July 11, 2022
The GST launch: An inflection point for India’s logistics sector
Read Mr. R. Dinesh, our Executive Vice Chairman’s Editorial article for Mint newspaper here...
We are a tech-led solution provider in the supply chain area: R Dinesh and Ravi Viswanathan TVS Supply Chain Solutions
In a free-wheeling conversation with Moneycontrol, TVS Supply Chain Solutions’ Executive Vice-Chairman R Dinesh and MD Ravi Viswanathan explain how the company’s business works
TVS Supply Chain Solutions (formerly TVS Logistics) provides logistics and supply chain management solutions to multiple industries, including the Automotive, Defence, Engineering, FMCG, Rail, FMCG, Utilities, E-commerce and Healthcare sectors, in the US, UK, Europe and other markets. As Managing Director Ravi Viswanathan puts it: “We are a tech-led solution provider in the supply chain area.”
A part of the newly-created TVS Mobility Group, it was perhaps a trend-setter in the erstwhile TVS group (whose four families have now gone their own ways, through a legal separation). When Goldman Sachs picked up an equity stake in the company in mid 2000, it became the talk of the town in the Chennai corporate world. Since then, the enterprise has come a very long way. Today, it is readying for an entry into the capital market.
In this free-wheeling conversation with Moneycontrol, Executive Vice-Chairman R Dinesh and MD Viswanathan share their thoughts on the past, present and future. Edited excerpts:
What is the philosophy behind the logistics business?
Dinesh: When I started the logistics business sometime in 2006, the capability was not present In India. To build a long-lasting business — a profitable business at that — we felt that the best method is to acquire companies that have capability from the developed market. When the choice came, we picked the UK for after-market and the US for production supply-chain capabilities. Post that, the focus was on building the developing market network. The initial focus here was India. India-Asia trade was becoming a core focus. And later, Singapore. It was the centre of the Asia-Pacific. We covered Asia-Pacific for developing market networks. I am proud to say one thing now. When we started, we said that technology alone would bring capability and the global network together. We went for technology not for the sake of it. How do we find the best possible solution for customers? How do we give customers differentiated solutions? That has been the basis on which we built this organisation.
How does it work?
Dinesh: I would say the organisation revolves around profitable growth and differentiation by bringing all capabilities and the network together using technology. Obviously, the TVS brand helped us to attract the right set of people and right set of customers. We have not lost a single person in any of the acquired companies. They have all stayed with us post the acquisition. Last but not least, we have the ability to provide an integrated solution to customers by solving issues. Why is an integrated solution important? Well, we are solving customer problems. We are not just providing a service. Significantly, we have brought the focus on continuous improvement in quality to the supply chain field as well. There is a very strong focus on that right from the day when we started our logistics business.
Is that an easy business opportunity?
Ravi Viswanathan: We reduce complexity by bringing in strong solutions. We use technology for that. We are a tech-led solution provider in the supply chain area. The complexity arises due to a number of issues. As a company starts growing, its processes come under stress and start slowing down. For, they use multiple processes and myriad modes. The biggest differentiator is our solution capability. Process is our strong capability. Our acquisitions — after-market capability in the UK and last-mile capability in Europe — keep us in good stead in providing holistic and transparent solutions. Why do you like Amazon? From the minute you order something and till the time it is delivered, you know where it is. There is complete visibility. That is what a customer in every business wants from us. For a large group in India, which is into mining, we offered a completely different solution than what they had asked for in the tender. They use different types of materials which are measured differently. We took time to understand them, created one mega warehouse, integrated their transportation, and codified all materials and ensured that they are all system-driven. The key here is in providing a holistic solution with robust technology that integrates seamlessly with the system across their entire enterprise. To cap it all, we should be able to repeat this at scale.
How is this achieved?
Ravi Viswanathan: The unique thing about us is our ability to bring multiple layers of sophistication. Once we acquire a company’s capability, we want that business to continue to grow. Not just that. We want that capability to be transported to other areas of our business. For a large customer in the UK, we have signed a significantly large deal, where we bring all our sourcing and procurement capabilities and codify them through a system that is connected to their own. We provide them an e-catalogue of all their things – where are they stored, when they are coming, how they are coming and stuff like that. Everything is given to them in a system-driven way. So, it requires a deep knowledge. There aren’t too many players in the sourcing and procurement field. We acquire a capability by taking over a company. We also take that capability to other areas and companies. That has been our business model. We have taken that capability to India and also to Europe. We acquired a company called Rico, which has last-mile capabilities. It is not a business-to-consumer transfer but business-to-business transfer of last-mile capability. We call this time critical last-mile capability. This is so critical for operations of the business.
Can you be a bit specific?
Ravi Viswanathan: Will give you the example of an ATM. If an ATM breaks down, we have to service it as quickly as possible. So, we have to raise a ticket and service it immediately. This requires a lot of capability: we need to know where the spares need to be stocked, look at the ticket matrix and the like and come out with an algorithmic matrix. These are very sophisticated. Those are the kinds of capability we have acquired. We have put in the systems and processes and scale them.
You are linked more to the automobile sector…
Dinesh: We are not just an auto player anymore. But I have to be secular. Today, we have taken what we have learnt in auto, codified them and made them easily deployable in industrial and engineering manufacturing. We have taken it to the technology and tech infrastructure fields, consumer durables, rail and utility. If you look at the distribution, 24 percent of our global revenue comes from auto, 26 percent from industrial and engineering, 12.5 percent from consumer durables, 17.5 percent from tech and tech infra and 7.5 percent from utilities. You can clearly see a very significant dispersion of the industry segments that we work in.
Do you just play the connector role? Or, do you also help clients in identifying their vendors?
Ravi Viswanathan: When we start, they give us a list of base vendors. But we typically sign a long-term deal. Over a period, I am going to commit some savings for him. My job now is to look at manufacturing — how do I plan properly. Let us say auto. Since they have a good set of base vendors, I start with them, and then improve on that. Sourcing capability is not the issue there. Here, the job is on how to improve the networking capability. I look at this integrated transportation from three angles. One, we need to look at resource optimisation. How many trucks and minivans we need. Once we do the consolidation of this, we need to look at load optimisation. It is about ensuring that the least air is packed in the container. Then, we have to look at route optimisation. We have our own software that does all these. This is the differentiation that we have been talking about. The technology is built and managed by a team of 100 plus engineers, all home grown.
Dinesh: We need to clarify here. We won’t say how many cars a manufacturer should make. That will be done by the manufacturer. But once that is decided, we step in to piece together all that is required to achieve that. We call it a milk run. All these require knowledge and technology.
Do you own warehouses?
Ravi Viswanathan: No, we don’t. We are an asset-light model. We also manage customers’ warehouses in their plants. We manage 18 million square feet of warehouses in India and about 22.5 million square feet of warehouses across the globe. We don’t own any of these. The same goes for the fleet as well.
Dinesh: We have a joint venture company in India. But we have an arm’s length relationship. That is professionally managed. We lease out from them. From day 1 we said we won’t own assets. That is the global model. Capital utilisation is meant only for acquisition and not for owning physical assets.
Source : https://www.moneycontrol.com/news/business/mc-interview-we-are-a-tech-led-solution-provider-in-the-supply-chain-area-tvs-supply-chain-solutions-r-dinesh-and-ravi-viswanathan-8463701.html