Auto after parts market is a high margin (25-40%) and high growth sector which can allay the medium term pains of slow growing Indian auto sector. It is expected to be a USD 15-20 billion market in India by 2020. Auto OEM's have an unprecedented opportunity to scale up the aftermarket business. One of the biggest enabler of this growth would be to build a highly efficient and responsive supply chains. Most traditional and existing supply chains fail on several counts leading lower penetration of OEM aftermarket products. The spurious spare parts and low cost/quality alternatives continue to thrive.
In such scenarios:
- Time to serve the market is high – OEM spare part manufacturing locations are mostly centralized and the channel partners are located pan-India leading to higher time to service. In several locations, it requires 7-15 days to serve the market which leads to high inventory stock with channel partners and also own warehouses
- Quality of the service is poor – there is high percentage (3-5%) of losses on account of damaged or lost shipments. It leads to poor experience for the channel partners and gives space to spurious products or other low quality alternatives
- The cost of servicing is high – OEM’s need to build a widespread network which might still take years to gain density; It leads to higher cost of servicing particularly in off-highway locations
- Poor technology integration – supply chain is still dependent highly on paper based and manual interventions leading to time, quality and accountability loss in the process
Rivigo recently introduced its breakthrough LPCD (Linear programming based continuous dispatch) service. LPCD is a client dedicated service that replaces surface couriers, FTL and PTL with a single continuous dispatch service charged at a geography based flat rate.
LPCD does the following:
- Eliminates need for surface couriers – Rivigo’s 50-70% lower lead time network (based on driver relays) allows it to aggregate dispatches while maintaining current shipment delivery SLA
- Combines FTL, PTL and Surface Courier dispatches into a continuous dispatch milk-run service with optimized routes, vehicle utilization and TAT
- Provides sealed-in and out high quality multi-party shipments with zero damages and shortages through eliminating multiple trans-shipments
Live feedback from customer applications integrates back into OEM ERP to provide ongoing reconciliation of order and delivery completion.
Needless to say the platform will keep evolving to further improve the OEM’s offering to its distributors, gradually bringing all transactions online in a single application
Rivigo has leveraged its technology and data science teams to build Rivigo LPCD algorithm that optimizes multi-modal dispatches (couriers, FTLs etc.) into a single continuous dispatch service. An owned fleet makes is easy to innovate on vehicle body. Modifications required in this case were segregating a full truck into compartments for different consignees
LPCD service has brought down damages to under 0.1% of shipment value – negligible insurance claim related paperwork. Shipments now reach at 50% lower TAT compared to typical surface courier services. Zero instances of shipment reconciliation errors and missing box claims by consignees. VOR shipments at 25-40% the cost of conventional air transfers but with similar TAT.
Greater satisfaction at OEM after-market customers with never before visibility - alerts for upcoming shipments, live tracking of vehicles, log of completed deliveries, facility to provide electronic PODs etc.