Warehouse operations are complex. However, technology holds transformative power. Some recent technological trends like data integration systems, warehouse management systems (WMS), robotics and wearables are creating a buzz and pushing the sector towards complete automation.
Twinkle Sahita
Logistics is embracing the ‘digitisation of everything’ era. This is driven by emerging needs as well as evolving technologies. With the growing e-commerce sector, consumers expect faster last mile delivery with more options to suit on their ‘on the go’ lifestyles. The US-based big-time player, Amazon has set up eight fulfillment centres across India with the largest being in Gachibowli, Hyderabad in the state of Telangana. This no doubt has taken competition in the warehousing segment to an altogether different level. Changing business dynamics and the entry of global 3PL service providers have also led to the re-modeling of the supply chain in India. Increasing demand is paving the way for enhanced services and value-added services including consolidation, labeling, packing and re-packing, distribution services, customer service and reverse logistics. Ergo, these factors are contributing to the need of automated operations ‘inside the box’ (warehouse). Talking about the state of the industry, Areef Patel, vice chairman, Patel Integrated Logistics (PILL), says, “The market dynamics of the warehousing and distribution centre business have undergone a paradigm shift. With shrinking margins affecting bottom-line of logistics players and reduced delivery times deciding client-retention levels, automation has become a key catalyst in optimising operational efficacies. Discerning customers demanding value-added services (VAS), constraints in retaining qualified logistics personnel, slow-moving stock-keeping units (SKUs) along with e-commerce and other multi-channel marketing strategies spawning an increased level of high orders have necessitated the need for automation.” Patel Integrated Logistics has warehouses in Chennai and Vapi. Chennai-based warehouse's cargo handling capacity is approximately 5600 metric tonnes per month. The warehouse in Vapi has monthly cargo handling capacity of approximately 6,100 metric tonnes. There are various complexities involved behind the scenes in the supply chain specifically in the warehouses wherein the inventory is managed and distributed thereafter. However, emerging technologies have made things easier. Ware ‘Tech’ Solutions Robots are navigating a new arena. They now enter ‘inside the box’. They have many benefits over humans. They don’t require health insurance, lunch breaks, or vacations. They can work 24/7 and don’t require training. Robot manufacturer, GreyOrange, focuses on streamlining order handling in the warehouse, specialising in ecommerce logistics. It works mainly with Indian ecommerce merchants such as Flipkart, gojavas and Jabong. Its Butler robot is designed to help ecommerce and logistics operations efficiently deal with high-mix, high-volume orders by moving around a warehouse and collecting the products that are being shipped. The company’s other offering, Sorter, is a high-speed sorting system that scans and sorts parcels for shipping. The system has eight components, including dimensioning and weighing, sorting conveyor and arm, and a bagging unit.
Wearables like smart glasses, watches are slowly integrating into the operations and bringing about a new paradigm on how one manages inventory. Google Glass introduction paved way for growth of wearable technologies. Already today, smart glasses have the ability to display task information, scan barcodes, and support indoor navigation, and can be integrated into warehouse management systems for real-time operations. Shuttle racking systems are used in large warehouses for high stock keeping units. With the systems, pallets are easily managed, with lower human error risks and safety risks. More efficiency can be achieved by connecting the process through the Warehouse Management System (WMS). Indian logistics companies, in wake of emerging reality are slowly moving towards digitisation mode for inventory checks and other functions in warehouses. “We have implemented Data Integration Services (DIS) system. The Change Data Capture (CDC) feature of the system has the inherent capacity to identify and capture crucial warehouse inventory data during insertion, updation or deletion from databases in a real-time environment. The changed data is thus ready for undergoing further integration processes. This has greatly helped us in scaling our data maintenance processes and reducing inventory losses to a considerable extent. We maintain a constant relationship with our technology partners like Oracle as the technology keeps evolving. We at PILL ensure that we are up to date with the revisions and up-gradation in technology for better SOPs and client satisfaction,” adds Patel. Another key technology that is used in tracking inventory systems and ensuring their safety is the Radio Frequency Identification (RFID) wherein objects are identified through low-power radio waves. This can also give better results when the process is connected through WMS. For warehouses with high-volume inventories and large goods in storage, RFID tags render labor-intensive tag reading redundant as they do not need any scanning and can save on labor costs and inventory control. Brijesh Lohia, managing director of Global Ocean Group talks about preferred technology between barcodes and RFID. “Barcodes are now less used because of its disadvantages over RFID. They are a lot slower process which is not acceptable to any company especially because of the ecommerce industry creeping in.” Warehouses of the future will deploy the next generation of self-driving vehicles, such as autonomous forklifts, pallet movers, and swarm conveyor belt systems. These vehicles have integrated sensors that enable navigational authority without the need for further infrastructure such as magnetic or inductive strips. This flexibility allows for various deployment scenarios and enables new use cases for machine-human collaboration.
Key challenges Though there are trends emerging in the warehousing sector, it is fraught with challenges as well. “Despite its strategic importance in the Indian economy, scale of opportunities offered and its immense potential for growth, the Indian warehousing sector is faced with several challenges including the lack of sufficient physical infrastructure. The time lag between devising and implementing strategies, due to the lack of international warehousing standards, is another concern. High fragmentation and the dominance of unorganised players due to various applicable taxes at the state and central level are other issues plaguing the warehousing space,” says Bohm. Indian players face challenges and bottlenecks at various stages of their operation life cycle. Some of these challenges are strategic, while others are operational and need to be managed on an ongoing basis. In such a scenario, the sustainable growth of the warehousing sector depends on how effectively industry players and the government can work together to address challenges in the long term. Warehouse players need to maintain a balance between service and costs. A common challenge encountered by most supply chain players is optimising supply chain costs while never compromising on service delivery parameters. Patel informs, “We have evolved a cost-effective inventory storage and distribution model wherein we do not maintain huge inventories which helps in reducing administrative costs, operational costs and labor costs. This has resulted in quick delivery mechanisms with the added advantage of reduced lead time and enhanced service levels. Huge cost overruns have the potential to disrupt customer service standards.”
Regulatory Changes The government has rationalised the tax structures to reduce supply chain costs and also to encourage the participation of private players in the system. Octroi was one of the traditional taxes introduced by the government. This was introduced with a view to develop warehouses and trans-shipment hubs outside octroi/state boundaries. However, it was objected to by logistics organisations since they allow delays at the octroi checkpost as they ensure that only goods which need to enter the octroi zone do so. Otherwise, further delays are involved in pre-paying octroi on other goods and collecting the refunds later. The implementation of VAT played a significant role in reducing logistics costs. VAT was introduced to avoid the cascading effects of tax as it was being paid at each level. The government had then decided to phase out Central Sales Tax (CST) and introduce Goods and Service Tax (GST), expected to revolutionise the entire warehousing sector. GST, with a uniform tax-rate, is expected to increase revenue by increasing tax collections, while it will help the logistics industry in re-arrangement, to enable the manufacturer to store and distribute goods across the country without any state boundaries. “Warehousing industry is picking up, and with the GST coming in, there is surely going to be a relief for the warehouse industry as well as the others,” states Lohia. “Instead of a multi-layered taxation structure existing in the country today, the implementation of the GST would lead to a unified taxation system. The impact on logistics and supply-chains would be phenomenal with the consolidation of vendors and suppliers and the elimination of existing penalties on inter-state sales transactions. The need to have warehouses on a state-wise basis for avoiding Central Sales Tax (CST) will be obliterated along with the related paper works. A fall in the number of stocking points will result in reduced inventory, leveraging of organisational efficiencies and improved operational controls,” continues Patel of PILL. Recently, Nitin Gadkari, Minister of Road, Transport and Highways of India emphasised on the need to reduce logistics costs in India from 18 percent to 10 percent at Maritime Nation Summit held in Mumbai. Nonetheless, the ‘pick and sort’ operations are now almost at its simplified stage. In the next five years, the Indian warehousing industry is set to grow at a CAGR of 8 percent - 10 percent and modern warehousing at 25 percent- 30 percent due to various factors including the anticipated increase in global demand, growth in organised retail and increasing manufacturing activities, presence of extremely affordable and desirable e-commerce options and growth in international trade.