Business India ×
  Magazine:
Corporate Report

Published on: June 16, 2022, 10 a.m.
TVS Supply Chain Solutions' one-stop solution
  • Dinesh: We are a differentiated supply-chain logistics solution; PHOTOS: SANJAY BORADE

By Lancelot Joseph. Executive Editor, Business India

Global supply chains are turning complex with manufacturing facilities and suppliers located anywhere across the world, and disruptions seemingly becoming the order of the day. Global manufacturers not only have to manage multiple product sources, but also disruptions like Covid-19, conflicts and wars, pandemics and natural calamities, all of which make sourcing and transporting critical components and parts even more challenging and time-consuming. 

Essentially, to keep the wheels of business running smoothly, it has become imperative to manage supply chains well. Needless to say, companies that are unable to manage their supply chains are susceptible to losing business and revenue. Manufacturers need to have tech-enabled integrated supply chains with the ability to reduce complexity, source components quickly, and shrink turnaround times. 

Increases in supply chain complexity have meant that companies need to increasingly engage third-party logistics specialists. With their international expertise, transport management and warehousing platforms, they provide global manufactures with the operational ‘lines’ supporting global trade. 

This spells huge opportunities for companies like TVS Supply Chain Solutions Ltd (TVSSCS), which provides integrated supply-chain solutions backed with technology. In fact, TVSSCS is among India’s largest and fastest growing companies in the field of tech-enabled supply-chain solutions integrated with manufacturers worldwide. It provides specialised solutions to reduce complexity in customers’ supply chains by using technology, data analytics, and unparalleled execution, combined with a comprehensive suite of technology solutions.

“We are a differentiated Indian supply-chain logistics solution. We understand a customer’s needs and we provide a comprehensive system. Our technology coupled with our deep domain expertise and global expertise enables us to develop and offer customised solutions to customers, making the supply chain agile and efficient. We are displacing the disintegrated services of the customer with one integrated service,” says R Dinesh, VC and ED, TVSSCS. 

One of TVS Supply Chain’s customers manufacturing two-wheelers was faced with issues related to manual entry and order errors for components, and depended heavily on packers during production. Assembly kits sometimes did not have the required components, which meant that manufacturing lines would be stalled. 

TVS Supply Chain formulated solutions such as visual AI material identification throughput management with the use of sophisticated cameras, and integrated the systems using APIs with vendor systems. This technology not only reduced errors but also ensured the assembling units continued to function smoothly. In addition, the firm also implemented cameras to monitor and provide alerts to identify operator absence at workstations. This ensured continuity in the production processes. 

Global tech-edge

The key to TVS Supply Chain’s success is the vast adaptation of technology. Unlike other logistics providers that simply provide door-step delivery, so to speak, TVSSCS has embraced a customised gameplan for each customer which involves getting into the customer’s shoes and understanding the logistics requirement holistically, plugging loopholes in the supply chains and ensuring that TVS Supply Chain Solutions are integrated with the manufacturing process. 

The advantage of using technology solutions in the supply chain is that it reduces complexity in customer supply. In addition, technological adaptation can also offer key solutions such as accurate demand forecasting, inventory planning and production, procurement management, network optimisation, visibility and supply-chain agility to handle evolving needs. 

Such a system not only improves the customer’s competitive advantages but also enhances end-customer experience and brings about revenue predictability. TVSSCS supply-chain technologies and processes are the core of its solutions and the comprehensive package it offers customers. 

Another key to the integrated solutions platform is that the technological solutions are cloud-based and powered by a system architecture that is highly reliable. One of the big advantages of a cloud-based system is that it is not only easily customised, it can be quickly adapted across multiple locations and regions. 

“Our cloud-based digital platform enables us to deploy an innovative solution developed for one industry and apply it to other industries to enhance the value we offer our customers. Our technological solutions are capable of being integrated with the customer’s IT infrastructure, ensuring a long-standing relationship with all our customers. This stickiness with a customer enhances customer engagement like no other logistics company,” adds Dinesh. 

TVSSCS and its customers have benefited greatly from investments in technology, talent and process. For traditional supply chains, the application of technology and digitisation of supply chains enable three key advantages which include flexibility, intelligence and efficiency. Its in-house knowledge base has the ability to drive synergies through transplanting relationships, technologies and capabilities.

Collaborative partnerships and active engagement with customers enable TVSSCS to design customised end-to-end solutions solving complex customer requirements. Customers see the benefits of such a transition, and want to apply the same processes in other countries. As a result, the company is able to add newer regions to its supply-chain models. 

For instance, TVSSCS was providing closed-loop services (such as spare parts logistics, break-fix, return and refurbishment services, and engineering support) to a global ATM point-of-sale systems and payment solutions company in the UK. Through active engagement with their other regional teams, TVSSCS partnered with them in redesigning their network and supply chains and, as a result, obtained a contract for spare parts logistics and return-and-refurbishment services in Europe and Asia-Pacific, including India and Australia.

Insightful analytics

The tech-based platform offers a host of advantages. Advancements in technological capabilities like artificial intelligence, machine learning and big data analytics enable a high level of informed decision-making at every level of operations. This not only provides real-time data analytics but also optimises network density and the utilisation of equipment across its entire network. The use of tech also improves operation efficiency and load optimisation. 

TVSSCS innovations integrates various capabilities, including intelligent geo-location, network design, route optimisation, load aggregation and helps predict the arrival times of supplies. Its tech capabilities also enable accurate identification of products and supplies. These predictive analytics drive intelligent decision-making and add significant value for customers, particularly where logistics traffic is large.

In addition, TVSSCS can create logistics networks that automatically track and analyse physical assets such as equipment, inventory location and stock levels, further enabling customers to improve their efficiency. 

Among such technologies, TVSSCS has implemented vision technology, which is used in areas such as human capital management, warehouse operations management and automatic label reading. This eliminates manual validation of supply chain products using cognitive intelligence, and advanced neural network models. Besides, advanced concepts such as facial recognition, label reading, and personal protection equipment recognition and drone technology are incorporated to enable innovative supply chains. 

“The vision technology makes manpower and inventory-checking processes more efficient. Further, with the help of drones and other technological infrastructure, reconciliation processes are fully automated and can be completed accurately and in a timely manner,” says R Shankar, ED, Special Projects. 

TVSSCS has not shied away from acquisitions, particularly when it comes to value-adding to clients’ services and enhancing service capabilities. For instance, the firm acquired i-Loads through the acquisition of White Data Systems Private Limited and Msys through the acquisition of Multipart Holdings. 

For a leading commercial vehicle manufacturer in India, TVSSCS applied its procurement and Msys technology suit to solve a key engine kitting and part procurement problem. The integration has brought about improved efficiency in commercial vehicle operations. This strategy has also enabled the company to expand its service suite and move up the value chain. 

“We have been focussing on moving-up the customer’s value chain with a varied range of technology-based solutions. We believe we have helped our customers seamlessly run operations by solving supply-chain complexities using our technology platform. Our solutions also involve customers outsourcing their complete supply chain on an end-to-end basis to us,” adds Dinesh. 

TVSSCS has a rich operating history with multinational companies, which includes more than 60 ‘Fortune Global 500 2021’ companies. The advantage of being global is that the firm can adapt best practices from anywhere across the globe and apply it to local environments. 

In fact, the firm is the only differentiated Indian supply chain logistics solution provider to have global capabilities and a network across the value chain, which allows it cross-deployment abilities, according to a RedSeer report. Indeed, the firm’s technology, coupled with its global and domain expertise enables it to develop customised solutions to customers. 

At a global level, the firm provides supply chain solutions to 8,956 customers as on September 2021, while in India the firm has over 827 customers. It caters to most industries including automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare. 

Having a global technology-led supply chain solution reduces friction in supply issues, improves service levels, quality, and ensures faster scalability. Another advantage is that firms are able to evaluate supply-chain bottlenecks and breakdowns in quick time and provide quicker fixes with solutions that can be replicated across the globe. 

Indeed, the firm’s cross-deployment capabilities and global network is spread across 25 countries, among them India, the United Kingdom, Spain, Germany, Australia and Singapore. The domain knowledge acquired in different regions and industries is levered across the world. TVSSCS, for instance, has been able to cross-lever its capabilities of last-mile services, spare parts and logistics and break-fix services and offer it to a government enterprise in health care and manage medical equipment across a large number of hospitals in India. 

With TVSSCS integrating its logistics with its clients manufacturing processes all across the globe, the firm has developed long-term relationships with many of its clients, which has provided resilience to its revenue and profitability. Indeed, the firm has quite a few marquee customers and, with many of them, the relationships span several years. 

With Mahindra and Mahindra, for instance, the firm has a 17-year relationship and over 16 years with TVS Motor Company and Ashok Leyland. Besides, the firm has long-term relationships with Hyundai Motor India, Hero MotoCorp, Daimler India Commercial Vehicles, Johnson Controls-Hitachi Air Conditioning and many more. 

Besides, for TVSSCS the addressable growth opportunity is huge, with companies increasingly adopting integrated supply-chain solutions. In fact, direct spends on logistics were $180 billion in FY21 in India. But given the demand for comprehensive solutions, spends are expected to increase to $365 billion by FY26 at a CAGR of 15 per cent, according to a RedSeer report. 

Within this segment, the size of the outsourced supply chain solutions where TVSSCS plays a major role is expected to grow at a faster 25-27 per cent annualised growth rate by FY26 to about $18-20 billion. 

TVSSCS’s global presence, however, means the growth canvas is even bigger. In fact, the global logistics market presents a huge opportunity with spends amounting to $9,137 billion in FY20. This is expected to grow to $13,189 billion by FY25 at an annual growth rate of 7.6 per cent. 

Of this, the global third-party logistics market was about $1,035 billion and is expected to grow at a good clip of 14.8 per cent annually to $2,063 billion by FY23, as per the Armstrong report. In some of the regions where TVSSCS has operations, logistic spends are expected to be robust over the coming years. In the UK, the third-party logistics market is expected to register a 14.5 per cent CAGR till FY25. Similarly, Europe, Asia Pacific and North America are other fast-growing markets for third-party logistics companies. 

Asset-light model 

Furthermore, TVSSCS operates an asset-light business model where its warehouses are operated through leases along with its network partners. It does not own these assets. However, it does have control over the capacity and fleet, scheduling, routing, storing and delivery of goods. It also manages customer-owned or leased warehouses. Its warehousing model revolves around leasing strategically located multi-user facilities in production and consumption centres across India with advanced technological capabilities, which will enable high quality service to its customers. 

“Our asset-light model has enabled us to expand across a wide section of regions, leverage and scale-up volumes and respond to client requirements in an efficient manner,” says Ravi Viswanathan, MD of the company. 

The firm’s revenues have been growing steadily over the past few years. Despite being a Covid-19 disrupted year, TVSSCS clocked revenues of Rs6,933.5 crore in FY21, up nearly 5 per cent over FY20. The firm has a healthy mix of customers with low concentration risk. The top five customers account for just 16.79 per cent of revenues as on September 2021.

The firm clocked an EBITDA of Rs386 crore in FY21 at an EBIDTA margin of 5.58 per cent. With the expansion and improvement in scalability, TVSSCS should be able to expand its margin profile significantly in the coming years. The firm’s pricing model covers direct operational expenses with margins driven by volumes and operational efficiencies. 

On the other hand, TVSSCS is also not heavily dependent on any one sector for growth. Its revenues are diversified across customers, geographies and industries. In fact, revenue from the rest of the world accounted for 74.8 per cent of its revenues in the half year ending September 2021, which shows the size and scale of its global operations. 

Over the coming months, TVSSCS plans to raise funds to pare down its debt with a fresh equity of about Rs2,000 crore, and to capitalise some of its strategically important step-down subsidiaries in Germany, US and Thailand. It is a differentiated supply chain company as opposed some of the pure-play logistics players operating in the country.

TVSSCS is a complete ‘one-stop’ solution for customers, from sourcing to distribution through its end-to-end capabilities, which includes sourcing procurement, integrated transportation, in-plant logistics, aftermarket fulfilment and secondary market. 

TVSSCS integrates its supply chain solutions and logistics services and solving complex problems with innovative solutions and implementation at scale at manufacturing facilities across the world. “We are one with manufactures and use intelligence, automation and dynamic optimisation capabilities to optimise supply chain visibility and lower total cost of operations. With our logistics expertise and technological advantage, it’s a win-win for all,” concludes Viswanathan.

Don't miss this

Corporate Report

IntelliSmart: All charged up

IntelliSmart is playing a pivotal role in the smart metering drive in the country

Corporate Report

Anarock scripts a success story

Anarock is betting big on the rapidly-growing domestic realty market

Special Report

Riding the downturn in the markets

A downslide in the market may be viewed as a good buying opportunity for long-term investors

Cover Feature

India faces a double whammy

India is now facing a dual problem of low growth and high inflation

Our letter to you, once a week.
Register with The CSR Weekly for free!

E-MAGAZINE
Double Whammy
Commodity boom
Adani's biggest bet
FROM THIS ISSUE

Selections

Wellness

F&B

Feature

Corporate Report

Corporate Report

Social Responsibility

Company Feature

Classrooms go live, thanks to Airtel

Published on April 5, 2022, 11:25 a.m.

Despite the pandemic, Bharti Foundation has ensured that children are not deprived of learning opportunities

Column

Collaborative excellence

Published on April 4, 2022, 8:53 p.m.

A policy perspective for meeting SDG-9 in low resource setting of developing economies

Column

Innovation and infrastructure

Published on April 4, 2022, 8:10 p.m.

India is well-positioned to become a model of corporate sustainability

Column

‘More for less’

Published on April 1, 2022, 10:12 p.m.

The merger of technology and SDGs – A game-changing win of the era

Climate Change

Collaboration

IRENA, Opec ramp up RE transition

Published on June 22, 2022, 2:01 p.m.

Both agree to mobilise finance, unlock investment and support project development

Mobility

A surge in hydrogen vehicles

Published on June 22, 2022, 1:11 p.m.

The consumer market is expected to lead the hydrogen vehicles space

Disasters

Climate migration wreaks havoc

Published on June 22, 2022, 12:51 p.m.

Climate change drives millions out of their homes

Government and Policy

Investors back UP’s green energy push

Published on June 22, 2022, 12:15 p.m.

Investment proposals galore in the state

Stay ahead of the times.
Register with The Climate Change Weekly for free!