Delhivery using mesh network to ace at various KPIs – Kotak Report

A recent report by Kotak Institutional Equities said that Delhivery Ltd.’s mesh network sets it apart as the best logistics solution in India, considering the market dynamics and its expanse. By leveraging its mesh network, the company has been able to achieve a commendable return of 30% on the capital employed in its express parcel service.

The presence of fewer touchpoints in Delhivery’s mesh network helps them to achieve increased speed and a substantial inventory turnover at gateways. When compared to competitors that use the traditional hub-and-spoke model with fixed routes, Delhivery experiences inventory turnover 10 times higher.

Delhivery’s mesh network uses real-time optimization algorithm to select the most cost-effective routes while considering external factors, whereas the systems used by its competitors are somewhat experimental. This sets apart Delhivery from its peers. The report emphasizes the need for other companies to recognize and leverage Delhivery’s network strengths rather than attempting to replicate them.

The report also mentions that Delhivery’s largest and most technologically advanced Tauru gateway centre, which serves 126 routes, handles 10 times the volume per day and up to 14 times during peak season, using the mesh network. This puts Delhivery in a sweet spot among its competitors.

Jefferies, another brokerage, predicts that the current prices of Delhivery’s stock account for less than 10% of its expected express parcel growth in the next three to five years, compared to over 30% in the past.

For modern-day supply chains, mesh networks are becoming an increasingly popular way to manage the flow of goods. Unlike traditional hub-and-spoke architectures, which are capital-intensive and rely on a central authority to make decisions about routing, mesh networks are highly distributed, with each node in the network connected to every other node.

Using mesh networks for optimising supply chain operations results in various benefits to the companies, including the selection of the most efficient route, better flexibility in events of disruption, and enhanced resilience.