Business Disruption Through Superior Value Propositions

By Srinivasa Raghavan:

In my role in TVS today I straddle between two large businesses. One is TVS dealerships where we sell close to 60,000 new vehicles every year, 12-15 percent of the trucks sold in the country. We have 2.5-3 lakh customers coming to our outlets to service their vehicles every year. We have the largest customer base of two million in the country, among the top 30 in the world. From that perspective I have two implications; one, I come in touch with a cross-section of the customer community with the eco system around it that links more than 100,000 garages or 40,000 retailers.
The second part of our business is the aftermarket where we essentially look at vehicles that have gone outside the dealership community to a completely fragmented market of a combination of retailers, distributors and garages. The issue is how we can consolidate that part of the aftermarket. We undertook this journey 3- 4 years ago and today we aggregate all the CV retailers under one banner called ‘PartSmart’ with a franchisee model for retailing multi-brand, multi-vehicle parts.
Similarly, with MyTVS we aggregate the garages for passenger vehicles. Between the business disruptions through superior value propositions today we have more than 200 stores; we expect to reach 500 by 2018.
Then we have an insurance portfolio–the eighth largest non-life insurance broking firm. We also have road-side assistance, a JV with the AA group and extended warranty with TWG group so that we are able to extend the life of the vehicle; backed by our investment in jazzmyride.com on e-commerce.
In addition, we have an eco-system where we have invested in start-ups that include telematics and IoT, big data and CRM analytics. So we look at technology, insurance, services and front-end aggregation, to try and bring modern retailing into India.
Though we can look at these two as separate businesses the underline is that technology has brought in one common, seamless platform for TVS and TASL (TVS Automotive Solutions Ltd) where we create the eco-system of suppliers and customers; we call it Community, Entrepreneurship and Innovation. Community is how to bring suppliers and customers together; Entrepreneurship is the franchisee model through which we aggregate, and Innovation is how we digitally interface it, to make this a self-serving industry. That’s the way we look at it; we would like more people to participate to modernise the trade. We believe GST will further facilitate this and make it more proactive.

Global Perspective

When we did this, a question arose – is the aftermarket industry local or global? We consider it global because three distinct things are happening. First one is that vehicle platforms are becoming global. This means that parts also become global; which means that the servicing eco-systems become global. On the line we made a few acquisitions in the UK-Universal Components that specialises on European trucks; Scuderia that looks at a complete high-end performance system for cars like Ferrari and Maserati. We are actively looking at participating in large buying and distribution houses.
The second point is that logistics have become global – the sourcing in engineering. Our group companies have invested significantly in logistics. We have established our sourcing and engineering of parts between Turkey, India and China, forming three hubs to provide good designing and engineering capability.
The third one is acquisition of distribution business; we have launched in the US, South Africa and Middle-East – we expect that these will grow. What enables and drives globalisation is technology.
For us technology has 4 aspects; a digital platform that comprises mobility, telematics &IoT, with very strong Artificial Intelligence (AI) built into Indian systems that are analytics embedded. The whole idea is to enable our parts dealers to give customers appropriate choices at optimum pricing as soon as queries come up and make it available physically in minimum time; to have an efficient master data management system.
The next sense of mobility is when a vehicle breaks down on the highway. The vehicle gives an alert in different forms, depending on the different category of vehicles. You must have a mechanism that can read the error code sent out and integrate it with road-side assistance to ensure the necessary tools are carried to the breakdown site quickly. For larger vehicles you will have to further integrate with the network data and compare it with the OEM’s specific master manual error code to provide a solution. So here, one end is telematics while the other end utilisesIoT, which are all integrated by the e-learning systems.
The idea is to marry technology with the consumer-use case to give him good service. We have our own IoT, we have developed our own algorithms in converting the DTCs (diagnostics trouble codes), integrated that with the call centre, to enable mobile enabled vehicles to reach the breakdown point within 30-45 minutes, across the country. Instead of confusing the customer with technology what we have to ensure is that he is connected or protected 24×7 when he drives.

Big Data And OEMs

My view is that there is no need to get all the data. An average car can throw about 25 GBs of data at any point of time. Do you really need such a huge volume? We need data only from the use-case point of view. Of course, vehicle manufacturer’s fears are justified as IPRs come into play. If you are insensitive to it, it becomes a problem. The manufacturer must be shown a way to manage his Intellectual Property and security.
There are a number of cases where IPR has been opened out and people have come in and damaged the car. There is a grey area here – a thin line between what’s right and not right. We have to respect the autonomy that players require;information must be related to the use-case. OEMs are fairly open on this as their customer satisfaction goes up; they are ready to collaborate from the application viewpoint. What is more important is how to marry your business model with the customer experience that you want to provide.
As long as your value proposition is articulated clearly, I don’t think there is any confusion. If you focus more on frills than on the core, you get into either over-information or undue expectation from the manufacturer. I would request more and more players to focus on the core business transformation, otherwise the technology will get defeated.
If you focus without disrupting the existing system, it remains an idea that will never become a business. I don’t need technology ideas – there are quite a few; we need business disruption through superior value propositions. That’s what we are trying to work out at TVS – translating and capturing the value proposition on the data platform, assimilating and converting that into knowledge, bringing it back by integrating the services portfolio and delivering with an agreed SLA.

Digitalisation

If I look at it from the last-half-mile of delivery, it plays a big role as I have to connect 40,000 retailers every day, which means there is a huge amount of last-half-mile flow happening. I am doing it because I want to reduce the working capital of my retailers as they are struggling with keeping 4-6 months of inventory.
Today, we have a mandate that every PartSmart retailer should not carry more than 45 days stock; I feel this is still high. So when you do that you actually unleash cash back into the business, to grow. You get more depth of parts placement with the retailer, which will help you increase your coverage and relevance. You have to capture the inventory information of every single parts retailer and integrate it with your supply chain model to make successful deliveries. I am going away from a forecasting method to a replenishment method of logistics. From there I integrate with my back-end, which has a very strong analytical engine, to replenish and then link with my mobility-enabled vehicle that does intelligent route planning to increase coverage.
So for me digital business has multiple connotations. It is a connect between different facets of the business but the real value will transfer only if it gets embedded into my supply chain analytics. Today we have 95 percent fill ratio and delivery within 24 hours. We want to beat that and do better; go twice a day to the retailer, but I think it will take another 12 months for us to reach there. In the aftermarket we are on par except for North America. If you look at the UK, Europe or India, I think we are developing a universal platform.

Business Sense

If a technology does not leapfrog in value generation, it will get defeated; it will get bypassed. You really have to marry the process and technology in such a way as to disrupt old procedures. For me the objective is whether I can reduce my working capital 30 percent and that for the retailer 100 percent. Everything digital should drive that.

Authors

Related posts

*

Top