Mahindra War Room 2016

Logistics Business Caselet

MAHINDRA PARTNERS SECTOR:

LOGISTICS BUSINESS CASELET: INTER-CITY TRANSPORT EXCHANGE
Mahindra Partners is Mahindra Groups Private Equity Division, whose mission is to
accelerate value creation through a diversified portfolio of emerging businesses.
Mahindra Partners has invested over USD. 1 Billion in Logistics, Clean Energy, Retail,
Luxury Boats, Steel Trading, Conveyor Systems, Consulting, Media, Vocational
Education and Water Utilities. The Division provides growth capital to pursue
opportunities in new and emerging areas, while adapting Mahindras unique strengths of
constant innovation, prudence and creative business modelling. This caselet pertains to
the Mahindra Logistics, the premier logistics service provider to both Mahindra and nonMahindra clients.
BUSINESS BACKGROUND
India is the 7th largest country in the world by land area with an Infrastructure that is in
the initial stages of development by advanced market standards. Mahindras Automotive
& Tractor businesses, which have been in existence for over 6 decades, had several
complex transportation needs to distribute vehicles and spare parts into the deep
pockets of rural and urban India. Over time, this led to the Mahindra Group developing a
strong competence in Logistical Distribution. This capability was consolidated into
Mahindra Logistics Limited in 2000. Initially, MLLs goal was to cater to the captive
needs of Mahindra Automotive & Farm Sectors as a premier logistics services provider.
Eventually, MLLs vision widened to cater to diverse external clients, to evolve into one
of Indias Top 5 third party logistics service providers, with leadership position in the
outbound automotive logistics segment. Recently, Mahindra Logistics has stated its big,
hairy audacious goal to be among the Top 10 Most Admired Logistics Companies
globally, by 2030, and envisions to be Indias leading, most-preferred integrated logistics
service provider.
LIVE CHALLENGE: INTER-CITY TRANSPORT EXCHANGE
As Indias economy grows steadily, Logistics is transforming into an exciting space that
is in the cusp of a major revamp in Technology & Operations. Most of the Logistics
Industry in India is unorganised, but technology-aided disruptions have started in right
earnest. While treading the path of traditional transportation, all current players
including Mahindra Logistics will need to adopt Technology & Innovation at their core.
This is bound to cause tensions between today & tomorrow, existing and future
offerings. With operating margins under continual pressure, there is belief that the
freight industry will become increasingly polarised over the next few years. The winners
are likely to be those players that recognise and wholeheartedly adopt the benefits of

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Mahindra War Room 2016

Logistics Business Caselet

collaborative logistics, actively using solutions such as freight exchanges, to

dynamically buy and sell spare capacity, reduce dead mileage, eliminate empty or light
running and increase backhaul profitability. The examples of Uber, Facebook and
booking.com have shown how Asset Light models that know what really matters - who
needs what when - can attain global scale rapidly, compared to the transaction heavy,
operations driven players.
The cost of Logistics in India today is about 15% of total, as against the international
best in class of 7-8%. What should be done disruptively to bring the cost of logistics
towards the global average, and benefit from the resultant efficiencies? How is the
Logistics Industry organised today - the individual buyers, the fleet owners, drivers etc;
How does transportation take place today, not just in road, but also in Rail and Waterways? Considering these variables, how can the whole eco-system be re-imagined
differently from the way it works today? Can Mahindra create a model where we sell
tonnage km, deriving synergy from the Trucks business as well?
Mahindra Logistics has the benefit of knowing the Indian Geography, and what it takes
in terms of time, cost, efficiency and partnerships to reach out to the nook and corner of
India. Can Mahindra Logistics too leverage the business information it knows
over a long period of time, the experience it has in actually delivering
transportation-needs across India, and the partnerships it has forged at the local
level, to build an Inter-city Transport Exchange - a Platform, a marketplace that
connects load owners and transporters. This model, if done well, could bring
significant efficiencies to the transport Industry itself, resulting in cost and travel time
that would benefit both Mahindra Logistics and the end consumer.
Another Mahindra sector - the Aftermarket Sector - has shown how it can successfully
leverage its knowledge of Used Car Sales patterns across India, to create the Indian
Blue Book, eDiig and AutoInspekt - digital products that leverage the information drawn
from the sector to bring unique benefits to the customer.
Evolve a strategy for a new Inter-city Transport Exchange Platform by Mahindra
Lgostics, that has the potential to disrupt the Indian Logistics Space, by
addressing the following indicative issues and more:
1. What are the problems that the Logistics Industry faces today, that the new model
aims to solve (unorganized market structure, limited reach of many small
transporters, lack of authenticated information such as truck records, absence of
freight & fleet availability for mid-sized and small companies etc.)

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Logistics Business Caselet

2. What are the various areas to be considered while creating a successful business
model? (Good technology exchange platform, tried and tested processes,
experienced staff)
3. How do we ensure both direct as well as indirect quality standards (Placement,
OTIF, scalability, vehicle health, driver and vehicle documentation,
4. Supply of Transporters, Trucks, Base-Building & Onboarding
5. What kind of technology as well as management expertise would be essential for
this model to succeed? (Bespoke algorithms, marketing, process control, operations,
etc.)

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