Infusing AI into Logistics

Nishith Rastogi set up Locus.sh, a logistics management platform, with the intention of simplifying logistics solutions. Shortly, it aims to launch a self-serve version of its solution which will eliminate human intervention and increase the number of deliveries many fold. 

Nishith Rastogi and his co-founder, Geet Garg, were building an app with a tracking device, RideSafe, for women’s safety.  However, it was a time when the food technology sector was booming and a couple of startups started using this app for tracking their delivery boys. Realising the market capacity, the duo started looking at it a little more seriously. Soon, Rastogi and Garg formed Locus.sh, with a mission to build deep technology products around automation of logistics. “We do the decision-making in the logistics process,” says Rastogi, giving it a simple explanation.

From the time the company was set up in May 2015, it has made steady progress. Locus spent the first eight months on development, setting up base and even had a few customers validating the product on the ground. “We had some really good customers who helped us evolve the product and we are running several frontline clients now,” says Rastogi.

The company also raised a small seed round during this period from growX ventures. After this, it assembled a team, primarily on the engineering side. The company recently raised US $2.75 million in Series-A funding from Exfinity Venture Partners, Blume Ventures, BeeNext and Rajesh Ranavat, MD of Li & Fung Capital along with existing investors who also participated in the round. These funds will be used for hiring and develop the technology further.

Understanding the nuances

A machine learning startup focussed on simplifying logistics solutions, Locus has built proprietary algorithms solving several problems like load balancing, route optimisation and planning, container utilisation (3D packing), etc.. It offers a set of infrastructure services making it a complete technology stack for logistics in the form of platform-as-a-service. Its technology suite comprises a set of proprietary algorithms – route deviation engine, order dispatch automation, capacity optimizer for fleet, field user app, dashboard for operations, live tracking for end-customer, configurable alerts from activities on ground, live reporting and predictive analytics. It has also enabled on-demand businesses to dispatch, track and manage its on-field workforce.

At a macro level, Locus’ solutions help its clients in reducing fuel consumption, achieve operational savings and contribute to a low-carbon economy. The engine also aims at reducing the number of delivery vehicles used by taking into consideration the maximum vehicle capacity.

Nishith Rastogi, Co-Founder, Locus.Sh

There a three basic factors that the company watches out for to enhance the effectiveness of its solution. One, consistency in operation; two, consistency in packaging; Three, transparency.  A customer should know where the truck is, the hub manager should know if there is any issue.


Solving the right problem

Locus has a ‘pay as you go’ solution where it charges on per-delivery basis on scale and the value it adds to the client. The company also operates a profit sharing model with select clients.

Currently, Locus automates intra-city logistics for 25 enterprises in India including Urban Ladder, Delhivery, Lenskart, Quikr, Liciou and more. For instance, with Urban Ladder (an online furniture store), 100 per cent of delivery across India happens through an automatic despatch system.  When the product is ready for despatch, there is no despatch manager deciding on proceedings and this has streamlined the process.

It provides technology and automation to at-home healthcare services for brands like Lenskart. The company helps the latter in optimising its scheduled appointments with the optometrists for eye check-ups at home. Locus is now making logistics more efficient for healthcare services startups like 1mg where it manages logistics for the online pharmacy and has managed to affect fuel cost savings of upto 25 per cent for it.

Talking about Locus’ diverse clientele, Rastogi says, “We have new age companies who have their own captive logistics. We also have consumer facing traditional logistics companies like Safeexpress or Blue Dart and those from the manufacturing sector.”

The company usually reaches out to the decision makers directly. “We exchange information and demonstrate the value of the product,” says Rastogi. The company has two people who are actively involved with sales out of its total team size of 25, over 20 per cent of which consists of PhDs, according to Rastogi.

Dealing with variability

Working on a market potential of US $1.5 billion in just the e-commerce segment,  Locus operates in a market where a large number of products are delivered to the end-user at the doorstep, instead of the shopkeeper, resulting in  a higher variability. “That drastically increases the expectations of precision in time and last mile etc.,” adds Rastogi.

Not just this, since the company operates in an era of GRP, clients automatically understand which vehicles deliver what package in what timeline, time slots and understand the traffic conditions.  “Now you need dynamic decision making,” says Rastogi. The company has clients not just in e-commerce, but across back-end distribution for sectors like FMCG and retail. Locus helps them organize demand and scheduled orders.

A larger number of companies are adopting automation. Take the case of manufacturing, automotive and retail.  “There are now IoT solutions that tell you that a potential stock-out is likely to happen,” shares he.

Therefore, as the delivery windows shorten, more synergies need to take place and this is especially needed in logistics where there are 100s of variables. “This is not designed for humans,” opines Rastogi. More and more decision making has become data based, for example, deciding where a warehouse needs to be established. Rastogi explains that it is decided on the  rental cost of the warehouse. If there are two warehouses nearby, one looks at the demand pockets and traffic patterns and identifies which one will facilitate faster delivery. Of course, the rent of the warehouse changes based on that. “It is not just the movement, but more of the precision making and planning that is getting data based,” says the co-founder.

Looking ahead

The company recently raised US $2.75mn in Series-A funding from Exfinity Venture Partners, Blume Ventures, BeeNext and Rajesh Ranavat, MD of Li & Fung Capital along with existing investors who also participated in the round. Amit Ranjan, founder of SlideShare.com, was an early investor. Balakrishnan, ex-CFO of Infosys, is on Locus’ board. It plans to use these funds to expand its team and hire talent from the global market and also upgrade its technology.

“Right now, we have a significant pipeline of transactions booked,” says Rastogi. The company is planning to launch the self-serve version soon and has recently launched a new engine which also does the packing pattern for a user.  “It provides the correct order to load products such that it maximises packing efficiency. It gives us access to a completely new market,” adds Rastogi. With no human intervention, the self-serve version can potentially increase the number of deliveries from a few 100s to a 1,000 deliveries a day.

“We keep building adjacencies and these are structured around the fact that we want to be able to move a package from point A to point B without any human intervention including pickup, time, mode and other factors,” says Rastogi on a concluding note.


Snapshot – Locus.sh

Founders:

Nishith Rastogi and Geet Garg

Year:

2015

Concept:

With its proprietary AI-based algorithms, Locus offers focussed logistics solutions and solves several problems like load balancing, route optimisation and planning, container utilisation (3D packing) for companies across sectors including e-commerce, retail, manufacturing and FMCG

Investors: 

Exfinity Venture Partners, Blume Ventures, BeeNext and Rajesh Ranavat, MD of Li & Fung Capital, growX ventures

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.