It is a lesson Milind Shahane, chief executive of Drive India Enterprise Solutions (DIESL), has taken to heart. This is the first stint in the services industry for Mr Shahane, a product of the Indian Institute of Technology, Bombay, and the Indian Institute of Management, Ahmedabad, and it comes on the back of 22 years of experience in engineering, with Tata Motors, Telco Construction Equipment Company and Voltas.

Being closely associated with the logistics function in his previous companies has been a help for Mr Shahane, a TAS officer from the batch of 1990. “It’s an exciting opportunity for me,” he says. “The business of logistics and supply chain has been identified as a growth area for India and for the Tata group. I feel honoured to have been given a chance to shape the future of this organisation.”

Established in 2003, DIESL is jointly owned by Tata Industries and Tata International. It started by supporting the procurement, distribution and sale of the handset business of Tata Teleservices. Until 2005, DIESL imported, distributed and sold handsets, modems, data cards, mobile accessories, etc, and it continues to do that.

Since 2005, however, DIESL has had a much larger canvas with which to work. The company now operates more than 180 warehouses across 28 Indian states and manages in excess of 5.5 million square feet of warehousing area across India. It covers 85 percent of the country’s districts and connects some 7,000 towns. More than half its revenue (59 percent) comes from Tata companies while the rest accrues from non-Tata clients.

Getting things moving
DIESL provides the full range of logistics services, including warehousing, distribution, international logistics, kitting and packaging, telecom trading and value-added services like cash management and e-trade.

The company offers primary distribution or transportation services, transporting goods from original equipment manufacturers and ports to the warehouse. The second part of its services involves transporting goods from warehouse to market, specifically ensuring these reach dealers, distributors, retailers and individual customers.

DIESL’s business, though, is far more complex than simply transporting goods from point A to B. Says Mr Shahane, “Our back-end systems and processes need to be managed efficiently so that we can deliver the right product to the right place at the right time and cost. Our ability to manage the supply chain, the strength of our systems and processes, the competence of our people and the technology in which we have invested — all of these are critical factors that can affect the quality of our services.”

Thanks to having the best of communications technologies, DIESL has established a countrywide network. Technology partner Tata Consultancy Services has provided customised IT solutions to ensure operational efficiency. These solutions include WIMac, which takes care of warehousing and inventory management; Connect, which delivers high-performance transportation optimisation, distribution management, a track-and-trace facility and route planning; and Connect international, which deals with the import and export component of the business.

“Our IT systems ensure visibility and tracking,” explains Mr Shahane. “They also provide data on how this is done, enabling us to take corrective action based on the information we have. But the technology can help us only up to a point; we have to depend on our workforce for the actual loading and handling.”

A logistics company’s main workforce consists of local hands who provide the manual labour, the muscle that the business demands. These people are, typically, unskilled. The next level consists of supervisors, who, in turn, report to the warehouse managers.

Risk factors
In a business in which clients often have millions of rupees at stake, a total reliance on human effort, and the consequent room for error, could spell trouble. In a situation where anything going wrong can lead to large-scale losses, DIESL needs to ensure that its people are well-trained and capable of handling any eventuality.

“We have to keep training our loaders and pickers on how to use equipment,” says Mr Shahane. “We also have to teach them about the procedures that have to be followed. Since a number of them are uneducated, and the attrition rate at this level is quite high, the learning needs to be reinforced all the time.”

In the absence of any certification course in logistics, DIESL gives a lot of importance to employee training at all levels.

As the business grows, up-to-date domain expertise becomes a factor. “We need to have domain expertise about our customers’ businesses as also about how to handle or store specific products,” says Mr Shahane.

Safe and sound
For example, perishable goods require cold storage and food cans need to be handled carefully. Low-volume, high-value goods such as laptops, cellphones, data cards, hard disks and the like have to be guarded against theft, which means that robust security systems have to be put in place. And the storage of chemicals requires strict compliance with safety regulations in order to prevent fires and leakages.

Maintaining consistency is crucial in the logistics business. Customers need to be able to rely on DIESL completely. That can be possible only if the company’s internal processes are consistently good across all links of the supply chain, and that’s what DIESL expends plenty of energy on.

“Efficiency and compliance with the law help to bring consistency in terms of handling and training,” says Mr Shahane. “Clients are always looking for a logistics services provider who will give them consistency, reliability and quality, and ensure that legal compliances are in order. Being an ISO 9001-2008 certified company is an advantage.”

While these processes help DIESL ward off the challenges posed by players in the unorganised sector, the key to ensuring success is to secure operational efficiencies at a competitive cost. “We are constantly working towards improving our operational parameters in terms of turnaround time, transportation transit time, loading-unloading efficiencies and warehousing efficiencies,” says Mr Shahane.

There are many goals ahead for DIESL. The company would like to get into the express segment, which involves the transportation of documents and small packages. Mr Shahane is also keen on servicing industries such as steel, chemicals and automobiles, all of which need specialised logistics and offer huge opportunities for growth.

The road ahead
DIESL’s future plans also include going beyond Indian shores, particularly to neighbouring countries such as Nepal, Bangladesh and Sri Lanka. It expects to follow this foray with an expansion into West Asia and Africa, where the Tata group has a sizeable presence.

But first, the company is looking to consolidate its position in the domestic market. This is crucial in the light of the growing number of companies, both foreign and Indian, that have announced plans to enter the logistics sector in India.

“We want to become a billion-dollar company over the next five years,” says Mr Shahane. “Our vision is to be a market leader in India by 2017, and we intend to do this by providing integrated supply-chain solutions”

Armed with the right systems and processes and boasting competent people, DIESL is gearing up to achieve greater victories in an industry that has been famously defined as “the practical art of moving armies”