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The murmurs about impact of Logistics Tech has now grown louder- with The Economic Times officially declaring trouble.

We have some exciting new Logistics companies and even more exciting Logistics Tech companies- most backed by blue chip investors such as SAIF, IAN, IDG, Nexus, Paytm among others.

BUT is the ground shifting? My take- temper your expectations- we will still be India (Actually more Bharat than India) even after 5 years. A better one for sure. But we are not about to leapfrog and become Germany by 2020.

So will logistic tech be used in a big way? I will say- YES and NO.

YES- because as people on ground use smartphones more- every driver has one now, thanks to Mukeshbhai !!- they are really cutting down communication gap and innovating.

• The most used technology will be? Not routing, not optimization, not Big Data, not Machine Learning- it is and will be Whatsapp.
• Already, pictures of drivers are shared, vehicle space is shared, broken boxes photos are shared...cutting down distance between branches
• Whatsapp groups are the norm- route wise group, hub wise group, sales groups. Managers straddle these and make things happen faster
• So people will change micro level practices and reduce obvious friction- that is a welcome change

NO- because salary level, education level and training are not changing. Thus- the capability to ABSORB HIGH TECH and drastically change operations is missing and unlikely to be industry wide.

• Powerful charts generated by Big Data (?) software gather dust- as there is no one to understand them and act differently
• Planned and optimized routes- where they are actually deployed- are hardly followed as managers rely more on experience (Surely the case in all Emerging Markets)
• KPIs are hardly measured, rarely displayed and are generally used to manage costs and not improve ops.
• Control Towers mean collection of CCTV screens (Seen at lobby of one of the largest Indian logistics player- for all visitors to see !!!), and may be a few GPS driven vehicles on map (seen at one of the largest DC in SE Asia !!)

There are of course exceptions- a few companies, a few hubs and a few managers. But all combined with less than 2% impact. When you want to \"change the industry\"- 2% is not enough.

SO how to make a difference?

Deploy BASIC technology BROADLY for small improvements- what I will call BROAD TECH rather than invest in HIGH technology in a few locations- call it HIGH TECH.

Incremental change- improve many areas by 5%-8% each year, rather than look for BIG BANG reforms.

Examples:

• Improve company wide delivery to information update time from 10 hours to 8 hours in Y1, 6 hours in Y2 and may be average of 4 hours is best you can get in Y3
• Improve vehicle placement ratio from say 70% to 75% in Y1, 80% in Y2 etc.
• Improve hub cooling time from average of 10 hours to 7 hours- huge deal if you can really achieve ACROSS all hubs

This will require a HORIZONTAL approach and BASIC technology. Take a tech initiative, deploy in 75% of network- only then take next one.

Now this may not be very exciting from a TECH point of view, especially for investors looking for exponential sales in 2 year time frame.

All tech is good and HIGH TECH will some day become BROAD TECH- but will that be in time to justify many valuations of Logistics Tech companies?

Well- that calls for a separate discussion !!