One stop solutions provider

Established in 2003 with deep roots in the formidable legacy of the Tata Group, Drive India Enterprises Solutions Limited (DIESL) is a leading provider of end-to-end logistics solutions, with over 180 warehouses covering 85 percent of India’s districts over 80 percent of the cities in India today. In an exclusive interview with ITLN, Milind Shahane, MD, DIESL, talks about the factors that make DIESL the preferred choice in 3PL.

As one of the leading integrated logistics companies in India what are some of the key differentiators that make DIESL the preferred choice when it comes to logistics solutions? The key differentiator that sets DIESL apart from other service providers is the range of integrated supply chain solutions it offers to various Tata and non-Tata companies in India. This gives our clients tremendous visibility, cost optimisation and seamless operations as they have to deal with a single partner for all their logistics needs. As an organised player, we leverage our pan India reach including our presence in seven NESA states and our vast network of 180 plus warehouses to enable our clients expand their operations anywhere in India. DIESL’s supply chain services include sourcing & channel management, freight forwarding, warehousing, in – plant operations, distribution, kitting & packaging, document management and value added services. Hence for our clients, DIESL acts as a one stop solution as we are capable of handling all kind of logistics requirement.

Could you give us a couple of real time cases where DIESL’s supply chain solutions brought significant value addition and noticeable cost optimization for clients? One of our clients was looking for a 3PL service provider to manage the operations of their mother warehouse at Kolkata which was earlier managed by a local logistics service provider (LSP). The local LSP was unable to demonstrate high service levels and was also managing the operations at steep costs. They were unable to handle volumes during peak season which tend to increase 10 times over at such times and demand 24/7 operations. To optimise cost of operations at the warehouse and to improve service levels, we took a strategic decision to shift from client’s standalone facility to DIESL’s shared warehouse so that clients would be able to take the benefits of larger operations at significantly less cost. We brought in various changes in the client’s warehousing operations such as per pallet pricing model, focus on operations-specific KPIs, etc. to bring in efficiency. This resulted in 45 percent reduction in warehouse rental and significant reduction in labour count from 30 to 18, without hampering any manpower productivity. DIESL’s Kolkata team showcased significant improvement in the first two months of operations by realising 100 percent achievement of KPIs such as location wise stock transfers, vehicle loading and unloading, vehicle GRN within 24 hours, inventory accuracy, home deliveries, product scanning, product adherence, MIS and documentation. Today with systematic KPI tracking & reporting by DIESL, the client is able to measure the efficiency of the warehouse operations and has also given additional business at other locations in the country.

Among the industries that you serve, which are the ones that you are really bullish about? We are catering to diverse industries like, consumer durables, telecom, retail, chemicals, lubes, power, projects, and automobiles. We are leaders in telecom sourcing and distribution in India and are expanding this vertical to cover more industries like hospitality, manufacturing, hi-tech and engineering. Give us a sense of the annual revenue and at what rate do you see the growth happening in the short and long term? Last financial year, we clocked in revenue of approximately INR 700 crores and we expect to grow at 4-5 percent per annum in the next two to three years. However, it also depends on the country’s GDP growth as the logistics sector is highly dependent upon the health of manufacturing and infrastructure sector.

Give us an update on your operational network like number of warehouses, total warehousing area, network of cities/town connected and number of transactions done in a month? We operate more than 180 warehouses across the country, in 29 states. We also cater to 7000 towns by covering 85 percent of country’s districts and connect very remote locations. We are present in all the seven North East states, which is also a key differentiator for us. In a dynamically changing business environment what are some of the important challenges for 3PL players like DIESL to remain relevant and profitable? The two major challenges which always exist in the Indian logistics market are: competition from the unorganised sector and outsourcing at transactional level. 3PL sector is largely unorganised and low cost service competition from unorganised sector is very high. In addition to this, enterprise sector in India outsource their logistics at transactional level as they still don’t treat 3PL companies as strategic partners. In various industries, customer’s operations are fragmented as various decision makers are involved due to which outsourcing end to end gets limited response and cost optimization in SCM becomes challenging for 3PL companies.

Apart from the industries that you serve right now do you plan to provide service to new industries or new areas of services? If yes, please elaborate. Recently we have launched a new vertical called ‘Industrial and Site Logistics Service (ISLS)’ under our service offerings. This unique logistics service includes in-plant logistics at the client’s facilities, and site management for projects to various companies from auto, solar power and paper manufacturing industries. In the trading vertical, apart from hi-tech /telecom, there is new focus on engineering and hospitality. When it comes to the cost of logistics, India has one of the highest logistics cost in the world. What do you think are the reasons? And what are some of the ways that you can bring this down? The logistics industry is facing challenges in various areas like poor infrastructure - quality of road network, poor availability of rail/water transport, poor warehousing infrastructure; many administrative problems like multiplicity of taxes, requirement of forms, way bills, road permits, etc. which complicate transportation etc. Further, the other challenges relate to availability of skilled manpower, local union issues, pressure on margin, hassles during road transportation like toll, interstate border etc. These challenges result in difficulties in smooth execution of supply chain and logistics activities in handling and movement of goods/material leading to higher cost and inefficiencies. The Government can play a major role in supporting the logistics sector by focusing on development of infrastructure like roads, railways, ports, airports, logistics parks, warehouses, ICDs etc. These would help to improve the storage and handling of goods and materials by providing facilities to logistics companies at reasonable costs. Further, the government needs to also focus on reducing the administrative hurdles the industry is facing. Some of these are multiple check points, delay in custom clearance and inspection, large amount of paper work and bureaucratic procedures, requirement of road permit, way bills and forms for transit, compliance to variety of regulations etc. The procedures need to be simplified so that there will be a reduction in time and cost.

What are some of the new trends that you notice in logistics, warehousing and supply chain management? And how does technology enhance innovation in these crucial areas of trade and commerce? Various developments are taking place in the different domains of logistics such as large distribution centers with small forward stocking locations across metro cities to ensure on time deliveries. Cross docking is another trend which is now increasingly followed by 3PL companies to reduce inventory holding and warehousing cost. On the warehousing front, companies are moving towards more mechanization in the form of hand pallet trolleys, forklifts, systematic racking systems, dock levelers etc. Movement of goods through containers and growing usage of multimodal transport system is another change which we are witnessing in the transportation sector. In addition to this, companies are also focusing on larger investments in IT solutions like tailor-made Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS), Transport Management Systems (TMS), track and trace etc. as these tools can give real time inventory details along with various other customized offerings.