Why this serial entrepreneur and a sector expert teamed up to provide tech disruption to B2B logistics
Bengaluru-based bootstrapped startup Stracuity Consulting Pvt Ltd’s Freight Deck is addressing the woes of Indian logistics companies with its transportation management system platform.
Ecommerce has not only brought logistics to the forefront but has also brought with it a gamut of problems plaguing the trillion-dollar global sector. From factories and distribution units to retailers, their warehouses, and end users, the supply chain network is enormous and often complicated.
This is a market that is ripe for disruption enabled by technology, especially in the B2B logistics segment. This was what led Ashok Krishna Bhat and Amit Anand to start Freight Deck in 2017. The transportation management system (TMS) platform is used by large manufacturing companies to procure, manage, and execute their transportation operations.
Prior to starting Freight Deck, Ashok had founded Rapidstall, an eco-friendly branding and display solution that is the best replacement for flex and vinyl printing, which contributes largely to the landfill problem in India.
"My family business is in the line of heavy industry projects for defence, aerospace, and heavy engineering industry. I spent a couple of years contributing to that business as well,” Ashok says.
Amit, on the other hand, started his career in enterprise software sales at Tally, and subsequently was in the logistics procurement space for over 12 years. Having built logistics contracts for the biggest business houses in the country over the past decade, he is a subject matter expert when it comes to logistics and transportation in the Indian market.
“We co-created the product with the support of our clients who were from the sectors of FMCG, industrial, and international trade,” Ashok says.
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Bringing together all stakeholders
The TMS platform works as an enterprise resource planning (ERP) for the logistics function. Ashok explains that it handles workflow right from procurement and digitising contracts to executing everyday operations management, such as indenting, shipment optimising, document management, and financial reconciliation.
“By doing this, we aim to bring down the cost of logistics in our country and enhance the competitiveness of the economy. The trickle-down effect of this is something we look forward to seeing in every product consumed in the country,” Ashok says.
They had to first spend time with clients to understand the problems in detail. What they found was a fragmented ecosystem with multiple stakeholders.
For goods to get from the factory to the consumer, a number of entities intervened: from corporate-planning and the transportation team, to the factory and warehouse at the shipper’s end and the broker, fleet owner and driver at the transporter’s end, along with CFAs, dealer, distributors, point of sale at the receiver’s end before finally reaching the end consumer.
These stakeholders were working in silos with limited or poor connectivity and visibility across the value chain. Non-standard workflows, hard copy documents, and redundant processes were the order of the day.
“Logistics as a function is collaborative by design but the systems on which the function runs are not. This core insight led us to build the Freight Deck collaborative TMS platform,” says Ashok. The platform works like a plug-and-play system.
Currently bootstrapped, the team spent Rs 3.5 crore over a year to get the platform running.
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The big logistics market
According to Associated Chambers of Commerce (ASSOCHAM), India can save over $50 billion if the cost of logistics and transportation is reduced from around 14.4 percent of GDP to nine percent of GDP. Compared to this, other developing countries spend less than eight percent of their GDP.
However, the logistics segment is fast picking up. In the first five months of 2019, the logistics sector witnessed a capital infusion of $6.25 billion across eight deals. That’s more than a six-fold increase from the amount it raised last year across 20 deals.
Other players in the space who raised capital include Bengaluru-based online trucking marketplace Blackbuck’s Series D round, and another $22 million raised by AI-backed supply chain optimisation startup Locus by Tiger Global.
Ashok adds that they are unit economic positive on the customer level since there is negligible cash burn involved in terms of customer acquisition.
“Also the relatively long cycles involved in the sales process of pitch-to-PoC to gradual scale-up in deployment means it takes eight to 12 months from initiation for us to realise full revenue levels from our clients. We, however, expect to be unit economics positive in another two financial year cycles,” Ashok says.
In the last financial year, the team claims to have gotten a revenue of Rs 1 crore. It now intends to develop the product further using deep tech.
“We are working on multiple use cases of AI that will be able to undertake a lot of operations that humans currently do, and do it more efficiently. We are also working on strong industry collaborations which we expect will work as force multipliers in due course,” Ashok says.
(Edited by Suruchi Kapur-Gomes)