Nishith Rastogi: The Future of Last-Mile Delivery and Sustainability with Locus

Nishith Rastogi (NR): The development of the Women's Safety app was prompted by a larger societal event and a problem statement that resonated with our personal experiences within the family.

Interestingly, during that same period, there was a significant surge in the on-demand economy. Our base in Bangalore, a hub of innovation alongside San Francisco, witnessed numerous startups emerging in various on-demand sectors such as flowers, food, and taxis.

Several of these startups adopted our technology stack to address exception management. Initially, we assumed they were using the tech stack for visibility, but it turned out they were interested in leveraging the feature of route deviation from our women's safety app. This app included an intelligent route deviation feature that allowed tracking without defining a specific route based on the start and end points.

They wanted to apply this feature in logistics to identify any unexpected stops, similar to how it worked in the women's safety app. This realization became a pivotal insight for us. While there was plenty of technology focused on visibility in the supply chain, there was a gap when it came to decision-making. This realization led to the launch of our platform, where machine learning and deep learning techniques became integral components of our system.

Our focus on these techniques is crucial as we are dealing with inherently ambiguous problems that evolve over time, making it imperative for us to utilize advanced technologies in our solution.

(NR): We launched a marketing initiative that garnered significant attention, both initially and throughout ongoing engagement with our clients and potential clients. The essence of this initiative was to provide an assessment of where businesses stood in their digital transformation journey. The underlying concept emphasized the progression from basic record-keeping to visibility and, ultimately, informed decision-making.

The idea conveyed was that the nature of solutions and the required change management varied based on the stage of digital adoption. Recognizing this, we aimed to guide decision-makers on the importance of investing in foundational elements, starting from record-keeping and progressing through visibility to facilitate effective decision-making.

As technology founders, we consistently emphasize the crucial role of change management. This understanding influences how we build both our products and teams, ensuring a focus on facilitating adoption in the ever-evolving landscape of digital transformation.

(NR): In the realm of retail businesses and consumer products, the cost of logistics plays a crucial role in the overall cost of goods sold, often ranging from 40 to 60%. By optimizing the last mile and impacting logistics costs by around 8 to 10%, you can effectively alter the cost of goods by 4 to 6%.

In industries where profit margins are narrow, typically operating between 1.5 and 4%, even a slight adjustment in logistics costs can have a compounding impact on the viability of selling a product. Home delivery, driven by positive customer references, transforms from being merely a fulfillment channel to a defining characteristic and feature of the product.

Therefore, factoring in and optimizing the cost of logistics becomes critically important. The technology selected for this purpose can significantly influence the success or failure of a brand.

If you can reduce the last mile operating cost by helping businesses deliver more orders with fewer trucks or by increasing the fill rate to maximize throughput within current delivery capacity, you effectively lower the per-unit logistics cost for each item. This reduction is particularly impactful for items where logistics costs make up a significant portion of the overall cost. This holds true for segments like retail and consumer packaged goods (CPG).

However, it's important to note that this principle may not apply to industries such as the jewelry market, where logistics problems are different and require a distinct approach.

(NR): Certainly. Locus leverages big data analytics and AI to optimize and transform last-mile delivery through various stages of the logistics journey.

Initially, our process begins with converting addresses to latitute/longtitude, a fundamental step in logistics. This involves utilizing language models, as addresses often come in various formats with missing commas, separations, and punctuations. We intelligently process and correct these addresses, ensuring accuracy by backfilling missing zip codes.

Moving on to the next phase, we focus on fleet monitoring. This includes assessing whether deliveries occur within specified geofence areas and verifying details such as proof of delivery pictures. We ensure that the picture contains the package, the house number matches the delivery address, and other relevant variables align correctly. This operational oversight is crucial for maintaining efficiency.

Finally, we extend our AI and big data capabilities to strategic aspects of logistics. This involves analyzing and capacity planning to identify the best transporters, determining optimal rate contracts, and negotiating for future agreements. By applying these advanced technologies across the logistics journey, Locus aims to enhance efficiency and decision-making in last-mile delivery operations.

(NR): Sure. While we currently support drone makers on our platform, I personally see more potential in ground-based drone deliveries rather than airborne ones. The primary reason for this preference is the economic feasibility, especially in urban areas. Drones are likely to make economic sense for a prolonged period in urban settings, with exceptions for specialized cases in mountainous or underdeveloped rural regions where roads are scarce. Urgent medical deliveries may also warrant drone usage in such areas.

However, I believe that in urban environments, noise abatement poses a significant challenge for airborne drone deliveries. Unlike technical limitations such as battery issues, noise reduction lacks a foreseeable solution in the physics of drone operation. Therefore, I don't envision widespread urban deliveries happening via air drones.

In contrast, ground-based drone deliveries, like those already operational in places such as Milton Keynes near London, seem more plausible for integration into our daily lives in the coming years. It's worth noting that regulatory challenges, like the requirement for visual line of sight and the need for human presence with each drone, can be addressed over time. Despite these challenges, the noise factor remains a significant concern, making it a crucial consideration in the foreseeable future.

(NR): Locus promotes sustainability in last-mile logistics by harnessing the power of technology and AI to facilitate quicker decision-making. The key to making sustainability practical is integrating it seamlessly into the customer experience. This involves identifying sustainable choices and presenting them to customers in a compelling manner.

Customers typically prioritize convenience or cost benefits over sustainability. To make sustainable choices more visible, we implement dynamic options on our platform. For example, in the context of deliveries, if a truck has available space for an additional package in a certain area, we can offer customers a greener and more convenient delivery option by adjusting the cutoff time just 30 minutes before dispatch. Customers may be prompted to accept a slightly delayed delivery with a dollar discount, contributing to a greener outcome.

To execute such initiatives, a significant amount of computing power and data sanitization is required. Platforms like Locus are designed to provide the necessary technology infrastructure and continually mature over time. The goal is to make home deliveries sustainable by offering sustainability as a price benefit or a convenient option for both the shipper and the customer.

The analogy of electric cars illustrates the point that sustainability needs to be aspirational and appealing beyond its environmental benefits. By making sustainable options convenient and cost-effective, technology plays a crucial role in encouraging customers to adopt greener choices. Ultimately, the idea is to align sustainability with customers' existing priorities and make it a desirable and accessible option through technology integration.

(NR): Our current focus is on leveraging deep learning techniques rather than extensively using Generative AI. While we employ deep learning for various applications, we have found Generative AI particularly beneficial for our internal company operations, contributing significantly to operational excellence. As part of our ongoing efforts, we are in the process of launching a tool aimed at simplifying and transforming onboarding and training processes through the application of Generative AI.

It's worth mentioning that at Locus, we follow a model that guides our technology choices: if a rule-based approach is sufficient, we opt for that; if machine learning can address the task, we choose it over rule-based methods; and only when necessary, we resort to deep learning. Even within the realm of machine learning, we prioritize techniques other than Generative AI unless specifically warranted by the task at hand. This approach ensures that we adopt the most suitable technology for each scenario, aligning with our commitment to efficiency and effectiveness in our operations.

(NR): Certainly. While I may not have specific insights into Locus's vision for last-mile logistics in the Asian region, I can share some noteworthy characteristics about Asian markets that can influence the future of logistics. The sheer size of countries like India, China, the United States, and Jakarta, with approximately 80% of the population of the top four countries located in close proximity, sets the stage for a massive volume of transactions, especially in the realm of home deliveries.

In Asia, the number of daily transactions in home deliveries can surpass the annual transactions of many Western markets. This not only highlights the numerical scale but also emphasizes the high dollar value associated with each transaction. This large consumer base makes logistics transactions in the region economically significant.

Moreover, when it comes to payments and logistics, Southeast Asia and rising sun markets often lead in terms of convenience, surpassing their Western counterparts. This can be attributed to various demographic factors, resulting in the actual convenience and innovation in delivery models that frequently influence the West. As a result, product managers and e-commerce managers in Western markets may find it beneficial to visit Southeast Asia to gain insights into the future appearance and functionality of their checkout pages, as innovations often originate in the Asian market and gradually influence global trends.

(NR): To ensure Locus remains at the forefront of innovation in the logistics optimization space, we are actively enhancing our features from a customer perspective. We are committed to making each feature smarter and more robust. Additionally, we are introducing a groundbreaking tool for global change management, specifically designed for enterprises navigating change in their transportation and operations while adopting new software.

This tool is anticipated to bring significant relief and efficiency to the entire operation, particularly for global enterprises concerned about change management. The excitement surrounding this new tool is palpable within our team.

And how do we stay ahead of the curve? Well, we have great customers and we listen to them.