From being yet another business vertical of the Mahindra Group, Mahindra Logistics has come to gather a name for itself.

Story by:

Anirudh Raheja

Mahindra Logistics Limited (MLL) debuted in the year 2000. The plan behind its establishment was to eradicate inefficiencies in the logistics sector. What began as yet another business vertical of the Mahindra Group has come to gather a name for itself as a full-fledged 3PL service provider, that currently stands at revenues of Rs.2000 crore plus. Targeting a revenue of Rs.6000 crore by the year 2020, the company, in less than a decade and a half, has come to have a network of 1500 business associates that are currently sourcing 25,000 trucks per month, each of them designed as per the CMVR guidelines. As a full fledged, integrated third party logistics services and people transport solution provider, MLL is operating on the basis of an asset light model. The company in primarily into 3PL business managed majorly by IT-based solutions. “Owning trucks directly limits a company’s scope of serving a diversified set of clients. The 3PL business model offers flexibility and scalability to us. We can offer customised solutions to the clients,” reveals Sushil Rathi, Chief Operating Officer, Mahindra Logistics Limited. It is such an approach to offer solutions as per the customer needs that has enabled the company to maintain long-term relationships in a competitive market place.

Understanding the needs

With a whopping 95 per cent of the cargo in India transported by road, the spending on logistics business is claimed to be as high as 7.1 per cent of the national GDP. Rathi is of the opinion that rather than forwarding their own selling point, they understand the needs of the customers, and their areas of concern. Under the existing business model, MLL works as an aggregator with third party suppliers. Third party suppliers are addressed as ‘business associates’, and are the direct asset owners. The ‘business associates’ may work with the company on a dedicated basis or a needful basis. For a precise focus in offering customised solutions, MLL’s business model is divided into two tiers – supply chain management and transport solutions. Under supply chain management, the company, till date, has served over 200 clients ranging across five verticals including auto and engineering, auto outbound, ecommerce, pharma and consumer, and bulk. Working closely with leading ecommerce players like Flipkart, Myntra, Amazon and Snapdeal, MLL has also come to associate itself with auto majors and suppliers under its auto and engineering, and auto outbound vertical. Adds Rathi, that MLL in the next 12 months will be looking to expand its reach in areas like coastal shipping and cold chain.

Transporting autos

In order to expand horizons, MLL has joined hands with Mumbai-based vehicle carrier solution provider, Indian Vehicle Carriers Pvt. Ltd. The two inked a joint venture in 2014 called 2×2 Logistics. The JV has been catering to the transportation needs of automobile manufacturers in India. As part of the JV, MLL owns over 125 trucks that have been specially customised to facilitate vehicle movement. “Simpler solutions might work but not everywhere. It is therefore important not only important to bridge the gap between demand and supply, allowing assets to freely operate while we also continue to evolve with the customers” states Rathi. With Mahindra, Hyundai, Renault, Nissan, Toyota, General Motors in the four wheeler space as MLL’s prime customers, and Honda Motorcycles and Scooters India, Hero Group, Yamaha and Bajaj in the two wheeler space as the prime customers of the joint venture company, MLL has come to look upon the business as the one that continues to evolve. With the need for specialised services felt, MLL has been able to execute orders that are complex in nature. One such order executed was the movement of vehicle body shells for Mahindra from Nashik to Haridwar in customised truck carriers. Avers Rathi, that for the job, the truck carriers were customised to be able to carry 10 body shells per vehicle over the earlier eight. This resulted in a saving of 25 per cent for the automaker. “To maintain a healthier relationship with our business associates, it is important to utilise, and efficiently, customised trucks,” quips Rathi. MLL has also introduced a fleet of CNG powered trucks on the Nashik-Mumbai route in order to carry high volume low weight cargo for M&M. This has enabled significant savings on freight cost for customers while reducing its carbon footprint.

Making IT work in logistics

With IT solutions turning out be an integral part of many business models, MLL has come to setup a centralised control tower at Mumbai to manage its logistics operations across the country. It is among the most recent initiatives taken by the company. Stresses Rathi, that it has enabled them to provide end-to-end visibility to customers; from the manufacturing stage, supply chain stage to the last mile. “Since all vehicles in India are still not completely GPS enabled, under control tower operations, we do 24×7 tracking of all vehicle movement. Whether GPS enabled or manually controlled, to track every consignment and vehicle movement across India is a task in itself.” If there would be a delay, and caused by a road challenge, the data for the same is collected and the customer is updated through SMS or email in real time. This is done to maintain transparency and visibility of the operation. The Mahindra Integrated Logistics Execution System (MILES) that the company has introduced is like an ERP. It is tailored to meet the needs and address the challenges faced during transportation. “MILES has the capacity to plan the load, route and do the entire tracking and invoicing; to provide updates directly to the customer,” Rathi informs. The system also shows the position of the consignment in real time. The same can be checked by the customer online. “If there is any change in the estimated time of arrival of the consignment, an update is sent to the customer in real time” he adds. MLL has also developed a mobile app. through which real time updates can be given to customers. Riding on its IT-based solutions, MLL is also undertaking transport depth management programs. Under this, the entire transportation for a particular plant of the company is carried out on an ongoing basis by deploying IT services. Such services have led to decent savings for JSW Steel at their Dolvi plant and for Dr. Reddy’s Lab for few of their plants according to Rathi.

Warehousing, Value Added Services and more

As a 3PL service provider, MLL manages five million sq.ft worth of warehouse space in the country. The warehouses are spread across different locations in India, and are dedicated or of the multi-user and built-to-suit type. They not only help to achieve optimal efficiencies, they also enable MLL to offer value added service for its clients. “We have been offering services like kitting and bundling of various promotional items . We also do kitting and sequencing of components before feeding it into the line for auto companies. Along side, we do tube and tyre fitment and also bundle them into a kit for a leading tyre manufacturer,” explains Rathi. Aspiring to expand its reach in the international markets, MLL acquired a major stake in Lords Freight India Pvt. Ltd. in 2014. This has enabled it to enhance its capacities in international freight forwarding space for both ocean and airways, and for imports as well as exports. MLL has also come to offer services like ocean freight and airfreight. These and many other services like project cargo services add value to the company’s portfolio.

Uplifting drivers; business associates

Upliftment of drivers and business associates is an important part of MLL’s business strategy. Opines Rathi, that if the drivers are not efficient and well taken care of, the importance of providing various solutions is lost. Emphasis is on paying the drivers salaries that are on par with the industry standards. PF and ESIC services are also offered. Regular driver training is imparted by conducting such programs regularly. “Almost everything – from safe driving habits, cultural issues and health check ups, are undertaken as this can help to change the behavioural pattern of not just of the drivers, but also of those that are involved in the business, states Rathi. MLL is also offering scholarships to the children of the drivers; it is also supporting them in case of a financial difficulty. Adds Rathi, “Every fortnight, MLL asks its managers to hold driver meets and understand the challenges and problems they face. Efforts to address them are immediately undertaken.” Working closely with associates, MLL has been encouraging them to enhance their quality of services. Says Rathi, that they also conduct programs like Mahindra MPower with Mahindra Truck and Bus division, and invest in their training at IIM Ahmedabad. This, he adds, uplifts their capabilities of doing business with us. Touching upon GST, and how it would affect a company like theirs, Rathi expresses that warehousing will transform into smaller and bigger ones over the need for many warehouses across the country. “It would also allow the hub and spoke model to gain momentum, reducing considerably the overall distribution cost, and in turn facilitating a reduction in the turnaround time,” he adds. With GST, Rathi opines that the amount of inventory that needs to be managed will reduce. A lot of hub to hub movement will take place through multi-axle trucks. Truck movement across India will also be smoother. The transformation of the CV sector that the government is planning, including the implementation of tighter emission norms will further elevate the efficiency of the industry, Rathi states. He concludes, “In the long run, safety will increase.”