Supply Chain Disruption: Case of Dastgyr

Dastgyr’s founders had built this company with the vision of establishing a marketplace platform that disrupts the currently fragmented supply chain by connecting 2 million underserved retailers across Pakistan directly to manufacturers, distributors and wholesalers. Considering the issues faced by the suppliers, it would take months before the suppliers agree to deliver on the same day, just hours before a Purchase Order was issued. Therefore, Dastgyr’s founders decided to first create demand in the market by focusing on suppliers’ on-boarding through the traditional inventory-based model.

Dastgyr at its nascent stage procured inventory from any supplier they could find irrespective of their location. Once, the suppliers were onboarded, the next challenge was to convert them on the Marketplace platform. Dastgyr’s Commercial team had to conduct several meetings with each supplier to convince them to shift to the marketplace platform. Despite several challenges faced by the Commercial team, Dastgyr is able to convert more than hundred suppliers. Furthermore, we have placed an efficient stickering system to monitor stock that is procured from suppliers onboarded on the marketplace platform.

Challenges faced by Dastgyr:

Currently, the suppliers are comfortable with traditional model of taking Purchase Orders in advance (usually 2-3 days before supply) and then arranging the stock. Due to capital constraint, the suppliers (mostly wholesalers) have to manage 2-3 loads during the day with the same vehicle. In addition, there is a high probability of vehicles to break down during delivery. In one instance, the supplier’s vehicle was confiscated by the traffic authority which resulted in unfulfillment.

Dastgyr’s Strategy:

Dastgyr had developed a comprehensive and highly informative process of onboarding suppliers. The supplier signs an undertaking where the key terms and conditions such as delivery on time are mentioned. In addition, the suppliers are informed about the benefits they will get through this platform. Through this approach, the payments to the suppliers are ensured by the Dastgyr’s Commercial team.

Market Dynamics:

Unfortunately, the market is still following a traditional inventory led model. One of the reasons for the success of the Japanese’ Just in Time Approach in Japan was the formation of industry clusters where each supplier had specialized in fulfilling a supply of one auto part. In Pakistan, there are no specific business districts pertaining to each industry. As a result, the major cost of travelling, loading and unloading does not allow the traditional suppliers to follow a disruptive approach. The lack of education in terms of digitizing their supply chain is still missing which hampers the growth of tech companies such as Dastgyr.

Future Outlook:

Due to high competition of tech companies in retail space, it is only a matter of time before every body shifts to the marketplace model. Already, we are seeing positive initiatives from the Government such as interest free loans and establishment of business districts in new cities. This will allow a smooth flow of goods within the economy and it will act as a catalyst for the upcoming tech companies to disrupt the marketplace. The wave for marketplace model is sweeping the Pakistani suppliers. They are forced to invest in vehicles that caters to specific demands of their customers. Furthermore, small suppliers consider it as an opportunity to expand their business and move up on the success ladder. Moreover, the improvement in value of services currently offered by the suppliers to retailers is significantly improved due to high competition between different market players. Thus, the marketplace model is way for future for all tech companies in the retail space of Pakistan.