Case Study-

Unorganized To Organize: Delhivery.comAbstract:

The case gives an overview of Delhivery's unstructured operation functions followed for Zone A shipments. It discusses various issues faced by them and they were unable to achieve the benchmark of delivering within 24hours. It also discuss the solutions to implement new logistics supply chain model which utilize time resource and perform efficiency which generate the business of express service for Zone A shipments.

Introduction:Delhivery founded in May, 2011 with five co-founder and few delhivery boys, the startup has now over 5000 plus employees who service 1500 plus clients base across express and fulfillment logistics. So far, it’s been mostly clear blue skies for Sahil Barua, co-founder and chief executive of ecommerce logistics services company Delhivery. His three-year-old startup has grown 400 percent year-on-year and investors have been queuing up too. The grey clouds have been few and far between, and those Barua recalls with visible sadness.

Barua, as co-founder (along with Mohit Tandon, Bhavesh Manglani, Suraj Saharan and Kapil Bharati) of one of the fastest growing startups in the country, can put such worries aside. What started out as a hyper-local express delivery service for offline stores in May 2011, delivering flowers and food from restaurants in Gurgaon for the first few months, is now emerging as a major ecommerce logistics player.

It was all in the timing. 2010-11 saw dozens of online retailers floating businesses and millions of dollars being poured into the segment by global investors. Barua and Tandon, who were working as consultants in Bain & Co, were impressed by the potential of the industry in India. In June 2011, Delhivery got its first ecommerce client, urbantouch.com, an online fashion and beauty retailer. “In August, we made the shift to ecommerce logistics and became focussed on this space,” says Barua.

Background Note:“Over the past three years, we have evolved into complete supply-chain solutions providing core e-commerce technology and logistics services for everyone in the ecosystem,” says Sahil Barua, Co-founder and CEO, Delhivery. Delhivery started as the express logistics service in June at Gurgaon and later extended to NCR region. At present, it has reached over 1800 pin codes and delivers close to 25,000 shipments across the country. Delhivery charges Rs. 30-35 to pick and deliver a 500 gm. packet in NCR, Rs. 40-45 for transferring a packet (same weight) to metro cities and Rs. 50 for tier-2 and tier-3 cities. When it comes to reverse logistics, the startup charges in tune of 1.2X to 1.5X of forward logistics.

Though several e-commerce logistics providers, such as Chhotu.in and Dialaservice.net, have shut down over the last two to three years, there continues to be strong competition in the sector, with firms like Ecom Express and QuickDel Logistics jostling for space. But Delhivery believes it has an edge: Not only is it an early entrant but it caters to non-ecommerce clients too. Delhivery piloted successful robotics technology in its fulfillment centers for improvising efficiency metrics. Delhivery expanded its fulfillment and express shipping network to over 27 and 250 plus cities respectively.

“We will also roll out a number of new technology products spanning across processes like order management and global inventory management, including warehouse and transportation management systems,” says Sahil. The total processing capacity per day is 1 lakh. Delhivery plans to extend its tool-kit which includes omni-channel services, customer/channel analytics, ship-smart and COMS. For its ecommerce clients, Delhivery offers IT support including inventory and order management, fulfillment and logistics services, handling of payment, managing the supply chain, among others. For enterprises, which are typically listed on marketplaces, Delhivery helps in order management, warehousing and shipping. For its brands clients, Delhivery offers help in creating in-store kiosks, demand forecasting, fraud detection, order fulfillment, warehousing, delivery, etc.

Objectives:Building Outstanding Retail ExperiencesThe Delhivery Seller Toolkit permits you to pick and choose from various modules and manage all your sales channels: online, mobile store-fronts and in-store sales.

Unified ITDelhivery developed an end-to-end suite of omni-channel solutions encompassing the best global practices tailor-fit to nuances of doing business in India, based on our operational experience which includes management tools for global inventory, distributed order management, channel integration, customer engagement, campaign creation and management, fulfilment management and demand analytics.

Focus On ProfitabilityDelhivery distributed fulfilment network coupled with inventory management toolkit helps you optimize inventory allocation across the

country and lower total logistics costs while maintaining same-day/next-day service levels.

Business: Unified platform for outstanding buying experiencesAll sellers facing evolving retail environment requires to continuously create seamless, cross –platform customer propositions. Business strategy are re-defining and adapting to evolving customer demands every day continuously to maximize the potential of business.

Delhivery Express Target Market - All seller (offline/online), e-Commerce companies and any client with express package shipping requirement.Value Proposition - Own network in 150 cities, express shipping, multi-model, reverse logistics, real time tracking and payment.o Shipping

Labeling, Express Shipping, Offline Payments, Drop Shipping and BOPS.

o Special ServicesReverse Logistics, After-Sales Support, Replacements, Call-

Center Services. Delhivery International Target Market - International sellers/merchants/brands.Value Proposition - OMNI Channel, FBD, Delhivery Express, Cross border fulfillment and shipping.

Data Services Target Market - Add-on services to sellers signed up for various Delhivery Services.Value Proposition - Customer scoring, fraud detection, lower cost logistics and merchandizing support.

o Channel AnalyticsChannel Productivity, Inventory Allocation, Vendor Selection.o Demand AnalyticsDemand Forecasting, Returns Management, Fraud Detection,

Recommendations Engine. OMNI Channel

Target Market - International brands, offline retailers looking to build multi-channels.Value Proposition-Integration of offline/online, flexible customer fulfillment. Whether it is a local, regional or national retailer, an international brand or an e-commerce company, the service offering can easily be designed to suit customers’ specific needs.

o Channel CreationWeb Store, Mobile Store, In-Store Kiosks, Social Media Sellingo Order ManagementDistributed Order Management, Global Inventoryo Customer EngagementCampaign Management, SEO, Email Marketing, Advertising,

Social Media Management FulfillmentTarget Market - Smaller brands starting online, small sellers on market places/own websites.Value Proposition - Direct integration with market-places, unified IT, low cost fulfillment, express shipping and payment collection.

Order Fulfilment, Just-In-Time Fulfilment, Special Packaging, Courier Management And Selection

Financial note:Suvir Sujan, co-founder and managing director, Nexus Venture Partners, which invested in the company twice, says Barua is an “outlier” in this space. “He is solving a real problem, not reacting to an issue. He is ensuring widest coverage (in ecommerce) in the shortest time at the minimum cost. He has a laser focus on problems in ecommerce and has created a model around them (Delhivery) ensuring sustainability even with these thin-margin businesses,” says Sujan. 

Investors are clearly biting. Over the last three years, Delhivery has raised three rounds of funding, reaching a total corpus of $42 million. In 2012, it raised an undisclosed amount from Times Internet Ltd. A year later, it garnered nearly $5 million from Nexus Venture Partners. In September 2014, it raised $35 million in funding, led by Multiples Alternate Asset Management. The third round also saw participation from existing investors Times Internet and Nexus Venture Partners.Gaurav Deepak, managing director, Avendus Capital, who helped Delhivery raise its latest round of institutional funding, calls Barua a mature, thoughtful leader. “He is someone you can trust to perform. They are a cohesive team, the roles are well defined and they stick to them. They are constantly focussed on increasing market share and growth,” says Deepak.

The company is breaking even on a month-on-month basis and Barua expects it to be completely profitable next year. Delhivery is also getting into the overseas ecommerce space, starting with Dubai and Bangladesh. By mid-2015, it expanded from its six warehouses with half a million sq ft area to 15 with 1.6 million sq ft. “Our vision is to fulfil all demands in 48 hours,” says Barua.

Delhivery’s Express Logistics Model:Express logistics service is an integrated time-definite movement solutions catering to First Mile, Long Haul, Intermediate and Last Mile delivery across India. Express Logistics has proven expertise in Network Modeling and Design, Route Planning and Optimization, Load Optimization and Vehicle Re-engineering. Express Logistics has been India’s first service provider to successfully implement Vehicle Tracking System. It enables customers to view the real time location of their consignments online on the India map. 

Express

F irst M ile

L ine H au l

Last M ile

First Mile: (From Client Warehouse to Origin Hub)

Line Haul: (From Origin Hub to Destination Hub)

Last Mile: (From Destination Hub to Dispatch Center)

At Delhivery, in the first mile, the important activities involve like pick-up shipments from client’s warehouse, scanning shipment during pick-up time and after entering to facilities (processing center) called

incoming, sorting shipments based on destination, bagging of shipment to form cluster, then connecting bags to hub for further connection. These activities occur in processing center so the working attitude of processing center play major role for the success of first mile.

Delhivery handles 17 processing center across India which serve more than 1400 clients to pick-up shipments from their respective warehouses.

Zones:Different locations under different Zones have been divided based on the mode and frequency of transportation:

Problem and solution for Zone A shipments:Due to ignorance by workers and less space for shipments to handling, cause disturbance in delivery process. The benchmark of delivering shipments at right time and right place in right condition and quantity was far ahead.

In Zone A, the pick-up city and deliver city is same which is called intra shipments. Following shipments from handling point to dispatch point is to break down the bottleneck in the stream of shipments from the purpose of source to the point of convey. These kinds of shipments are in the highest priority to dispatch from center.

MORNING AFTERNOON

DC 3 179

Dpc 1 592

HUB 448 459

PC 1659 791

2111 2021

While going through the problem and cause of the issue, they analyze the performance of each facility. The above graph tells about the performance of each facility (PC, HUB, DPC, DC) involve in the supply chain management. The performance of processing center is more effective than other facilities. But the amount of shipments present in DPC at morning and at afternoon is almost same which lead to blockage in the flow of shipments. This bottleneck lead to delay in delivery in Zone A which takes standard time duration from pick-up to delivery is less than or equal to 24 hours. And another problem was improper network routing of pick-up vendor location.

MORNING AFTERNOON0

200

400

600

800

1000

1200

1400

DCDpcHUBPC

So, the network routing from processing center to vendor pick-up location were reworked and the optimization of supply chain by reducing the cost per shipments.

Client location

Names(S_PC clients)expected volume

vehiclecost

(1side)total cost

cost per shipments

A Shop clues,Street-9 210Van1 194 388 0.473170732

B Snapdeal 200

C Jabong 100Van2 117 234 0.585

D Indiatimes 300

E Datawind,Yepme 600 Tata ace1 32.64 65.28 0.1088

FFlipkart,Viviana,ED

Retail,Mobile store,Zoffio,Callmate

1600Tata 407

1110.409 220.818 0.13801125

GSnapdeal RL, 3000 Canter1 85.05 170.1 0.0567

Zovi,Vedeocon 800 Mahindra pickup1

67.65 110.7 0.135J New age 20

H Purple panda 300 Tata 407 2

685.698 1371.396 0.914264I Suksh,Jabong 1200

2560.294

To improve the performance of facilities, the scorecard was prepared containing few parameters and based on these parameter the evaluation of facilities are done:

• Labor productivity• Pick up Accuracy • Fuel Efficiency• Absenteeism of workers • Space utilization • Utilization of truck capacity • On-Time Arrivals • Type of bags creation

Few more data analysis reports are prepared for the obtaining the standard benchmark of delivery shipment at time.• High Value Shipments -Incoming Not Done• Client Wise Priority(Top 5) ageing 1 day -Incoming Not Done• Mixed Bags -%age• PC Performance -Highest Breach• Ageing -Numbers of days• Zone A Tracking -Numbers of shipments deliver

Exhibit 1:

Exhibit 2:

Exhibit 3: