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R. Balaji

TO BUY a product from more than 8,000 farms, bring it to processing facilities and redistribute it to 10,000 dealers all in one day and everyday calls for some keen logistics management. If the product — in this case a million litres of milk — is a perishable commodity, transporting it is surely no milk run.

According to Mr R. G. Chandramogan, Chairman and Managing Director of the Chennai-based Hatsun Agro Product Ltd, the company is setting a benchmark in keeping the logistics cost low.

Consider this: Over 800 vehicles collect milk from 8,000 farmers, carry it to 32 chilling plants spread over four States and from then to dairy units for processing and packing before transporting the products to the dealers.

The company markets milk in four brands — Arokya, Komatha, Santosa and Delight.

The vehicles cover every Tamil Nadu town with a population of 30,000 and parts of Karnataka, Andhra Pradesh and Maharashtra as also Kolkata.

Everyday the vehicles cover about 120,000 km, the equivalent of traversing the globe thrice.

According to Mr Chandramogan, Hatsun's transport cost per litre works out to about 67 paise against Re 1 to Rs 1.25 for others.

At 57 paise, it is even lower within Tamil Nadu where the company has an extensive network and the largest volumes.

The logistics cost is about 7.25 per cent of its turnover of about Rs 480 crore and the effort is to lower it to 6.25 per cent, he says.

Size and efficiency are the key, and Hatsun is thinking bigger and modern. Transport from the dairy farms is necessarily dispersed and the vehicles are small.

These transport the milk to the chilling centres, of which there are seven in Kancheepuram, 14 in Salem, three in Bangalore, seven in Belgaum and two in Kolkata. From the chilling centres, the milk is carried to the dairy plants at Kancheepuram, Salem, Bangalore, Belgaum and Kolkata.

With huge quantities of milk involved, the company is going for larger vehicles. Starting with 9000-litre tankers, where the transportation cost was about Rs 10.50 per km, the company graduated to 15,000-litre vehicles (Rs 13.50) and is now looking at 23,000-litre tankers (the transportation cost will be Rs 15.50 a km).

However, the larger vehicles represent a saving of about 25 per cent on a litre of processed and raw milk, according to him.

The vehicles are all on contract. Hatsun contracts only the bare chassis and provides the stainless steel tanks. The advantage is both on cost and quality.

The company's cost of hire for the bare chassis is lower than for a fully fitted out tanker.

Hatsun exploits its creditworthiness with the banks to finance the purchase of stainless steel tanks at low interest rates. Thus, the tanker is of an assured quality and can be shifted to another truck, if needed. The vehicles operate at 87-98 per cent capacity.

The company soon plans to install Global Positioning Systems in the larger tankers, to track their movement for efficiency of operation.

The company officials said that Hatsun has also gone in for refrigerated trucks rather than just insulated vehicles; this helps maintain milk at low temperature when being moved from the chilling centres to the point-of-sale.

The company has done away with intermediate depots where the milk used to be cooled during transit. This not led to cost savings but also maintaining quality.

The Hatsun fleet includes over 60 15-tonne tankers for raw milk and container carriers for processed and packed milk; 32 nine-tonne tankers and containers; and a host of vehicles of varying capacities from seven tonnes to the three-wheeled one-tonne carriers.

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