Adding INR 5.28 Cr to the bottom line of a rapidly growing FMCG brand

CHALLENGES

The company was collaborating with a number of local, unorganised service providers for its primary transportation needs, giving rise to multiple challenges:

1. Absence of a Transportation Hub Nearby Causing Placement Delays
   The company’s manufacturing plant is situated in a remote location in Raipur with no transportation hub in close proximity. To resolve this, it hired multiple vendors but even after 72 hours of raising an indent, the company had no guarantee of vehicles being placed. Owing to this, it also had to keep more stock than necessary to ensure uninterrupted supply to distributors.
    
2. Inefficient Load Optimization Led to In-transit Damages 
   While its products should ideally have been transported via a 32 feet multi-axle containerised truck, the company was compelled to work with whatever vehicle the transport services providers were offering. As the company’s packages were heavy but non-bulky, the remaining space was often utilised by squeezing  a second type of goods for maximum throughput. The local transporters also indulged in fraudulent practices of loading goods from different clients within the same truck which resulted in significant damages to the packages during transit.
    
3. Higher Transit Times + Operational Inefficiencies = High Working Capital
   As the company was working with unorganized transport services providers, its transit times remained significantly high, adding to the overall inventory carrying costs. Moreover, these associations combined with minimal technological intervention and unskilled team members riddled the company’s logistics operations with sub-optimum practices and intensive manual work. This led to a steep rise in the error margin, eventually costing the company a significant amount of working capital.

These challenges were affecting two key growth areas of the company -

• A huge chunk of the working capital which could be diverted towards core functions was being spent on managing logistics operations 
• Unable to expand online due to the strict logistics compliance requirements of online aggregators which the current service providers couldn’t meet

SOLUTION

In order to tackle rising costs and enable better transportation of shipments with shorter transit times and more efficient operations, we began devising a comprehensive approach and took the following steps:

1. On-time vehicle availability
   We moved our vehicles closer to the company’s manufacturing plant and started providing them 3 trucks per day even if it meant that the trucks had to travel empty for more than 500 km to reach their destination to ensure predictable placements. 
    
2. Identifying the right vehicle fit 
   As per our solution, we identified 32 feet multi-axle containerised trucks as the only vehicle to be used for the transportation of the client’s packages in order to bring down in-transit damages to a negligible amount as well as maximise loadability
    
3. Industry-leading transit times with real-time tracking
   With an operationally excellent DNA, a GPS enabled fleet and a centralised control tower offering complete visibility and transparency , we offered unbeatable transit times along with real-time tracking & monitoring of vehicles.  
4.  

Through collaboration, continuous monitoring and optimization of operations to solve challenges at each stage, we were able to drive tangible results for the company.

Reduction in warehousing space resulting in  INR 44,88,000 annual savings
50% reduction in inventory days resulting in  INR 94,58,182 annual savings
Reduction in DEPS resulting in  INR 3,65,94,720 annual savings

“With Varuna Logistics, our primary transportation is sorted. They are delivering our products safely & swiftly while reducing the total cost of our logistics operations.”

Operating amidst the COVID-19 Lockdown

When the pandemic was disrupting every industry imaginable, we successfully brought our client’s operations back on track with our transparent, predictable and consistent service. 

Having a vertically owned supply chain, our client faced an unprecedented demand as the competitor’s imports were curbed due to the government imposed lockdown. Though
vehicle movement was restricted, manpower was drastically reduced and ensuring compliances related to hygiene and safety became critical roadblocks to getting the product in the market, we were committed to keep our customer’s supply chain running and so we did.

• 97% Placement Performance: The company raised indents for 88 vehicles during the lockdown and we were able to successfully place 86 of them. 
• Reliable Transit Time: Post 1st of April, we were able to generate the same TAT performance that we had delivered before the lockdown.
• Contactless Logistics: To ensure minimum human touch, we pioneered digital LR during the lockdown period to ensure greater workforce safety, error reduction and cost optimisation. 
•  

“After some initial hiccups, not only was Varuna Logistics able to get our products to the market, they did so in half the expected time despite the lockdown.”

RESULTS

5, 28,95,006 annual savings due to efficient, predictable and reliable logistics service.

In one year of our engagement with the company, we have been able to build more efficiencies into its primary transportation setup, enabling seamless coordination, complete visibility and greater savings.

• Saving Warehousing Cost: Initially, the company had decided to expand its Delhi warehouse from 25,000 square feet to 35,000 square feet. After experiencing our performance, it decided to reduce the warehousing space to just 18,000 square feet as all the redundancies within the system were driven out. It has also initiated efforts to bring down its Guwahati warehouse space by 30-35%. 
• Saving Inventory Carrying Cost: With an efficient logistics system, the need to carry and store excessive inventory has been reduced by up to 50% from 25 days, saving the company a significant portion of its working capital.
• Optimizing Manpower Cost: As the status of operations became completely transparent & visible, the daily hassles reduced. The company is now working with a single vendor and raising indents on our customer portal owing to which regular alignments have become systematic & streamlined and manpower costs have been optimised. 
• Online Growth: Complete alignment with aggregator compliances along with a reliable delivery setup has enabled the company to expand its online presence and boost online sales.