Road to ef­fi­cient de­liv­er­ies with LSPs

The use of proper and planned lo­gis­tics is im­per­a­tive for sur­vival in the cut-throat com­pe­ti­tion of the e-com­merce in­dus­try. Thus, e-tail­ers of­ten have to make a choice of part­ner­ing with ei­ther es­tab­lished lo­gis­tics play­ers or al­low­ing new play­ers in the

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The growth in the e-com­merce sec­tor in In­dia has gained speed with online re­tail­ers com­pet­ing with one another to sell the prod­ucts at the low­est pos­si­ble price at an op­ti­mal de­liv­ery pe­riod. The sur­vival of these online re­tail­ers en­tirely de­pends on the ex­tent of co­or­dina- tion be­tween lo­gis­tics tech­niques em­ployed by their lo­gis­tics ser­vice providers (LSPs).

Choos­ing the right part­ner

Though the ini­tial cri­te­ria for part­ner­ing with an LSP de­pends on safety, eco­nomic vi­a­bil­ity and fea­si­bil­ity of the ser­vices, Neeraj

Ag­gar­wal, Sr Di­rec­tor – Sup­ply Chain, Flip­kart views, “The ca­pa­bil­ity to de­liver across the length and breadth of the coun­try within the sched­uled/promised de­liv­ery time is the key re­quire­ment for a lo­gis­tics firm. As a de­liv­ery part­ner, these firms should be able to of­fer or­der reschedul­ing, can­cel­la­tion, re­turns and cash-on-de­liv­ery sup­port plays an im­por­tant role too.” Praveen

Sinha, Founder and Man­ag­ing Di­rec­tor, views, “Hav­ing ro­bust IT in­fra­struc­ture, solid on-field oper­a­tions and a pas­sion for cus- tomer sat­is­fac­tion are the fac­tors that make a lo­gis­tics firm the right part­ner. In ad­di­tion, a shared com­mit­ment to bring down the cost of ful­fil­ment is nec­es­sary in a com­pet­i­tive en­vi­ron­ment. The lo­gis­tics firm should be ready to adapt its sup­ply chain to suit the needs of the in­dus­try.”

Mak­ing the right choice

As timely and safe de­liv­ery of the com­mod­ity needs to match the cus­tomer’s ex­pec­ta­tions and there­fore is the most im­por­tant is­sue, the right choice of LSPs is es­sen­tial for the sur­vival of any e-tailer will­ing to beat its peers in terms of faster de­liv­ery and com­pet­i­tive pric­ing. Be­cause of this, e-com­merce giants con­stantly face the dilemma of whether to tie up with the ex­ist­ing play­ers or the new-age lo­gis­tics play­ers who are mak­ing their pres­ence felt ow­ing to the var­ied ben­e­fits they pro­vide.

Sa­muel Thomas, Di­rec­tor Trans­porta­tion, Ama­zon In­dia in­forms, “We work with both es­tab­lished and new play­ers in the lo­gis­tics space. Any courier player which can pro­vide the best cus­tomer ex­pe­ri­ence is a good fit for us. While mak­ing de­ci­sion about the choice of sup­ply chain providers,

Ra­jesh Kaul, Di­rec­tor - Sup­ply Chain Man­age­ment, Fash­io­ says, “Pref­er­ence is given to es­tab­lished play­ers but off late new play­ers have also started pro­vid­ing ser­vices which are as good as the es­tab­lished ones.” Ag­gar­wal adds, “We pre­fer a lo­gis­tics part­ner who can sup­port cus­tomer de­liv­er­ies and re­turns to/from thou­sands of pin-codes. Ser­vices in non­met­ros and ru­ral ar­eas are an added ad­van­tage as a lot of our or­ders come from these cities.” But,

Kaustabh Chakraborty, Vice Pres­i­dent – Oper­a­tions, Ur­ban Lad­der has a com­pletely dif­fer­ent ex­pe­ri­ence to share. Chakraborty clar­i­fies, “It is im­por­tant for us to see that our lo­gis­tics part­ners are will­ing to mould their way of work­ing to our needs. We have gen­er­ally seen the es­tab­lished play­ers find­ing it dif­fi­cult to re­spond quickly. The niche ser­vice providers are the ones we find most at­trac­tive since they show a will­ing­ness to cater to our needs as well as move quickly.”

Kashyap Vada­palli, CMO Pep­per­fry ex­plains, “We do not give weigh­tage to ex­pe­ri­ence/years of es­tab­lish­ment as we be­lieve in en­cour­ag­ing en­trepreneurs.”

Eval­u­at­ing the ser­vices

The rapid trans­for­ma­tion in ecom­merce has changed the way es­up­pli­ers do busi­ness. As both the home-grown and for­eign e-com­merce giants strive to be cus­tomer­centric com­pa­nies, e-tail­ers rely on the ser­vices of es­tab­lished play­ers as Gati, FedEx, DHL Ex­press, Blue Dart, Aramex, In­dian Postal Ser­vices, TNT Ex­press and many oth­ers. Anil Khanna, Man­ag­ing Di­rec­tor, Blue Dart Ex­press opines, “e-com­merce play­ers look for LSPs who will reach its online buy­ers in tier-II and tier-III towns within the spec­i­fied transit time, pro­vide as­sured de­liv­er­ies and re­li­able ser­vice qual­ity. Cash be­ing the key driver of and work­ing cap­i­tal for the e-com­merce in­dus­try in In­dia, e-com­merce

play­ers pre­fer LSPs who can han­dle cash in a safe and se­cure man­ner and re­mit it on a reg­u­lar pre­de­ter­mined ba­sis.” While dis­cussing about the cri­te­ria that e-tail­ers fol­low while opt­ing for a sup­ply chain provider

Aditya Gupta, Zonal Busi­ness Head – North, DIESL pointed out that the LSP part­ner­ing with any e-tailer should be able to pro­vide ser­vices round the clock, be able to in­vest in tech­nol­ogy like Ware­house Man­age­ment Sys­tems, scale up oper­a­tions, pro­vide so­lu­tion at mul­ti­ple lo­ca­tions, be cost-ef­fec­tive, com­ply with labour laws and all other laws of the land and nev­er­the­less, fi­nan- cially re­source­ful. Vivek Ba­j­pai, Chief-FSC E-Comm Lo­gis­tics, Fu­ture Sup­ply Chain So­lu­tions added, “e-Tail­ers make sure that their ser­vice providers have ser­vice­able pin codes, low de­liv­ery turn­around times, bet­ter ser­vice lev­els than their peers, com­pet­i­tive pric­ing cou­pled with val­ueadded ser­vices apart from pro­vid­ing cash-on-de­liv­ery ser­vice and an up­dated MIS re­port­ing struc­ture.” With the online In­dian shop­pers ma­tur­ing and their ex­pec­ta­tions be­ing at par with global con­sumers, one of the big driv­ers of growth of the e-tail­ers is a great door step de­liv­ery ex­pe­ri­ence. San­jiv Kathuria, Co- Founder and CEO, Dot­zot briefs, “While eval­u­at­ing a LSP the e-com­merce com­pany looks for an ex­ten­sive reach and net­work and the abil­ity to de­liver not just in metro and tier-I cities but also to in­te­ri­ors of In­dia. One more cri­te­ria is the LSP’s abil­ity to han­dle re­verse pick up for ef­fi­cient re­turn and ex­change man­age­ment. Cash-on-de­liv­ery is the big­gest driver for online com­pa­nies’ growth in In­dia and also adds a lot of com­plex­ity to the de­liv­ery chain. The e-tail­ers are es­sen­tially look­ing at spe­cial­ists in end-to-end ful­fil­ment ser­vices.”

Diljeet Singh, Chief Busi­ness De­vel­op­ment and Mar­ket­ing Of­fi­cer, Gati Kin­tetsu Ex­press puts for­ward, “E-tail­ing com­pa­nies face the chal­lenge of in­te­grat­ing and co­or­di­nat­ing the com­plex and time-sen­si­tive flow of prod­ucts from ware­house to store to home. In ad­di­tion to that these com­pa­nies need to con­stantly meet ex­pec­ta­tions of their cus­tomers.”

En­gag­ing ser­vices of new­bies

In­no­va­tive meth­ods brought about by e-com­merce have brought about im­prove­ment in the process of sup­ply chain man­age­ment apart from forc­ing the new play­ers in the lo­gis­tics sec­tor to per­form in a more ef­fi­cient and eco­nom­i­cal man­ner than the es­tab­lished play­ers in the mar­ket.

Naveen Rawat, Co-Founder & Di­rec­tor, Holisol Lo­gis­tics, founded in 2009, elu­ci­dates, “As the e-com­merce busi­ness is rapidly evolv­ing, cus­tomers also look at flex­i­bil­ity and adapt­abil­ity as key con­sid­er­a­tions as the LSPs may re­quire to quickly re­align as per chang­ing busi­ness re­quire­ments.” As the doorstep de­liv­ery is fun­da­men­tal in the grow­ing seg­ment of e-tail­ing space,

Sanjeev Sax­ena, Co-founder and Di­rec­tor, Ecom Ex­press ex­plains, “Cus­tomers are look­ing for ef­fi­cient last-mile part­ners to han­dle their dy­namic re­quire­ments. The part­ner should have wide cov­er­age in tier-III and IV towns be­sides met­ros and other key towns and should have the abil­ity to scale up their op­er­a­tion ca­pa­bil­i­ties to man­age pro­mo­tional and fes­tive sea­sons’ vol­ume. Other key fac­tors which cus­tomers ex­pect are flex­i­bil­ity in ser­vic­ing of­fer­ings, low re­turn per­cent­age and faster COD amount re­mit­tance.”

En­gag­ing out­side re­sources and out­sourc­ing to them

More and more items are be­ing bought by cus­tomers to­day us­ing the ‘click & shop’ model ap­proach. To keep up with the ex­po­nen­tial growth of the e-tail­ing sec­tor, the new LSPs are gear­ing up to their full po­ten­tial to de­liver ship­ments to the end con­sumers. Bagaria says, “The first and fore­most thing we look is the Pin Code ser­vice­abil­ity, un­less and un­til both the com­pa­nies (new and old ones) are of­fer­ing the same kind of ser­vice­abil­ity. The sec­ond pri­or­ity of se­lec­tion is the cost. The third is whether they are giv­ing out on con­tract or whether they have their own ser­vices as lots of lo­gis­tics com­pa­nies have given their fran­chisees in dif­fer­ent cities, which do not have a man­date of a qual­ity. Apart from the afore­men­tioned, tech­nol­ogy is a big win­ner for us.” Sinha adds, “The di­vi­sion of busi­ness be­tween ex­ist­ing and

new play­ers is mainly based on ser­vice con­sid­er­a­tions. Ser­vice con­sid­er­a­tions in­clude on-ground per­for­mance, meet­ing high ser­vice lev­els and the abil­ity to de­liver within re­stricted time­lines.” Kaul ex­plains, “We map each part­ner with de­liv­ery per­cent­age for a fort­night and res­o­lu­tion time for queries raised and di­vide busi­ness ac­cord­ingly; it keeps the com­pe­ti­tion healthy be­tween all of them.”

Liv­ing up to its name

When asked if ty­ing up with the es­tab­lished play­ers is a safe bet and the un­der­ly­ing ben­e­fits for part­ner­ship of the e-tail­ers with the big es­tab­lished play­ers, Has­san Mikail, Global Ecom­merce Di­rec­tor, Aramex ex­plains, “Not all e-tail­ers are iden­ti­cal. Es­tab­lished play­ers of­fer end-to- end sup­ply chain ser­vices to help both start-ups and well es­tab­lished busi­nesses to launch or ex­pand their e-com­merce oper­a­tions, in­clud­ing ware­hous­ing and in­te­grated lo­gis­tics, pay­ment col­lec­tion ser­vices, or­der pro­cess­ing, and out­sourc­ing of cus­tomer ser­vice through var­i­ous con­tact cen­tres.” As it is im­per­a­tive to have a wide net­work to meet the grow­ing need of the e-com­merce cus­tomers, Khanna em­pha­sises, “Our ser­vices to this seg­ment can be broadly dif­fer­en­ti­ated on three pa­ram­e­ters – ser­vice of­fer­ings, tech­nol­ogy and ser­vice qual­ity. These three el­e­ments com­bined form the bedrock of our lead­er­ship in the e-com­merce lo­gis­tics space.” The ex­ten­sive ex­pe­ri­ence of es­tab­lished play­ers equips them with the means and knowl­edge of han­dling a myr­iad of lo­gis­ti­cal chal­lenges. Most im­por­tantly, es­tab­lished re­puted play­ers are good at what they are do­ing and have a track record to fall back on, which is why they hold the prime mar­ket po­si­tion. Singh con­firms, “Gati, with its 25 years of ex­pe­ri­ence in ex­press dis­tri­bu­tion and sup­ply chain man­age­ment, al­ready comes with ex­ist­ing rep­u­ta­tion, good­will and trust that are crit­i­cal for third party man­age­ment on be­half of the e-tail­ing com­pa­nies.”

De­liv­er­ing as per prom­ise

As the boom in e-com­merce has led to new lo­gis­tics play­ers com- ing to the field, it can­not be de­nied that the new-age play­ers have man­aged to make a mark for them­selves in the in­dus­try by pro­vid­ing var­i­ous ad­di­tional ben­e­fits. Pranav Pa­tel, Man­ag­ing Di­rec­tor, Swap­nex Lo­gis­tics points out ad­van­tages as re­li­able transit times and de­liv­ery, sin­gle point of con­tact con­ve­nience, pro­ject man­age­ment method­ol­ogy to re­duce risk, cost and time on start ups and DMAIC process im­prove­ment method­ol­ogy to drive con­tin­u­ous im­prove­ment and adapt to your chang­ing needs.

Ad­van­tages of in-house lo­gis­tics firm

The race to trans­port mil­lions of com­modi­ties safely within the promised time frame and the scram­ble to stay ahead in the race has pushed the e-tail­ers to in­vest in their own lo­gis­tics sup­ply chain. An ex­am­ple of the same is Flip­kart which largely de­pends on E-kart to meet 70 per cent of its de­liv­er­ies. Ag­gar­wal ex­plains, “Cur­rently, our de­liv­er­ies are taken care of by a com­bi­na­tion of E-kart Lo­gis­tics, our ded­i­cated last-mile de­liv­ery part­ners along with third-party courier ser­vices in­clud­ing In­dia Post. To­day we are us­ing four or five big part­ners for de­liv­ery, which in­clude our ded­i­cated lo­gis­tics part­ners. As Sinha views, “There are ben­e­fits in hav­ing an in-house lo­gis­tics firm as it en­ables de­vel­op­ing and pi­lot­ing newer ser­vices like ex­press and as­sured de­liv­ery, of ac­cu­rately plan­ning last mile loads es­pe­cially dur­ing peak sea­sons.”

There are very few e-tail­ers in the coun­try hav­ing their own de­liv­ery arm. The con­cept of hav­ing its own lo­gis­tics arm arises only in cases of high de­liv­ery vol­umes with the com­pany try­ing to gain con­trol over last-mile con­nec­tiv­ity.

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