For the MSME ecosystem logistics is definitely something which can drive smart growth in business. Measuring the importance of the supply chain has become a very critical subject in today’s world. In an exclusive conversation between Mr Huafreed Nasarwanji, Chief Commercial Officer, Gati-KWE and Faiz Askari, Founder Editor of SMEStreet, it is explained how logistics as a business vertical influences SME business. Here are the edited excerpts of the interaction:
Faiz Askari: What is your observation on the influence of logistics in MSMEs’ business?
Haufreed Nasarwanji: The fact of the matter is that for the last several years, that has been enabling SMEs quite significantly from a distribution and logistics perspective. But what we have been doing for the last six months, for a year and it's going to be a very strong focus area for us.
Just managing logistics or just managing distribution for an SME is not enough because honestly, anybody can do that. So what we are really trying to do here, is to create an enabling ecosystem for SMEs. And I'll tell you why this enabling ecosystem is very important. So we already deal with several thousand SME customers. Because a substantial part of my customer base, SMEs are my largest customer base today at GSE. So we actually went across the country speaking with them and trying to understand from them where true value creations of them happen.
And one very clear message that we started hearing about a year ago as it is not just about logistics or distribution or fulfilment. It's more about supporting their businesses. Because especially in the micro and small, for me it's different. But for micro and small, we aren't just logistics. So, for example, there were questions which were asked us how can you enable us to hold inventory closer to market? How can you enable us to create new markets? How can you enable us to access new channels and new customers? And this is where we took a step back and we just said that we have this network of ours in Battee, which is a very spread out network.
Faiz Askari: Sounds interesting as, being a leading logistics solution provider, Gati is becoming a pro -SME Business partner. Please give us more information on this holistic approach of GATI for SME customers.
Haufreed: Yes, so when I say very deep and very spread out, what I basically mean is that after the Pin code coverage, the Indian Postal Service has been the deepest and most reliable reach. And not only just reach, this is also a question of how reliably you can service that reach. Because there could be a chapel manufacturer in Kolhapur who has been selling his products in four or five clusters in western India. Yes. And now suddenly you tell it that, look, I'll take your product and I'll sell it in Guwahati, but if you cannot do that reliably, then there's no value in that for him. Right. So it is not just leach, but it is leech and reliable. So we heard what our customers are SMEs, and especially, as I said, the micro and small enterprises wanted. And what we have created for them today is not only a network which gives them the reach that they need with the reliability, we have also added on two or three very important value ads. And I wouldn't even say value ads. Actually, these are two or three reasons why they should work with us and not with somebody else. Okay?
Faiz: Please explain the value add that Gati is providing for SME customers.
Haufreed: We basically go and talk to large groups of SMEs in smaller towns and cities and say, how can we be your knowledge partner? It is not mandatory to become our customers, forgetting our knowledge as we are keen to share what could be helpful for SMEs’ business.
So we explain to them three or four things. The first thing is, from the discrete or limited markets that you used to serve, how can we serve more markets in parts of the country? Very frankly, being the sort of organization and having worked in India for so many decades, we understand channels, we understand distributors, and we understand the market.
So we are actually able to connect an MSN with somebody who will act as their dealer distributor in a year, you could have a pen manufacturer, right.
This person. And this person has been running the same business for the last 150 years. Right. And now you suddenly tell them that, well, we'll give you a dealer and distributor who will distribute your products in Mumbai, in Delhi or in Kenya.. And not just for the sake of saying it. We've actually enabled it. We've actually made it happen. And then the second thing that we can do is because of our footprint in terms of the locations in which we have hubs and warehouses, we can actually store inventory for these guys. And this is something which they are not able to do. So as an SME, you produce material close to market as the orders come in, we will pick from that warehouse and order.
Faiz: GATI is a globally acclaimed organization. What are your observations for Indian SMEs in particular that you learn from other markets?
Haufreed: Our CEO will always talk about this, that everyone wants to make in India, but ultimately who will move in India. And that is where absolutely we need to move in India first.
And our philosophy honestly is that for larger enterprises, if you have 1000 core, 1500 core companies, we are there as your logistics partner. We are happy to help every SME with their logistics issues irrespective of the fact whether you are our customer or not.
Faiz: What is your suggestion for an efficient logistics strategy for MSMEs?
Haufreed: When it comes to a Micro, small and medium enterprise, you could be a manufacturer of artisanal craft anywhere in India? And we are able to come in and work with you and completely change your business. And the best thing is we don't want to charge them for this. This is not a service. Because when their business grows and their business succeeds automatically, the volume increases on my network. Exactly This is not a case of saying I will come and I will do something for you and I will charge you for it.
In addition, we have a network; we have a reach, we know dealers, distributors, and channel partners across industry, engineering, auto, FMCG, consumer, electronics, handicrafts, you name it, we know those. We also understand the geographic outreach of India, it's so diversified that does not serve. And we can actually sit down and work with them and tell them that look, we will create five X access for you, right? All you need to do to get that five X access is to produce or my trade, as your business may be, and the rest you leave for us.
Faiz: What level of engagement can be expected between GATI and SME customers?
Haufreed: And I think the potential is just phenomenal. Huge amount of support, honestly, from both national and local associations whom we want to work with very closely. A huge amount of positive support from micro and small enterprises themselves. We are also looking at tying up these sessions in various cities. And when I say various cities exactly, I was also having your perspective. We can surely discuss and we will share some of the activities which we are doing.
And you know what? Bring in micro and small enterprises and just do knowledge-sharing sessions. Exactly. If you don't want to sell them here today, how can I enable you to double your turnover in two years?
Faiz: According to you, what importance can Logistics provide for the Manufacturing sector?
Haufreed: Make in India is very important, but ‘Move in India’ is also we need to do that. We collaborate and have an efficient collaboration. So exactly. Few points for the kind of conversation we had. Really impressive to have such a vision because normally logistics is considered to be like the conventional set of businesses, it is considered to be one of the important elements in the supply chain and in some cases, it's considered to be 3% of the overall revenue or how companies are spending money or interpreted the input cost.
But with your perspective towards creating a value add and there is a huge need to have such understanding. We interact with MSEs every day and yesterday I came across a small company which is into infrastructure provider they are into imports and they do again setting up infrastructure interiors in other parts of the country from the delay. So their perspective they are facing this challenge after China, this thing, sometimes they get stuck in customs, their consignment gets stuck and most of the time it is just one-liner information which they just need to fill up.
Faiz Askari: What message do you wish you give to SMEs who visualise going Global.
Haufreed: Gati is the entity with which you are interacting and you are most comfortable. But we also explained to them that behind Gati is something called the Allcargo Group, to which we belong. And the Allcargo Group today honestly is the only large multinational logistics company from India. We have a global network, we have a warehousing business, we have a CFS business, and we have a variety.
So we are literally end to end. And how can gassy be the gateway for you to not only sell domestically but how can we help you take your businesses outside? Now, this is a formative thought and if we can actually create these systems which help small businesses do things which they would never have imagined. So these are the kind of opportunities which MSMEs normally are not aware that, okay, a global expert organization in logistics can give their hand apart from just business for your logistic knowledge also. So this is something huge.