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The Future of Logistics – Digital, Responsive, and Responsible

Rampraveen Swaminathan
March 31, 2021

Girish VS, from ISCM, speaks to Rampraveen Swaminathan, MD & CEO of Mahindra Logistics Ltd., on how Mahindra Logistics is ready for the new normal.

LPI captures the outside-in view of Indian Logistics. We are currently ranked 44. How can we improve our LPI score?

The LPI of a country is measured on factors like ease and efficiency of moving of products within and beyond the country. It is also defined by a composite score measured on six crucial parameters; customs performance, infrastructure quality, ease of arranging shipments, logistics services quality, consignments tracking and tracing, and timeliness of shipments.

We think the following aspects will help us improve our Logistics Performance Index:

  1. Infrastructure: The recent budget focuses on infrastructure development which will provide a much-needed boost for smoother and faster logistics transportation. This move will further ensure greater connectivity in tier -2 and tier-3 cities in all these states. The targett of completing 11,000 kms of national highway corridor under Bharatmala project by next year will also have a positive impact on nation’s supply chain. Additionally, the highest financial package for railways will add to the smooth connectivity between different points of country and easy and faster freight movement.
  2. National Logistics Policy: Similarly, the union government should formalize the national logistics Policy to streamline the logistics eco-system in the country. This policy will help instandardizationn of the industry and will help in hurdles that are impacting the competitiveness of domestic goods in the international market, amongst many other points.
  3. Digitization of customs clearance process: A lot of effort has gone into optimizing and digitalizing supply chains, however there is a lot of work which needs to be done as far as digitizing customs clearing process is concerned. Customs clearance plays a significant role in reliable delivery and cost of ownership, and yet many companies are still hesitant to establish customs services in-house. With the advances in digitalization, it is an ideal time to adapt to these newer ways.
  4. Balance skewed modal mix – There is also a need to balance the skewed modal mix and utilize more cost effective means of rail, waterways, and ocean for long hauls.
  5. Beneficial GST – GST has helped in reducing lengthy clearance processes and complex paperwork at numerous inter-state points to a thing of the past. This has resulted in a drastic cut in travel time as well as sizeable cost-cutting in logistics. Ramping up on the speed and reduction of expenses of goods’ movement, in turn, means a great boost to the GDP by approximately 100-200 bps and opening up of numerous commercial opportunities. Since the advent of GST, more than 20 state borders having numerous check posts have been dismantled enabling trucks to cover more ground.
  6. Implementation of Fastags – It is also helping in reducing wait times at tolls and can be highlighted.
  7. Department of logistics within ministry of commerce – Gov. has formed a department of logistics within ministry of commerce. This department needs to be enabled to take quick decisions on all logistics related issues pertaining to planning, investments, clearances, construction etc.
  8. Upgrading Technology – The private players also need to assist by improving their capabilities. Usage of ‘GPS’ to improve track and trace capabilities, ‘IoT’ for fuel sensors and smart locks, ‘route and network optimization’ though analytics etc. are relatively simple yet effective solutions with potential to improve efficiency, reduce cost and time which will eventually impact LPI too. 

There is also a need to balance the skewed modal mix and utilize more cost effective means of rail, waterways, and ocean for long hauls

The pandemic has changed the supply-demand equation for companies, leading to high levels of uncertainty. What is your view on the emerging scenario in Indian Logistics Market? What are the trends you are seeing? How different is it from the past?

This is a period of recovery and we have seen a stronger growth environment and we continue to execute our strategy. In near future, we see a few key trends in the industry.  There is an increased adoption of multimodal transportation systems infulfillmentt logistics and warehousing services. We have also observed an increase in Omni-channel distribution models especially in e-commerce and consumer segment, a higher level of service integration and demands for integrated solutions and greater adoption of technology in creating the customer value proposition.

There are five key trends that can be seen emerging in the near future.  

Firstly, Digital is table stakes. The importance of Digital as a channel to market has accelerated significantly due to the pandemic.  Till now we were used to the general trade and the Kirana stores. Then came the modern trade and the big retail malls. Now we have online trade. India’s online trade is growing in terms of penetration but in a Covid-19 induced lockdown era, online trade has stepped up a whole different ball game. 

The second key trend is increased focus on fulfillment logistics are warehousing. Many of our customers want to move inventory as closer to demand as possible and also improve their reach.  The Covid-era has perforce reminded everyone that inventory in the right place is very important; being close to our customers is equally important.  This goes beyond just infrastructure and access – there is likely to be a much sharper focus on quality of service, optimization and time defined service levels and technology will be a key differentiator here.

A third key trend will be a growth in Omni-Channel networks. Companies are trying to figure how to operate the inventory in a far more efficient way in the field and drive optimization through omni-channel models for distribution, so that they can use the same inventory and support online as well as physical delivery.  An increased level of volatility and demand variability puts added pressure on customers. 

The fourth big trend which is happening is increased focus and adoption of multi-modal logistics. The pandemic has shown the need and opportunity to leverage rail, sea and waterways a lot more effectively. In many of our key markets like auto & farm sector we have seen a step change, thanks to the increased focus and support from the Railways.  So multi-modal is now becoming a bigger focus and it is very important for India.  If logistics cost in our country has to come down then in the long run we have to become much more multi-model.  You need to have cost-efficient transportation models to use, waterways, air, road and two-wheelers modes judiciously.

The final and perhaps the most significant trend emerging is of using technology, data sciences, analytics and automation. In the post-Covid environment there is a greater focus on improving the predictability of supply chain.  Customers are focusing on a much more granular and multi-variable dimension of supply chains. Today it is not just marketplaces or aggregation tools, but systems which allow management of the overall supply chain, optimization and design of the network and the ability to do that with the appropriate level of customization. 

The current market leaders will compete for a dominant market position by acquiring smaller players, for achieving scale through consolidation, and innovation through the acquisition.

A third key trend will be a growth in Omni-Channel networks. Companies are trying to figure how to operate the inventory in a far more efficient way in the field and drive optimization through omni-channel models for distribution, so that they can use the same inventory and support online as well as physical delivery.

How have consumer preferences changed post-pandemic? What changes are you bringing in to ensure customer demand?

Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and – in the case of consumers – at low or no delivery cost. The logistics sector is under growing pressure to deliver a better service at an ever lower cost. The e-commerce segment growth has accelerated the demand for transportation and fulfillment logistics including sort centres, fulfilment centres, return processing and last-mile delivery and hence it will be crucial to implement the technology for ease of labour and execution. Post outbreak, there has been a perceptible growth in demand for essential products through the e-commerce channel and the lockdown has enforced consumers to move towards digitalization. We have also seen a shift in strong demand from tier2 and tier3 cities and towns accelerating in the last six months and again the same patterns we should expect to continue in 2021.

With the strong demand during the recent festive season, MLL had set up nearly 10 lakh sq. ft. of flex warehousing solutions for supporting customers in anticipation of the ongoing festive season. A considerable size of this space is also catering to large Pharma companies during the pandemic. In the mobility business, we have been developing our on-call business with experienced enterprise customers and deepened our offering there.

We are working very closely with our customers in ramping up our operations. As we have looked beyond COVID-19 we continue to be focused on four key priorities; ensuring safety, continue to provide essential services, conserving cash and liquidity, and driving improvement and engagement. Most of our investments in our warehouses has been on technology. With automated and custom-made WMS systems, we will continue to meet the demands of our customers.

Logistics Industry in India is getting competitive. What distinguishes Mahindra Logistics (ML) from its competitors? Why does a customer, rely on ML and not someone else?

MLL’s biggest USP is its ability to integrate wide bouquet of services together to solve customer’s problem. Instead of being the typically transactional service providers, providing piecemeal services for transportation, storage, manpower etc., we focus more on stitching customized end to end solutions for our customers which results into better efficiency and lower costs.

Our integrated solutions is an articulated vision, which we developed as a business last year saying that we want to actually put a significant amount of energy around driving that to our customers. We believe our biggest strength is client centricity and all our customers have unique and individual supply chains, which flow through their individual strategies and businesses and therefore they do need customization and at the same time as there is increased variability and volatility, there is a need for and value of integrating different elements of their supply chain, warehousing, distribution, inbound transportation and even within distribution between part truck load, full truck load and we are uniquely positioned to provide that number, so a lot of our newer business wins are actually accelerating around integrated solutions.

Ourtechnology-enabledd, “asset-light” business model allows for scalability of services as well as the flexibility to develop and offer customized logistics solutions across a diverse set of industries. Being asset light helps us offer customisation. We study customer’s operations, understand their pain points and then design the solution as per their business needs. MLL provides differentiated, customised solutions at every step of the supply chain. We also help our customers with scaling up and scaling down of operations with great ease and at an optimized cost.

It must be mentioned here that MLLs depth of the network, large number of business associates, knowledge gained through operations in various industries, and strong corporate governance practices are key differentiators. Our Express and Freight Forwarding offerings which complement transportation, Warehousing, and our Stores and Line feed business are additional strengths that help us in creating the mark in the industry.

What is a Digital Supply Chain, and why is it a big deal? How can digitization make the supply chain more efficient, agile, and customer-focused?

Digital supply chain is a big deal because of the nature of work that happens in the logistics industry. It is equally important to equip labours on using the technology. The industry has witnessed a positive shift toward digitization ever since the pandemic has begun and MLL has also taken initiatives like launching our new system for procurement and materials management. We upgraded our transport management system and drove an integrated architecture and integrated several of our systems together. We upgraded some of our labor management systems and launched some other feature upgrades across our architecture.

Ever-evolving technology will soon be able to take over logistics industry as we move towards catalysing the digitalization of supply chain management. Companies are transforming the face of supply chain management by transforming traditional supply chain management activities with the help of AI, Machine learning, IOT etc.  The growth in fulfillment logistics and warehousing services, increase adoption of multimodal transportation systems, increase in omnichannel distribution models especially in ecommerce and consumer, a higher level of service integration and demands for integrated solutions and a greater adoption of technology in creating the customer value proposition.

What would be the technology challenges you foresee for logistics services firms in digitalization?

We have started to focus deeply on operation excellence with structured programs to reduce cost, to increase operational productivity and streamline our warehousing footprint. The focus of these initiatives has helped us mitigate the impact of the volume drop in auto and engineering verticals and it kind of manage our cost more efficiently.

We have also seen a shift in strong demand from tier2 and tier3 cities and towns accelerating in the last six months and again same patterns we should expect to continue in 2021.

Since logistics is heavy on manpower, we face challenges in introducing digital medium but we are getting there. We are investing on technologies for improving the transportations and improving the speed at which we can do, move towards digital PODs (Proof of deliveries) and actually integrate a supply system also on the same basis. It would obviously provide benefits across the entire value chain from customers all way to our supplies and ourselves included and there have been initiatives this year around that, though adoption from customers and partners is still a work in progress.

What initiatives have you taken for supply chain sustainability?

Mahindra Group’s vision of the Future of Mobility – a sustainable automotive ecosystem that brings mobility solutions to customers across the world. We at Mahindra Logistics, deeply believe in the need to adopt environment-friendly solutions and our business practices are aligned accordingly. We are delighted to launch EDEL. With these electric vehicles and take this step towards a greener future. It will be a critical business for the company as the nation is being driven to an all-EV market in a decade or so down the line. We are confident that this step will go a long way towards contributing in the nation’s mission of sustainable living.

We launched our enterprise mobility business ‘Alyte’, India’s largest enterprise mobility company business in April, wherein pre-Covid was going through an exciting growth phase we were launching new services, investing significantly in growing our electric fleet, launching some new solutions, our on-call business and so on.

MLL entered in a different segment of owning vehicles as they introduce ‘EDEL’ which is derived from the term ‘Electric Delivery’. We have already placed orders for 200 EV’s and EDEL would be operating across 6 major cities in India which includes Bengaluru, Delhi, Mumbai, Pune, and Hyderabad Kolkata.

Our technology enabled, “asset-light” business model allows for scalability of services as well as the flexibility to develop and offer customized logistics solutions across a diverse set of industries

The EV’s used are Treo Zor vehicles from Mahindra Electric, which were launched in November last year. These EV’s have higher cubic capacity, can move faster, and as a result can replace diesel vehicles that are being used currently by e-commerce players. Currently, no vehicle of this capacity is used by any of the existing e-commerce players. In addition to this, these EV’s can run up to 100 kms in one charge. By launching EDEL, MLL becomes the first player in using such high-end electric vehicles for last-mile delivery.

We have being doing small package, mid package, last-mile delivery as well which means smaller constituent of our business. Over the last year what we found many of our customers have been trying to figure out how to make that last-mile move sustainable and move carbon neutral. Obviously as that business grows at 25% to 30% a year for us it is just boils down from the go back customers as well. As sustainability becomes a bigger agenda many more customers have been saying can you provide us a solution around that and challenge has been the right quality assets but also have these services, which de-risks customers and provides them with flexibility to operate them because you have to optimize the network and optimize the delivery routes and not just having a vehicle itself is not enough. So we have seen that as strong opportunity that we have a down a bunch of work both in terms of the product specification.

Can you shed some light on your CSR activities – its aim, approach, and goals?

The CSR vision of MLL is to serve and give back to the communities within which it works with integrity and responsibility.

The objective of CSR policy is to

  • Encourage employees to participate actively in the Company’s CSR initiatives and give back to the society in an organised manner. Every MLL employee is expected to contribute time and effort towards community building
  • Contribute to the development of communities by providing support to education, health & infrastructure
  • Contribute to the employability of the communities which we work by providing support to education, vocational training and job opportunities.

To mention a few CSR activities, MLL had set-up a water project in 2019 covering 6 hamlets under Tembha Group Gram Panchayat, Shahapur Taluka, Maharashtra. This safe drinking water project, one of the largest in the region is pumping over 1 lakh litres of water from the government pipeline to Balwad village – an extension to Gangadpada, Madhepada, Karpadepada, Thalkar Pada, Pardhi Pada and Belwandi hamlets. More than 300 families and 1500+ villagers benefited from this project.

With these electric vehicles and take this step towards a greener future. It will be a critical business for the company as the nation is being driven to an all-EV market in a decade or so down the line

Similarly, MLL launched an initiative ‘Zero Road Accident’ under the aegis of their road safety awareness program that aims to spread awareness about the importance of riding safely for your physical and mental wellbeing.  As part of this drive, employees of Mahindra Logistics Ltd. gifted helmets at wedding ceremonies to the bride and groom. This is to encourage them to take safety seriously, and also enhance awareness amongst guests who attend these weddings. This is a first of its kind safety measure to create awareness in the society and create a larger impact.

MLL is focused to strengthen diversity and inclusion (D&I) at the workplace by leveraging untapped talent pools, enhancing engagement and more importantly embracing a sense of oneness that celebrates our demographic dividend. As part of its five-year roadmap, the company is actively employing differently-abled persons, ex-servicemen from the armed forces and bridging the gender diversity gap by hiring more women from various backgrounds and experience. On 1st May 2020, the company has unveiled its LGBTQIA policy and it has already hired a number of employees across board in its robust plan to employ people from the community.

What is your leadership style? How would you define success?

As a leader it’s not really about your success, but the success of the organization and helping our teams discover their best. Personally, what matters to me is impact – to help Mahindra Logistics develop a differentiated value proposition and business model and build an institution which is inclusive and empowers our stakeholders. My leadership focus is on driving transformation – governance, thinking big & execution. I try and spend 50% of my time meeting customers and employees across our facilities. ♦♦♦♦♦

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