Shipping value to the supply chain

Transporting goods in a sustainable and efficient manner is the raison d'être for every industry. When it comes to the automotive industry, the operation assumes even greater significance given the humongous number of parts that go into manufacturing an automobile. For vehicle manufacturers, the need to have the specific component at the right time on the shop floor plays a critical role. What’s more, storing such products in ample volumes also constitutes a fair challenge on the back of high real estate cost, logistics and receiving shipments in shipshape condition from component suppliers aplenty. Catering to these requirements of automakers – both OEMs and component suppliers – is also a sizeable business opportunity. 

Bullish on this business is Leading Enterprises in Advanced Pooling (LEAP) India, a five-year-old firm established by Sunu Mathew in July 2013. The company, which aims to be a leading 4PL provider (an integrator which accumulates resources, capabilities and technologies to run complete supply chain solutions) uses returnable packaging that helps reduce the carbon footprint. This includes Foldable Large Containers (FLP), line side feeding foldable crates, returnable wooden pallets, totes, interlayer sheets, belts and wedges among others.

Sunu Mathew, who is managing director of LEAP India, says, “During the initial period, we came across a critical issue of an automotive company whose products were frequently getting damaged during transit. This was the problem statement which we wanted to solve. We investigated the issue and found out it was because of incorrect packaging and loading of trucks. The solution was a Foldable Large Container, which not only reduced the transit damage but also increased the efficiency of loadability and substantially reduced the time taken for handling products. We gained an understanding of the requirements of the automotive industry, which was on the lookout for such innovative solutions as they are not just efficient, but also help in reducing the carbon footprint, which is the need of the hour.”

The company since inception has raised close to Rs 325 crore in Series A and B funding and plans to raise an additional Rs 500-600 crore in round C with a mix of debt and equity. According to Mathew, “The same investors have pumped additional funds in rounds B and C. This talks volumes about LEAP. Based on our achievements, no one is interested to exit. Rather, they are desirous of jacking up their stakes in the company.”

LEAP India states that its packaging material is supplied to customers after careful study and ensuring standard operating procedures of packaging requirements at their doorstep. This is systematically integrated with asset management and reverse logistic services after the packaging is used and emptied, so as to ensure seamless integration of the value chain. Under the service umbrella, customers can get rid of their non-value-added work and focus towards their core competency. Mathew says, “With the scarcity of real estate in India, everyone is moving towards vertical storage solutions and this cannot be achieved without palletisation. The industry is also showing trends towards consolidation from 3PL to 4PL, which means that customers don’t want to deal with many entities and want to integrate all their needs towards one. We work with the transporters, warehouse owners, racking system providers and integrate them together towards a consolidated Solution Provider Consortium. This is our USP.”

The company claims with its all-India network, it is able to deliver the same quality of services across the country, combined with its engagement with customers from the concept stage itself. It states that it ensures seamless integration across the entire supply chain including the supplier, customer, trucker and their customers.

Foldable Large Containers not only reduce transit damage but also increase efficiency of loadability and substantially reduce time taken for handling products.

According to Mathew, the supply chain in India is bifurcated between supplier, production, transporter, warehouses and customer – and all working in silos. He states until and unless the stakeholders come together to create an ecosystem in the country, the pace of improvement cannot increase and will keep on happening in bits and pieces. He says, “As we are fighting ignorance, we need to get the best practices from the world and implement them here because every place is a sinkhole in terms of the supply chain and has immense potential for improvement. Integration is the name of the game and I feel that it is logical that complete information flow is in place.”

Present and Future strategy

The service integrator sees the new tax regime of GST (Goods and Services Tax) becoming a facilitator. According to Mathew, auto companies going in for bigger warehouses rather than multiple small ones is translating towards removing the black box between input and output credit. “With faster movement of goods across India, we are certainly getting many more enquiries as customers are looking towards accuracy and efficiency, which is a sea-change from the traditional approach. We foresee accelerated growth in the days to come,” adds Mathew.

Palletised products can be moved faster compared to manual handling of individual palletised cartons. 

According to Mathew, LEAP India’s growth has been in triple digits year on year for the past five years and he expects this trend to continue for the next five years also. The growth will taper to a relatively moderate 40 percent after that. In FY2018, the company reported revenues of around Rs 80 crore; it is  targeting Rs 200 crore in the current fiscal.

The company is banking on its high-growth phase and expects the trend to continue; it already caters to multiple industries with automotive being one in the lead. Mathew states there are many Tier 1 suppliers who are looking for complete 4PL solutions from the company. In fact, the company plans to diversify geographically after Round C of funding for which it is gearing up its supply chain.

“We clearly want to be a solutions company as far as packaging is concerned. As of now, we don’t plan to get into any other associated function of the supply chain but will definitely facilitate that. We are committed towards providing 360deg packaging solutions, anything which can be pooled, we will lay our hands on it. However, the theme will remain packaging. Since we have more than 700 touch-points across India, it enables us to pool assets across the nation. In essence, we want to bring about a paradigm shift in the automotive supply chain,” signs off Mathew.

(This article was first published in the 1 July 2018 issue of Autocar Professional)