Digital Highway Bridging The Journey Towards A Sustainable & Greener Logistics
Saurabh with more than 26 years of experience in the cement sector, he brings in vast knowledge of company development, operations excellence, and technical & commercial abilities. He is also an active member and vice chairman of various committees for procurement, environment, sustainability, and technological innovation at FICCI and CMA.
In a conversation with Charulatha M, Correspondent, siliconindia magazine, Saurabh emphasized digitization's role in enhancing logistics efficiency, reducing carbon footprint, and fostering CSR initiatives in India.
Explain the significance of digitization in the logistics industry and its impact on overall efficiency?
Over the last seven or eight years, there has been a discernible shift in the field of logistics, characterized by significant improvements in operational effectiveness. The use of dilution methods, which have successfully shortened procedures and increased operational visibility, has been the main force behind this evolution. These developments have led to a decrease in errors, increased productivity, and better understanding of areas that need to be optimized.
Significantly, stock levels have been reduced in a number of nodes, such as dealership networks, depots, and warehouses. Because digitalization increases transparency by making inventories and transit movements easily observable, there has been a decrease in stockpiles. As a result, proactive steps can be implemented in reaction to variations in demand, guaranteeing prompt action to avoid shortages or excesses. Additionally, by delivering products on time and providing dealers and business partners with better assistance, these enhance-ments have increased customer happiness and reduced complaints about product availability.
The visibility of transportation routes is another area that has seen tremendous improvement, which is especially relevant in a country like India where the road network is expanding at a rapid pace. Routine route improvement and upgrades allow for faster truck movement and shorter transit times, which improves overall logistics efficiency. Furthermore, the implementation of digitization has made it easier to get timely updates from clients regarding the arrival of materials, which has improved the planning and scheduling of subsequent consignments. Together, these developments provide firms with improved insights for resource planning and strategic decision making, highlighting the critical role that digitalization plays in contemporary logistics management.
What role does data analytics play in optimizing logistics processes, especially in the context of digitization?
The primary challenge confronting us today lies in effectively leveraging the vast amounts of data amassed through digitization within our systems. The crux of this challenge revolves around the timely analysis of this data and the subsequent dissemination of actionable insights to the appropriate stake holders, facilitating prompt decision-making. Our observations, echoed by industry peers, underscore the critical need for data analytics capabilities to furnish timely and pertinent analyses to pertinent individuals within the organization. The efficacy of digitization hinges upon the consistent and insightful analysis of data, ensuring that actionable insights are readily available. Without such timely analysis, data risks becoming mere numbers on a dashboard, devoid of meaningful interpretation.
Consequently, identifying areas of concern, pinpointing deviations from expected outcomes, and prioritizing crucial information becomes a daunting task. Nonetheless, effective utilization of digital resources enables the generation of predictive insights derived from historical data, empowering decision-makers to anticipate future trends and make informed choices. Furthermore, through digitalization, it becomes feasible to monitor and adapt to changes in historical data, such as alterations in routes, transit times, stock levels, and truck efficiency. By optimizing routes, the efficiency of truck operations improves, leading to reduced transit times and enhanced inventory management practices. Consequently, this optimization not only diminishes inventory carrying costs but also minimizes overall logistics expenditure, illustrating the dual benefits of legislation and data analytics in optimizing both cost and efficiency within the logistics landscape.
In what ways can digitization help in reducing the carbon footprint of logistics operations?
Certainly, implementing measures to reduce carbon footprints is imperative in the pursuit of environmental sustainability, particularly in the logistics sector where diesel usage predominates. Currently, 95 to 98 percent of fleets rely on diesel fuel, necessitating a transition towards alternative energy sources such as EVs, LNGs, CNG, and hydrogen. However, this transition requires time for maturity. There are two primary approaches to address this challenge. Firstly, reducing diesel consumption can be achieved through route optimization and thorough analysis of operational areas. By identifying optimized routes and enhancing driver efficiency, diesel usage can be minimized. Secondly, optimizing transportation routes presents opportunities to rightsize fleets, further reducing diesel consumption. Digitization plays a pivotal role in these efforts, offering realtime insights into truck movements and alternative route options.
Moreover, digital platforms facilitate the integration of various transportation modes, enabling companies to choose environmentally friendly options. As railways and waterways continue to develop, visibility into alternative transportation modes expands, facilitating informed decisions to reduce carbon footprints. In summary, leveraging digital solutions and optimizing transportation routes are essential strategies for reducing carbon footprints in logistics operations.
How is decarbonization managed by major players in India and how is CNG infused in logistics digitization? What is your experience when it comes to decarbonization and CNG so far?
In the logistics industry, decarbonization efforts can be advanced by transitioning away from diesel trucks towards alternative modes of transportation. Initially, this involves shifting freight to railways and sea transportation, followed by the adoption of electric vehicles (EVs) and LNG-powered vehicles, both of which offer partial decarbonization compared to traditional diesel. Additionally, CNG presents itself as a viable substitute. Looking ahead, hydrogen holds promise as a future option for decarbonization. However, the current landscape lacks the necessary infrastructure and ecosystem to exclusively favor one alternative over others.
As an industry, we've taken strides in adopting electric vehicles, though technology refinement is still underway. Similar to the advancements seen in passenger vehi-cles, the range of electric trucks has improved from around 50 kilometers to up to 500 kilometers, a trend we anticipate to see in other alternatives as well. Presently, our industry operates a small fleet of electric vehicles, with plans to expand, alongside transitioning towards LNG vehicles facilitated by the development of energy infrastructure.
As opportunities arise, such as the maturation of EV and LNG technologies, we aim to integrate them into our logistical model. With a forecasted timeline of 12 to 36 months, we anticipate a significant increase in our share of EVs and LNG trucks, potentially growing from the current 1-2 percent to 8-10 percent within the next three years. This multi-pronged approach, incorporating rail, sea, CNG, EVs, and LNG, positions us to make meaningful strides towards decarbonization while meeting logistical demands efficiently.
In your opinion, what are the most critical challenges that companies face in achieving carbon-neutral logistics?
One of the primary challenges facing the logistics industry in transitioning to non-fossil fuel-based options is the significant cost differential compared to traditional diesel trucks. While a standard diesel truck may cost around 40 lakh rupees, alternative options such as EVs could be approximately three times as much, and LNG vehicles may range from two to two and a half times the cost. This steep initial investment poses a barrier to adoption, with payback periods extending to 10-12 years. However, technological advancements over the next 2-3 years are expected to improve these alternatives, though early adopters may necessarily reap immediate benefits. To incentivize adoption, it's crucial to consider initiatives like incorporating carbon credits into procurement decisions, effectively reducing the perceived cost barrier. Government and nongovernmental support will be pivotal in operationalizing such carbon credit platforms. Regulatory uncertainties, such as the implementation of carbon pricing, further complicate matters, highlighting the need for clearer guidelines and timelines.
Additionally, the complexity of supply chains makes emissions tracking and reduction challenging, emphasizing the importance of collaboration and data sharing among stakeholders. Creating a platform for sharing experiences and best practices in adopting non fossil fuel-based logistics can help alleviate concerns and encourage wider adoption. While the transition may seem daunting, starting with intermediate steps like optimizing diesel consumption, expanding CNG usage, and embracing digitization can yield immediate operational cost savings. Exploring hiring models for EVs and LNG vehicles, despite limited commercial gains, can also drive operational efficiencies. Ultimately, engaging with investors and service providers willing to invest in and operate alternative vehicles can help facilitate the transition towards sustainable logistics practices.
In a conversation with Charulatha M, Correspondent, siliconindia magazine, Saurabh emphasized digitization's role in enhancing logistics efficiency, reducing carbon footprint, and fostering CSR initiatives in India.
Explain the significance of digitization in the logistics industry and its impact on overall efficiency?
Over the last seven or eight years, there has been a discernible shift in the field of logistics, characterized by significant improvements in operational effectiveness. The use of dilution methods, which have successfully shortened procedures and increased operational visibility, has been the main force behind this evolution. These developments have led to a decrease in errors, increased productivity, and better understanding of areas that need to be optimized.
Significantly, stock levels have been reduced in a number of nodes, such as dealership networks, depots, and warehouses. Because digitalization increases transparency by making inventories and transit movements easily observable, there has been a decrease in stockpiles. As a result, proactive steps can be implemented in reaction to variations in demand, guaranteeing prompt action to avoid shortages or excesses. Additionally, by delivering products on time and providing dealers and business partners with better assistance, these enhance-ments have increased customer happiness and reduced complaints about product availability.
The visibility of transportation routes is another area that has seen tremendous improvement, which is especially relevant in a country like India where the road network is expanding at a rapid pace. Routine route improvement and upgrades allow for faster truck movement and shorter transit times, which improves overall logistics efficiency. Furthermore, the implementation of digitization has made it easier to get timely updates from clients regarding the arrival of materials, which has improved the planning and scheduling of subsequent consignments. Together, these developments provide firms with improved insights for resource planning and strategic decision making, highlighting the critical role that digitalization plays in contemporary logistics management.
What role does data analytics play in optimizing logistics processes, especially in the context of digitization?
The primary challenge confronting us today lies in effectively leveraging the vast amounts of data amassed through digitization within our systems. The crux of this challenge revolves around the timely analysis of this data and the subsequent dissemination of actionable insights to the appropriate stake holders, facilitating prompt decision-making. Our observations, echoed by industry peers, underscore the critical need for data analytics capabilities to furnish timely and pertinent analyses to pertinent individuals within the organization. The efficacy of digitization hinges upon the consistent and insightful analysis of data, ensuring that actionable insights are readily available. Without such timely analysis, data risks becoming mere numbers on a dashboard, devoid of meaningful interpretation.
Consequently, identifying areas of concern, pinpointing deviations from expected outcomes, and prioritizing crucial information becomes a daunting task. Nonetheless, effective utilization of digital resources enables the generation of predictive insights derived from historical data, empowering decision-makers to anticipate future trends and make informed choices. Furthermore, through digitalization, it becomes feasible to monitor and adapt to changes in historical data, such as alterations in routes, transit times, stock levels, and truck efficiency. By optimizing routes, the efficiency of truck operations improves, leading to reduced transit times and enhanced inventory management practices. Consequently, this optimization not only diminishes inventory carrying costs but also minimizes overall logistics expenditure, illustrating the dual benefits of legislation and data analytics in optimizing both cost and efficiency within the logistics landscape.
Leveraging digital solutions and optimizing transportation routes are essential strategies for reducing carbon footprints in logistics operations
In what ways can digitization help in reducing the carbon footprint of logistics operations?
Certainly, implementing measures to reduce carbon footprints is imperative in the pursuit of environmental sustainability, particularly in the logistics sector where diesel usage predominates. Currently, 95 to 98 percent of fleets rely on diesel fuel, necessitating a transition towards alternative energy sources such as EVs, LNGs, CNG, and hydrogen. However, this transition requires time for maturity. There are two primary approaches to address this challenge. Firstly, reducing diesel consumption can be achieved through route optimization and thorough analysis of operational areas. By identifying optimized routes and enhancing driver efficiency, diesel usage can be minimized. Secondly, optimizing transportation routes presents opportunities to rightsize fleets, further reducing diesel consumption. Digitization plays a pivotal role in these efforts, offering realtime insights into truck movements and alternative route options.
Moreover, digital platforms facilitate the integration of various transportation modes, enabling companies to choose environmentally friendly options. As railways and waterways continue to develop, visibility into alternative transportation modes expands, facilitating informed decisions to reduce carbon footprints. In summary, leveraging digital solutions and optimizing transportation routes are essential strategies for reducing carbon footprints in logistics operations.
How is decarbonization managed by major players in India and how is CNG infused in logistics digitization? What is your experience when it comes to decarbonization and CNG so far?
In the logistics industry, decarbonization efforts can be advanced by transitioning away from diesel trucks towards alternative modes of transportation. Initially, this involves shifting freight to railways and sea transportation, followed by the adoption of electric vehicles (EVs) and LNG-powered vehicles, both of which offer partial decarbonization compared to traditional diesel. Additionally, CNG presents itself as a viable substitute. Looking ahead, hydrogen holds promise as a future option for decarbonization. However, the current landscape lacks the necessary infrastructure and ecosystem to exclusively favor one alternative over others.
As an industry, we've taken strides in adopting electric vehicles, though technology refinement is still underway. Similar to the advancements seen in passenger vehi-cles, the range of electric trucks has improved from around 50 kilometers to up to 500 kilometers, a trend we anticipate to see in other alternatives as well. Presently, our industry operates a small fleet of electric vehicles, with plans to expand, alongside transitioning towards LNG vehicles facilitated by the development of energy infrastructure.
As opportunities arise, such as the maturation of EV and LNG technologies, we aim to integrate them into our logistical model. With a forecasted timeline of 12 to 36 months, we anticipate a significant increase in our share of EVs and LNG trucks, potentially growing from the current 1-2 percent to 8-10 percent within the next three years. This multi-pronged approach, incorporating rail, sea, CNG, EVs, and LNG, positions us to make meaningful strides towards decarbonization while meeting logistical demands efficiently.
In your opinion, what are the most critical challenges that companies face in achieving carbon-neutral logistics?
One of the primary challenges facing the logistics industry in transitioning to non-fossil fuel-based options is the significant cost differential compared to traditional diesel trucks. While a standard diesel truck may cost around 40 lakh rupees, alternative options such as EVs could be approximately three times as much, and LNG vehicles may range from two to two and a half times the cost. This steep initial investment poses a barrier to adoption, with payback periods extending to 10-12 years. However, technological advancements over the next 2-3 years are expected to improve these alternatives, though early adopters may necessarily reap immediate benefits. To incentivize adoption, it's crucial to consider initiatives like incorporating carbon credits into procurement decisions, effectively reducing the perceived cost barrier. Government and nongovernmental support will be pivotal in operationalizing such carbon credit platforms. Regulatory uncertainties, such as the implementation of carbon pricing, further complicate matters, highlighting the need for clearer guidelines and timelines.
Additionally, the complexity of supply chains makes emissions tracking and reduction challenging, emphasizing the importance of collaboration and data sharing among stakeholders. Creating a platform for sharing experiences and best practices in adopting non fossil fuel-based logistics can help alleviate concerns and encourage wider adoption. While the transition may seem daunting, starting with intermediate steps like optimizing diesel consumption, expanding CNG usage, and embracing digitization can yield immediate operational cost savings. Exploring hiring models for EVs and LNG vehicles, despite limited commercial gains, can also drive operational efficiencies. Ultimately, engaging with investors and service providers willing to invest in and operate alternative vehicles can help facilitate the transition towards sustainable logistics practices.
