The quaking aspen approach to the enormity of logistics

The Logistics sector in India, that has largely been conventionally (read manually/inefficiently) driven, is now increasingly turning towards digitization and automation, considerably boosting India’s prospects in building a robust foundation for a growing economy. The logistics sector in India currently accounts for over 14% of GDP ($380b), employs over 22m people, and is expected to grow at a CAGR of 10.5%

An opportunity in inefficiency (over $100b)

In India, Logistics costs as a percentage of GDP (14%) exceeds that of other comparable countries — 10–11% in BRIC countries, 8–9% for developing nations. Developed markets such as the USA and Germany are even more competitive, with the ratio ranging between 8–9.5%. This upward pressure in logistics costs in India could be ascribed to the lack of efficient inter-modal and multi-modal systems.

Nearly one-third of India’s logistic cost (~4% of GDP) is due to inefficiency such as lower road & rail speeds, higher than required inventory levels and theft & damages. [Source: Edelweiss, India Logistics Report 2018]. Several factors are expected to combine to reduce these inefficiencies over the next decade, including a favorable tax regime, improved infra leading to reduced transit times, warehouse consolidation, and rapid adoption of technology solutions. As if to herald this disruption, Logistics has (finally) been granted infrastructure status.

To make sense of this disruption, businesses across the world have begun adopting technology at a faster pace than ever before. Individual challenges have been countered with point solutions. However, the movement towards integrated supply chain systems that dynamically coordinate across customer, distributor, supplier and production is an essential stepping stone to navigate across the range of stakeholders, and solutions around cloud, big data, IoT, AR etc.

With the above thesis, and backed by the experience of working with companies like Blowhorn and Xpressbees that serve large shippers, and companies like Lenskart, Myntra, FirstCry and Flipkart that manage complex supply chain networks, we sought to further understand this sector’s blueprint. Our conversations with heads of supply chain, financial controllers and so on revealed one key insight — Enterprises were thinking of freight more strategically as a competitive value center, but were unable to find best-in-class technology solutions.

Chennai, coffee and hot chocolate

What added further caffeine (and cocoa) to our research was a hot Chennai afternoon, sometime in early-August. We had made our customary visit to Saravana Bhavan, completed meetings for the day and invited Nitin (CEO, Pando) for a conversation. It was one of those meetings where the deck is kept aside, the entrepreneur and you understand the problems of the space and end up having a meaningful conversation on how to address these problems step by step , delivering value to customers, and in the process, building a massive global business. The answer to this highly networked industry is network in itself and hence the name Pando.

In parallel, one of his colleagues was sitting at a table nearby, closing a client call right behind us. We got really interested in speaking to her as well and while Nitin called Abhijeet, Pando’s Co-Founder and CTO, we got to understand a lot of unique cases that Pando was able to solve for with their network-first approach. It was clear that their team was their biggest asset — Ashok Vasan, a senior sales leader who built I2’s global GTM, Computer Associate’s channel partnership strategy, Dell’s call center operations who had recently joined Pando (and moved to Chennai from Singapore) to head their GTM, was only symbolic of the quality of the team.

The 40 mins meeting slot stretched into a couple of hours!