strong focus on operations and service excellence.