Question - 1:
Startup demography and landscape
Answer:
India’s start-up ecosystem has undergone a tectonic shift
over the past decade. The number of startups itself has grown
exponentially over the past few years, now going past 50,000
startups. These are not restricted to a few sectors and
geographies but are spread across the board.
Proliferation of the internet, higher rates of literacy and a
greater exposure to the outside world have fuelled
sector-based innovation in IT, artificial intelligence, IoT,
finance, healthcare, biotechnology, education, agriculture,
and logistics, to name a few.
The government of Maharashtra has taken various initiatives
such as the launch of ‘Maharashtra State Innovative
Startup Policy 2018’, ‘Fintech Policy’ and established
‘Maharashtra State Innovation Society’, providing a
facilitating environment for startups.
It must be noted that of the 14,565 odd startups approved
under the country’s ‘Start-up India’ initiatives in 2018, the
highest number are from Maharashtra. Many of the emerging
logistics startups such as Xpressbees and Leap India are
based in Maharashtra.
However, the state has its own set of challenges for startups.
For instance, real estate prices in Mumbai are steep
compared to most of the other cities in India. It is well
known that few startups began operating out of Mumbai, but
later shifted to other cities in order to sustain and expand
their business. That said, Mumbai still remains a leading
breeding ground for innovative minds, especially B2B
(business-to-business) startups in the fintech and enterprise
tech space.
Following are some supply chain based startups based in
Maharashtra:
Leap India, LogiNext, Cogoport, Freight Tiger, Wow
Express, Emiza, Xpressbees
Question - 2:
Disruptive milestones and unicorns in the recent past -
reasons for success
Answer:
Typically, a milestone in a supply chain refers to an event or
task described in an implementation or action plan which
must be completed within the specified time frame. In this
case, the recent past has provided a lot of technological
disruptions - cloud computing, AI, machine learning,
blockchains, and such - which add more steps in the
implementation plans of a supply chain.
An unicorn is a privately held unlisted startup company
valued at over $1 billion. Let us consider one such logistics
startup in Maharashtra, named Xpressbees, as our case, and
see how they succeeded.
Case: Xpressbees
Xpressbees is an Indian logistics startup headquartered in
Pune that works with several e-commerce firms in the
country, and has more than tripled its valuation to $1.2
billion in a new financing round. They have more than 1,000
customers — including financial and e-commerce services
giant Paytm, social commerce startup Meesho, eyewear
seller Lenskart, phone maker Xiaomi, online pharmacy
NetMeds and online marketplace Snapdeal — deliver their
products across the country. It has presence in over 3,000
cities and towns and it processes more than 3 million orders a
day.
● One factor of their success is their model, which is the
3PL model (Third Party Logistics Model).
● In a 3PL model, an enterprise maintains management
oversight, but outsources operations of transportation
and logistics to a provider who may subcontract out
some or all of the execution. Additional services may be
performed such as crating, boxing and packaging to add
value to the supply chain.
● The Xpressbees business model also operates on B2B
(business-to-business) and B2C (business-to-consumer)
models. Their B2B business model involves providing
services to other companies and online markets.
● The B2C E-Commerce model includes selling goods to
the end customers. The major source of revenue for
Xpressbees also lies in the fulfillment services which
comprises warehousing and transportation.
They have also invested heavily in artificial intelligence
based solutions, that offer customized logistics services
ranging from collection and storage of goods to
transportation and door-step delivery and predictive
analytics, leading to an increase in solving inefficiencies,
streamlining operations and better customer relations.
Question - 3:
Govt. Policies and its impact on startup expansion
Answer:
Owing to the rapid growth of startups in Maharashtra, the
state government of Maharashtra has set into effect some
policies to develop its startup ecosystem and foster
innovation in future ventures. Following are some of the
policies in effect:
(a) Maharashtra State Innovative Startup Policy 2018
The main vision of this policy is to transform Maharashtra by
catalyzing the growth of an innovation-driven
entrepreneurial ecosystem to achieve wholesome and
inclusive socio-economic development.
● The policy aims to offer many benefits to boost startup
growth such as self-certification, quality testing
assurance, tax holidays, patent filing assistance and
easing norms for procurement.
● An online portal named the Leapfrog Maharashtra
portal was created to create a single point of contact for
the entire startup ecosystem and enable knowledge
exchange. The Leapfrog Maharashtra portal will also
function as a single window clearance system for
startups to obtain clearances and approvals in a
time-bound manner.
● Universities, colleges, polytechnics and ITIs with a
demonstrated history of innovation on campus will be
identified and business incubators will be established
within their premises.
● Three cluster-specific Centres of Excellence (CoEs)
will be established in premier research institutions. The
State will forge national and global partnerships to
ensure the CoEs provide world-class infrastructure,
services and guidance to startups at various stages of
growth.
● Private firms will be encouraged to establish sector
agnostic co-working spaces. Whenever a Government
department or agency allocates any land to any industry
or provides extra FSI on the land owned by any industry,
it shall be mandated that the industry promote and
mentor startups and undertake minimum 10%
product or service procurement from these startups.
● A fund-of-funds will be established with an initial
corpus of ₹100 Crore and a total corpus of ₹500
Crore over a period of five years. Investments will be
made in SEBI-registered funds including early stage i.e.
angel and seed funds.
(b) FinTech Policy 2018 (Maharashtra)
The major objectives of the FinTech Policy 2018 is to
incubate at least 300 startups in the next three years,
facilitate venture capital funding of at least Rs. 200 crores
for FinTech startups in the next three years, and provide at
least two more times co-working space to startups.
● Additional FSI will be provided under this policy to
promote setting up of Smart FinTech centers. At least
85% of the built-up area should be occupied by units
in the business of FinTech (startups, incubators and
accelerators), banking and financial services, including
NBFC and insurance, and IT/ITeS sectors with focus on
FinTech.
● Annual benefit of Rs. 10 lakhs will be provided to
FinTech startups for a maximum period of 3 years (for
companies with an annual turnover up to Rs. 25 crores)
towards reimbursement of internet and electricity
consumption, hosting infrastructure at subsidized rates
and reimbursement of state and central GST.
● The Government of Maharashtra will set up an
investment fund of Rs. 20 crores for funding FinTech
operators and incubators.
● An incentive fund of up to Rs. 10 crores will be created
to encourage high growth tech startups in their first year
of operations. Each year, top 20 rated startups are
provided with a grant of Rs. 10 lakhs each, once
during the lifetime of the start up.
Question - 4:
Smart supply chains - existing measures & remedial
measures to convert them to smarter supply chains
Answer:
A smart supply chain is one that is self-organizing and
self-optimizing. Thus, they can predict bottlenecks from an
upcoming event. Following are some of the existing benefits
of smart supply chains:
Existing Measures:
(a) Operational Bottlenecks Prediction:
● A smart system can predict a possible operational
bottleneck arising from an event.
● Pre-empting these types of events can be used to
streamline the system and prevent waste.
(b) Smart Predictive Analysis:
● Used to monitor the conditions of all operating
equipment in a factory.
● Reports sub-optimal equipment performance to
supervisors, thus bringing light to defects and allowing
greater efficiency to be achieved.
(c) Enhanced Supply Chain Transparency:
● Supply chain transparency can be very helpful in
catering to eco-conscious customers, and maintaining a
transparent supply chain can help prevent disruptions.
(d) Predictive Maintenance To Prevent Downtimes:
● IoT and AI removes the need for a maintenance
schedule, allowing companies to predict when a piece of
equipment will work.
● IoT sensors monitor the health of each piece of
equipment and feed real-time data to alert supervisors.
Following are some remedial measures that can be taken to
improve existing smart supply chains:
Remedial Measures:
(a) Prioritizing Data Quality over Quantity:
● Filtering mechanisms are needed to obtain a clear
picture of the data used in the process of smart supply
chain management.
● Existing, future and traditional data sources must be
joined to obtain higher quality data.
(b) More Focus on Digital Transformation:
● End-to-end automation and value stream supply chain
optimization will become essential.
● Complex manufacturing operations will then need to
become increasingly digitized.
(c) Improving Bottleneck Management:
● Machine learning and AI can help automating systems
to detect, rank and eliminate issues, thereby reducing
human error.
(d) Effective Sales and Operation Planning:
● Collection of real-time data allows companies to realign
instantly if conditions such as warehouse management
or transport capacity change.
Question - 5:
Impact on Industry
Answer:
In the next 5 to 10 years, smart supply chains will exert a
strong pull on the Indian economy. Linear and sequential
supply chain operations will move to a more digitized and
open framework that minimizes machine capabilities with
high throughput and limited resources.
● Predictive analytics, dealing with large amounts of
data, can see an improvement of demand forecast
accuracy, reducing error by 30-50%.
● Smart vehicles will lead to significant cost reduction in
transportation and product handling.
● Performance management systems can now use an
automated root cause analysis approach for exception
handling.
● Closed-loop planning integrates pricing decisions with
demand and supply planning, allowing prices to
dynamically adapt to optimize profit.
● Order management is improved by employing
no-touch order processing and real-time replanning.
The potential impact of the smart supply chain can be
calculated by using the following factors:
(a) Supply Chain Service/ Lost Sales:
● Low customer service is either driven by a wrong
promise, wrong inventory profile, or an unreliable
delivery of parts.
● By leveraging all available POS/market intelligence,
improving forecast quality, demand shaping, the service
will improve drastically, thus significantly decreasing
lost sales.
(b) Supply Chain Costs:
● The goal is to have minimal costs and minimal
kilometers driven, still meeting the required service of
the customer.
● Cost reduction measures can be improved using
automated routing, and advanced methods to calculate
the clean sheet.
(c) Supply Chain Planning:
● More than 80% of the tasks in the S&OP process can be
automated, and these have implications on the other
elements. Systems can detect exceptions where a
planner should interject.
(d) Inventory:
● The replenishment lead time can be reduced
significantly using planning algorithms, and new
methods such as 3-D printing can reduce inventory.
Thus, the benefits and impact on the industry, as well as the
remedial measures of smart supply chains have been
discussed and elaborated upon.