FROM MAGAZINE: Interview with Dhruvil Sanghvi, Co-founder & CEO, LogiNext Solutions
Recognised as one of the youngest and fastest growing startup CEOs in India, Dhruvil Sanghvi has played a pivotal role in revolutionising logistics and field service management in Asia and the US. After graduating from Carnegie Mellon University in Pittsburgh, USA and having had the experience of advising some of the Fortune 500 companies on technology and data analytics, Sanghvi started LogiNext in early 2014. In this interview to Maunesh Dhuri, Dhruvil Sanghvi, Co-founder & CEO, LogiNext Solutions, articulates the importance of tech-based solutions that are robust, cost-effective and add to the operational efficiency of the logistics sector.
What are LogiNext’s service offerings for the industry?
We do have a heavy focus on the primary, secondary and tertiary distribution. Our primary offering majorly involves inter-warehouse movements, secondary is warehouse to distributors’ movement and tertiary is distributors to the retailers’ movement and the last mile which is retailers to the end consumer movement. We have covered all these segments with the use of our tracking, optimisation and analytics technology. The newest trend that we have seen in the last five years is the enhancement of the shipment visibility, which allows organisations to track their shipments. No longer does an organisation question us on the shipment or the truck, some five years back all this used to happen via phone calls.
Can you give us a specific example on the mechanics of this technology?
Currently, we have sixteen different flavours of algorithm that optimises routes into every single leg of logistics. If a specific company wants to fulfill 1300 distributors from a particular warehouse at an ‘x’ location, the company will need probably 50 trucks, 25 tempos and 10 bikers. How does a software suggest you how many trucks you will need, how many people would you need, how exactly they will be moving today, what sort of load they should be carrying, and when should they be reaching to the customers. Also, giving the visibility to the end customer so that they know when they are going to receive these shipments and at the same time, balancing the load across all the vehicles. All sort of solutions are plugged into our single algorithm. We have multiple algorithms depending on the model of logistics, geography, and category of the shipment. For example, if you are distributing apparels in Singapore or groceries in Jakarta, each shipment needs a different algorithm. We are on the predictive side of things where we suggest what to do in order to ensure smooth supply chain. It’s more of a proactive approach.
What has been the impact of demonitisation on the logistics sector?
From the e-commerce standpoint, the best thing that has happened after demonitisation is that the Cash-on-Delivery (COD) shipments have reduced. Traditionally, 70 percent of orders across Indian e-commerce companies were COD and now the percentage of COD as payment mode has reduced to 40 percent. Importantly, people’s trust on the credit card systems has increased and again all this change has been driven by smaller cities.
What has been the impact of GST on start-ups?
All startups in India, majority of them are software companies. The value they bring is not in the form of any goods. They are all service companies and hence, for them, the Goods and Service Tax (GST) has not made any significant impact because they were not manufacturing anything. GST has had a huge impact on manufacturing companies. There are not many startups that are involved in the manufacturing business. With the introduction of GST, we are cutting the same tax and paying the same tax. There's no notable difference that we witness due to GST.
How will organised warehousing change India’s logistics sector?
Warehousing in India was and is still happening in a very traditional way. GST has encouraged the warehousing sector to evolve rapidly from traditional 'godowns' to modern facilities. We work with a couple of fast moving consumer goods companies and they are restructuring their entire network planning strategy across India. If they had 36 clearing and forwarding agents and 50 warehouses across 29 states, now they are trying to consolidate all these warehouses into larger ones because there are no tax implications levied on a warehouse belonging to a particular location. The only consideration now is the cost of land, availability of resources. In fact, larger warehouses now have the appetite to adopt technology that include robotic butler systems, more sophisticated warehouse management systems, automated sorting machines, among others. At the same time, transporters are also coming together. So when there is a larger demand to be fulfilled from one warehouse, logistics companies also do not have to be fragmented. Now they can give their entire contract to a larger organisation from a logistics standpoint and can operate from one warehouse to multiple touch points with the same truck. That brings the optimisation levels of truck utilisation to a very high level. All these factors together play a crucial role towards bringing more technology, more processes and more economies of scale.
What do you foresee in the logistics sector in the next few years?
I think one of the things that we shall see very soon is skipping the traditional way of technology. Companies are working on several R&D projects that are path-breaking and destructive in nature where you are skipping a generation of tech. India has been usually a market where we stagnate with something for ten years and then suddenly we do a revamp. This can be seen in terms of payments (from credit cards to online payment wallets), before laptops were utilised we moved to smartphones, simple navigation devices were not available and now majority of the people on the roads are driving using Google maps.
Where do you see LogiNext in the coming years?
We are one of the few organisations that help companies skip the generation of tech. We are working with certain companies where excel sheets were not prevalent and are helping these companies utilise route optimisation, package automation and those sort of technologies that are skipping the entire part of transportation management systems or enterprise resource planning systems. We want people to start using simpler technologies that can help their logistics operations become smoother and efficient. We are trying to simplify the era and aim to enable everyone use ‘tech’ whether it is a delivery boy, driver, or a technician. Whoever is travelling as a part of their daily job will be using LogiNext in the next few years.