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Viewpoint | August 2016

Growth of the textile industry depends on the efficiency of logistics

Rivigo is a Gurgaon-based technology-enabled logistics company that is integrating the two to bring a perceptible change in supply chain management thereby creating immense value for its customers in the apparel industry. Founded in 2014, Rivigo is disrupting the sector with its unique ‘driver relay model’ and cutting edge technology to consistently provide unparalleled delivery times to clients which is 50-70 per cent lesser while improving quality of life of truck drivers.

In just one-and-a-half years, Rivigo has built a robust infrastructure of more than 750 trucks, approximately 1,500 drivers and more than 40 strategically located pit stops across more than 150 distinct routes. Such an infrastructure coupled with its in-house tech innovation is empowering Rivigo to provide unique driver engagement, highly reliable 24/7 service network, strong and systemic crisis management and a holistic client servicing experience. Because of the value-adds that it provides-cost reductions, Just-in-Time capabilities, getting product to store shelves faster, new methodologies, and automation-Rivigo has won major contracts from companies like Indorama and Arvind Mills.

Deepak Garg, Founder & CEO, Rivigo, talks to ITJ’s Senior Sub Editor, Karthik Muthuveeran about the company’s share in providing their facilities for textile industries.

Let us know about the good history of the company since its inception, and also its spread & strength of the infrastructure built so far.

Even as the Indian economy is being talked of in the same breath as other, more mature economies, the country's logistics supply chain that transports its economic produce, remains utterly unorganised and convoluted. It is plagued by myriad of problems like poor truck efficiency, driver lifestyle and delay in shipment. None of the stakeholders involved were happy because of these gaps in the system.

Unlike the US and Europe where hauling a freight carrier over long distances is seen as skilled employment, India's large population, high poverty and insipid law enforcement mean driving a truck is for those who do not find employment elsewhere. When we were conceptualising Rivigo, we knew we would have to solve real problems. We realised that technology can be used effectively to come up with solutions to these.

Rivigo has done it and the results are there for everyone to assess. The first truckload from Delhi to Pune reached in 35 hours for a client hitherto used to 70 hours. Rivigo later lowered this to 28 hours. On an average, cargo transportation time has been slashed up to 70 per cent.

The innovation of introducing a drivers’ relay, supported by an operational network of pit stops that support all maintenance and uptime requirements for a fleet of about 1,000 trucks. A novel system in the world, this enables Rivigo’s trucks to flow smoothly on existing roads much like a river that overcomes all obstacles in its way. Our fleet of trucks is taken care of through tie-ups with OEMs so that moving across highways is as fast, efficient and effortless as possible. Crucial mother pit stops, spread across as much as 2.5 acre, have captive workshops from Ashok Leyland, suppliers of Rivigo’s trucks.

Here, AL’s engineers attend to the youngest fleet in the industry undertaking a pre-trip inspection - a standard practice in the glamorous aviation industry that has now been introduced in India’s logistics sector to ensure a smooth run for Rivigo’s trucks.

In the unlikely event of a breakdown on the road, the truck is brought back on the road within four hours - against an average downtime of up to 48 hours on highways - courtesy AL’s engineers stationed 24x7 at transit pit stops. Similarly, the tyres, a crucial component for smooth navigation, are always kept roadworthy with tyre technicians stationed at pit stops through an exclusive agreement with JK Tyres.

Man and machine are supported through a technological uplift that takes care of the other remaining hurdles the Indian logistics sector suffers from. The trucks are equipped with sensors at all vital points and linked to satellites for effective monitoring against any unscheduled stops, fuel pilferage, cargo theft and tampering of cargo, etc.

Customer confidence is fostered through apps that allow them to track the movement of cargo live. Clients of the consignee are also able to track the cargo live, permitting them to plan production, consumption, sales and support activities effectively. Rivigo has made all this possible via its disruptive innovations in a traditional sector to transport goods across the length and breadth of the nation - speedily, safely and reliably.

What is the concept/mission behind the company’s growth?

I always thought there should be a mission in life and my mission was: could I and my friends from McKinsey, who launched Rivigo together, act as change agents? Could we improve the ecosystem to bring in efficiencies and make the life of stakeholders happy and more meaningful? Our initiative began a year and a half ago and Rivigo is what you see today - a company that has the youngest fleet of about 1,000 trucks that will grow to about 3,000 by the end of this financial year. Our philosophy of thinking ahead, improvising and finding solutions to simplify complex processes has uniquely positioned us in the Indian surface logistics network. This philosophy of ours along with technological innovations in the entire ecosystem and our unique driver relay model has helped us to tread the growth trajectory within a short span of time.

How do you see the supply chain management industry in India?

Overall the cost of supply chain in India exceeds 15 per cent of the GDP. Most of this is contributed by the inventory carried at all stages - right from raw material to semi-finished goods and finished goods at different nodes. Inventory is an indication of inefficiency in the supply chain and is a non-value adding cost. Technology can play a very significant role in reducing this component. We are confident that over the next decade, technology driven innovations and reliable supply chain will bring down overall cost of supply chain significantly.

What are the ultimate benefits of well developed supply chain & logistics integration?

Synchronised logistics among supply chain members create value for end customers by reducing costs associated with redundancy and duplication. Integrating the logistics competencies and resources of a diverse supply chain also positions the entire supply chain to better serve customers. Integration, however, requires new ways of thinking.

In this era of competition among supply chains, the success of a corporation is increasingly dependent on management's ability to integrate the company's networks of business relationships.

The focus of supply chain management must evolve in response to changing business environments and evolving product life cycles. Different interactions among participants are required during each phase of the product life cycle, from inception through recycling. The supply chain for products in new markets must be flexible to respond to wide fluctuations in demand (both in quantity and product mix). Products in mature, stable markets require supply chains that can reliably deliver products at low cost. Thus, effective supply chain management must be responsive to these changing conditions to ensure that the supply chain evolves accordingly.

The following worldwide trends and forces are driving supply chains toward increased integration:

  • Increased cost competitiveness: Having substantially improved the efficiencies of internal operations, OEMs are seeking further cost reductions by improving efficiency and synergy within their supply chains.
  • Shorter product life cycles: The Model-T Ford, for example, was competitive for many years. A personal computer (PC) is state of the art for less than a year, and the trend toward shorter product life cycles continues.
  • Faster product development cycles: Companies must reduce the development cycle times of their products to remain competitive. Early introduction of a new product is often rewarded with a large market share and sufficient unit volumes to drive costs down rapidly.
  • Globalisation and customisation of product offerings: Customers the world over can increasingly afford and are demanding a greater variety of products that address their specific needs. Mass customization has become the new marketing mantra.
  • Higher overall quality: Increasing customer affluence and tougher competition to supply their needs have led to demands for higher overall quality.

These increased demands on OEMs for improvements in product design, manufacturing, cost, distribution, and support are being imposed, in turn, on their supply chains.

What are the major transformations that Rivigo has undergone these years? And what are the investments?

Over the last 18 months, we have expanded our product offerings to support logistics requirements of different customers. In addition to a Full Truck offering (FTL), we now have an expanding network to provide Part load (PTL) offering and cold chain offering to the customers. We will continue to invest to strengthen our capacity as well as network over the coming years

Please give us more details on the digital initiatives of Rivigo.

Technology is playing a very critical role in enabling our operations and providing transparency to our customers.

What do you think is the share of logistics in this e-commerce boom?

According to some reports, the fast growing e-commerce sector is expected to drive the $167-billion domestic logistics industry. The third party logistics (3PL) segment which stood at $17.4 billion in 2013 and accounts for 7 per cent of the logistics industry’s revenue, is expected to witness a compounded annual growth rate of 21.16 per cent till between 2013-18.

By the time e-commerce made its debut in the US, it already had a strong third and fourth party logistics set-up with companies such as DHL, UPS, FedEx boasting of a strong network in the country. But the scene in India was very different. The Indian postal service with no fast track delivery set-up, reaching up to 15,000 pin codes at its own speed was the only alternative except for a few private companies.

However, contrary to popular belief, it is technology that is the determining factor in the logistics business. The most important aspect in an e-commerce logistics provider is how quick and good the management is in solving operational problems through technology. In the online delivery business technology is the game changing factor.

Distribution capability is also of vital importance and a large network presence is why an e-commerce company, despite running their own delivery divisions, depend on third/fourth party assistance.

However, the e-commerce sector has its peculiar challenges, notably the peak in demand for their services during the festival and sale seasons. For instance, most 3P logistics see a huge spurt in orders during the festive season. Similarly, for others weekend deliveries swell.

The question is how do e-commerce logistics companies ready themselves to meet the sudden spurt in orders and do they really want to expand capacity for that one day of big sales. And after that day what would they do with the additional resources?

What is the company’s share in providing these facilities for textile industries in its activities.

Textile and apparel is an important part of our journey. The industry could achieve huge advantages by improving its supply chain and logistics lead times. We are working with many large textile and apparel manufacturers and have a dedicated team that is looking after their requirements.

The supply chain in textile industry is quite long & complicated. How does it manage this?

The biggest challenge for garment manufacturers is to keep pace with the fashion market and its short lifecycles. With the average season for a fashion trend ranging from 3-4 months, it becomes crucial to deliver apparels from mother warehouse to the stores within the least possible time.

The logistics management plays a crucial role in the unmatched timely delivery from raw materials to finished goods within the stipulated time frame to the end consumer.

The world of textile industry is huge and it is growing at an accelerated pace in economies across the globe. Second largest employer after agriculture, the Indian textiles industry, currently estimated at around $108 billion, is expected to reach $223 billion by 2021.

The growth in the textile industry would have to be supported with an efficient logistics setup therefore there is an immediate need to address some of the key concerns hovering around the movement of the goods through road:

  • Shelf life of the products: The season cycle of an apparel on an average spans from 60-80 days. Therefore it becomes crucial to deliver the apparels from the manufacturing unit to the point of sale within the least possible time in order to increase the shelf life of the product.
  • Rivigo Solution: At Rivigo we have addressed this concern in the best possible manner. Through our modus operandi we have been able to reduce the transportation time from one place to another by almost 70%. Case in point is - delivery of products from Bangalore to Guwhati. A normal; transporter takes approximately 10 days whereas we are able to deliver the products in just 3 days. As a result we are able to add value to our customers by increasing the shelf life of their products by 10%.
  • Damage: A high damage ratio of products while the goods are in transit from one place to another leads to cost escalations for the sellers as the costs have to be borne by them. It is therefore important for the logistics company to put in place procedures to bring down the damage ratio to 0 per cent. Rivigo Solution: Having an eye for detail, Rivigo through its technology keeps a constant vigil on every process right from the stacking of the goods to the delivery and handing over of the goods to the customer. This has enabled us to ensure almost 0% damage of goods transported through Rivigo.
  • Loss of goods: Lack of accountability that leads to loss of goods in transit has been one of the major concerns for the logistics industry and the customers. It is therefore important to put in a place a system that ensure no loss of goods.

Rivigo Solution: We have incorporated technology at every level in the ecosystem to enhance our operations. Box-level tracking is one such example that ensures there is no deviation in the number of goods from the time of uploading to offloading of the goods.

The transport and logistics industry has a key role to play in the growth of the textile industry therefore there is a need for transformation of the entire logistics industry. Implementation of technology along with streamlining of the process would enable this transformation and would ensure smoother and efficient transportation of goods through the road network across the length and breadth of the nation.

We continuously strive to build a supply chain ecosystem with greater transparency, improved service levels and reduced complexity. With a pan-India network, Rivigo reaches out to over 60 cities in a shortest possible timeline. Keeping in mind the changes in technology and consumer preferences, we continue to innovate on technology to bridge the gaps between the manufacturer and the consumer.

Kindly let us know more on the unique ‘driver relay model’.

One of Rivigo’s USPs has been that it takes along the entire ecosystem, particularly the drivers who are the most vital element and provide them with a better environment to work in. this enables us to provide a superior and holistic quality services platform to our customers.

One of the biggest problems of this sector is driver availability. If the driver works in a healthy and disciplined fashion, the entire value chain benefits. Not only will the client get services on time the truck operator can expect higher efficiency from the vehicle which will ultimately help clients get better service and OEMs develop high quality of relevant product.

We thought about how to convert these poor lifestyle “25 days away a month job” into a “day job” and that is how we started working on a “Driver Relay” model wherein we change over the drivers after every few hundred kilometers. This way the driver gets to come back to his home every day. This has been made possible because when they go a few hundred kilometers one way, they roster back home the same day. So the truck keeps moving. This drastically improves the turnaround time and service levels.

As a result goods reach faster, more efficiently and there is proper utilization of the truck. Apart from ensuring the safety of the driver, this also ensures that the service level improves.

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