A.

Team Constitution
• Participants must form a team consisting of four members
• Members of the team should belong to the same B-school
• All members should be final year management students, pursuing a two-year flagship
MBA/ PGP program
• It is advisable to form a team with members of diverse set of specializations
Note: Teams must ensure to register within the allotted timeline for their submission to
be considered for evaluation

B. Submission Guidelines
• Submission deadline is October 22, 2018, 11:59 PM
• There should be only one submission per team
• Submissions can be made in .pdf/.docx, format along with supporting working files
(.xlsx) containing the calculations
• Ensure necessary comments are mentioned at all points for the ease of understanding
of the evaluating panel
• Limit the document length to max 12 pages
• To submit, mail the documents in a .zip folder to nexus@rivigo.com (naming
convention: Team Name_Institute Name)

C. Evaluation Criteria
The evaluation will be based on:
o Business analysis of the problem statement
o Out-of-the-box ideas
o Supporting analytics and calculations
o Feasibility of the suggested model

D. Timelines
The challenge will have the following milestones:

• Registrations: Oct 9 – Oct 15

• Case launch: Oct 12
• Challenge: Oct 12- Oct 22
• Leaderboard release: Oct 28
• Presentations (top 10 teams): Nov 1- Nov 2
• Announcement of winners: Nov 4
structions Launching 3rd Party Logistics (3PL) services
Launching 3rd Party Logistics for Roadway

Congratulations!!
Your team has been hand-picked by the CEO of Roadway, a leading player in the logistics industry,
to launch its 3PL (3rd Party Logistics) division1. The CEO feels that there is considerable interest
in the investor circles in the 3PL line of business. With legislative changes being implemented,
including and not limited to amendment of the Constitution of India (GST), there is clear
Governmental support acting as a catalyst to this sector.
Roadway currently provides the full truck load (FTL) and part truck load (PTL) solutions2 to the
existing clientele across more than 14,000 pin codes PAN India.

Presentation to Investors
The task at your hand is to identify and define the value chain of the upcoming business unit of
Roadway, for providing integrated services to the existing clients - warehousing and other Value-
Added Services (VAS) along with the last mile transportation services.
The CEO must present the analysis on the potential for this business to Investors and is eager to
be prepped up thoroughly for the presentation. He would like you to design the go-to-market
strategy of the 3PL business while covering the following aspects in your deliverable:

• Identify the business potential of 3PL in India

• Identify the major sector and industries that should be targeted first and why?
(Hint: Think in terms of major 3PL/market requirements of different sectors)
• Identify locations and sizes of warehouses across India for the selected sector/s and
industries
(Hint: Consider either expanding few of the existing processing centers facilities or setting
up new facilities)
• Define the pricing strategy (for the selected sector/s) for the 3PL division
o Build an excel model which will generate pricing for given specifications (e.g.:
weight, volume, turnaround, service level agreement etc.)
(Hint: Pricing models will be location and sector specific)
o Basis the pricing that has been arrived at – give us an understanding of the
breakeven point. (Try to provide a sensitivity analysis – i.e. what would be the
breakeven point if we adjust the pricing to different levels)
(Hint: You are encouraged to think beyond the traditional pricing model which includes,
fixed warehousing changes (on sq. feet basis) and transportation changes (on kg basis))
• Provide financial projections for the business model defined above, a valuation range
along with a sensitivity analysis on critical variables

1
Refer to Appendix 1 for more details on 3PL
2
Refer to Appendix 2 for more details on FTL and PTL
 • Provide a PLAN B and PLAN C for raising funds.
o Do a comparative analysis of the options – you may decide upon the criteria for
critically evaluating the options

Your consulting fee (read Reward) is contingency based – i.e. you will be paid (quite literally!)
basis how complete and thorough your deliverable is and how convinced the CEO and Investors
are, with the business model and underlying economics.
Note:

• Feel free to use the available sources to get more insights on 3PL business and logistics in
general (kindly quote the sources/references in your submission document)
• Restrict the scope of the launching and running 3PL services in India only
• Feel free to use your own assumptions as to the % penetration in the first few years and
a steady state market share and growth rate for financial projections and valuations
• Kindly provide a detailed explanation for the assumptions made. No assumption is
incorrect as long you justify it well!
Appendix 1: 3rd Party Logistics (3PL) Services
3PL services can be defined as the company’s use of third-party businesses to outsource the
elements of its distribution and fulfillment services. 3PL services include providing transportation
services (including first and last mile), fulfillment centers’ (FCs) operations, along with other
value-added services. Generally, 3PL service providers use advance IT infrastructure including
Warehouse Management Systems (WMS), Fleet Management Systems (FMS), Order
Management Systems (OMS), etc. to bring in operational efficiency.
In India, 3PL is consistently growing as a business segment. 3PL as a service is expected to grow
more than 10% (CAGR) for the next 3 years (2019-2022). It forms 14% of the India’s GDP in 2017
and out of which, 22% is contributed by outsourced logistics.
In 3PL services, the split of cost across transportation and warehousing is roughly in the ratio of
60:40. Moreover, the cost of leasing warehouse space varies from ₹15/sq. ft/month for tier-II
cities to ₹30/sq. ft/month for metro cities in India.

Appendix 2: Details of existing business units of Roadway

• FTL (Full truck load) services: FTL services are meant for clients who require full truck for
shipment from their manufacturing warehouses to their distributor warehouses. In the
FTL business, revenue is dependent on the truck size and lane (irrespective of truck
utilization). As of now, Roadway owns a large fleet of 3000+ trucks and provides the
service on all major lanes in India.

• PTL (Part truck load) services: PTL services are provided to clients who require only fixed
tonnage (generally less than 5 tons) and don’t want to book the entire truck. In PTL
business, revenue is dependent on CFT (Cubic feet) and lane. The cubic feet calculation is
done to ensure that volumetric consignment is not charged on actual weight but on
volumetric weight. For example, a lighter parcel (apparels/footwears) will be charged
based on its volume, whereas denser parcel (auto parts/industrial goods) will be charged
based on its actual weight. PTL business runs on the hub and spoke model. Your
conglomerate has 24 large scale Processing Centers (please see the appendix for the
exhaustive list) across India which act as hubs. These are connected to 250+ branches
(bigger cities have more than one branches), which serves more than 14,000+ PIN codes
PAN India. The first and last mile of the PTL services are handled by Business Partners
(B.P.) who pick up the load from client location and drop at the branches. Similarly, B.P.
pick-up the load from the branches (on delivery leg) and delivers at the client’s doorstep.
Existing Processing Centers (PCs)
Delhi Mumbai Bangalore Hyderabad Chennai Kolkata Coimbatore Guwahati
Lucknow Jamshedpur Ambala Jaipur Ahmedabad Pune Indore Nagpur
Patna Vishakhapatnam Noida Siliguri Amritsar Jammu Patna Salem

Appendix 3: Major sectors and industries

Major Sectors Industries
Energy Equipment & Services
Energy
Oil, Gas & Consumable Fuels
Chemicals
Construction materials
Materials Containers & Packaging
Metal & Mining
Paper & Forest
Aerospace & Defense
Building Products
Construction & Engineering
Capital Goods
Electrical Equipment
Industrial Conglomerates
Machinery
Auto Components
Automobile & Components
Automobiles
Household durables
Consumer durables & apparel Leisure products
Textile, Apparel & Luxury goods
Personal Products
Retail
Household products
Packaged Food
Food Beverages
Tobacco
Health care Health care equipment & supplies
Biotech
Pharma, Biotech & Life Sciences Pharma
Life Sciences tool
Communication Equipment
Storage & Peripherals
Technology Hardware & Equipment
Electronic Equipment
Semi-conductor Equipment
Appendix 4: India’s 3PL segmentation
A. Based on service
Service (in Billion USD) 2018 2019 2020 2021 2022 2023 2024 2025
Freight Forwarding 2.78 3.07 3.44 3.87 4.37 4.95 5.61 6.37
Domestic Transportation Management 6.09 6.64 7.32 8.12 9.06 10.13 11.33 12.69
Intl Transportation Management 8.28 8.96 9.79 10.78 11.92 13.21 14.66 16.27
Warehousing & Distribution 5.98 6.57 7.29 8.14 9.14 10.29 11.6 13.07
Value-Added Logistics Services 1.33 1.47 1.66 1.88 2.13 2.43 2.77 3.15
Total 24.45 26.71 29.49 32.79 36.62 41.01 45.96 51.55

B. Based on end-use
End-use (in Billion USD) 2018 2019 2020 2021 2022 2023 2024 2025
Manufacturing 5.21 5.79 6.5 7.35 8.35 9.5 10.82 12.33
Retail 2.13 2.36 2.64 2.98 3.38 3.84 4.36 4.96
Healthcare 1.29 1.42 1.57 1.75 1.96 2.21 2.48 2.79
Automotive 7.08 7.7 8.47 9.38 10.44 11.65 13 14.53
Others 8.74 9.44 10.3 11.31 12.49 13.82 15.3 16.94
Total 24.45 26.71 29.49 32.79 36.62 41.01 45.96 51.55

Appendix 5: Top 5 3PL companies in the world (2017)

Rank Company Revenue (Billion USD)
1 DHL 65.41
2 UPS Supply chain solutions 58.36
3 FedEx 50.37
4 Kuehne + Nagel International AG 20.28
5 C.H. Robinson worldwide 13.48
Appendix 6: Total annual load movement (through road) across India
State (Annual) From (in '000 tons) To (in '000 tons)
Andhra Pradesh 179832 169062
Arunachal Pradesh 1290 1813
Assam 39797 38344
Bihar 43884 48225
Chandigarh 228 274
Chhattisgarh 19339 17549
Dadar & Nagar Haveli 3237 4023
Daman & Diu 2975 3609
Delhi 53882 125019
Goa 8948 9379
Gujarat 240990 241058
Haryana 128791 102638
Himachal Pradesh 35264 41501
Jammu & Kashmir 19342 33118
Jharkhand 31182 18586
Karnataka 99589 92363
Kerala 62963 71374
Madhya Pradesh 127690 106064
Maharashtra 259924 258555
Manipur 1916 3498
Meghalaya 6889 1796
Mizoram 1438 3376
Nagaland 3435 3495
Orissa 115584 116409
Pondicherry 5781 5654
Punjab 133446 119105
Rajasthan 127055 106030
Sikkim 141 1613
Tamil Nadu 105734 106909
Tripura 858 1807
Uttar Pradesh 107169 112530
Uttarakhand 15138 18351
West Bengal 42806 43412
Appendix 7: Warehouse storage options
Warehousing Stackings
Block Stacking
Single-deep pallet racking
Double-deep pallet racking
Drive-in racking
Shelving
Floor pallet stacking