IT Is Key To Warehousing Growth In India

The demand for regulatory compliance, security and quality assurance has increased the demand for modern warehousing where organised players have an essential role. Technology adoption in warehousing is deemed as an imperative for efficient business processes.

Nahida Jafferi

India has come a long way from basic godowns to smart distribution centres. However, a lot of improvement in warehousing is essential since warehousing accounts for 25 percent of the overall logistics costs.

India ranked 44th out of 167 countries in the World Bank's Logistics Performance Index (LPI) and second in the 2018 Agility Emerging Markets Logistics Index. The reason being the overall logistics costs in India that accounts for 13 to17 percent of the Gross Domestic Product (GDP), which is nearly double (6-9 percent) the logistics cost to GDP ratio in developed countries such as the US, Hong Kong and France.

Warehousing is one of the key enablers in supply chain solutions and is the fulcrum for procurement, manufacturing and distribution services which collectively contributes to robust supply chain services. The demand for modern warehousing has increased, and so has its lease period.

PV Sheshadri, CEO, Future Supply Chain Solutions Ltd(FSC), observed, “The supply chain industry is at an inflection point where we will see the demand for good warehousing infrastructure gaining prominence for the next three to four years and this demand needs to be fulfilled with high-quality Grade A warehouses. These modern warehouses are insulated, ventilated and climate-proof with round the clock surveillance and standard quality and safety procedures.”

The warehousing space is expected to undergo a big transformation with the help of advanced technologies that will significantly change the way products are received, stored, and shipped.

Sheshadri commented, “Though a large part of warehousing operations are still manual, some of the latest technologies including cloud software, drones, Internet of Things (IoT) and wearable devices are gaining popularity, thus transforming the world of the supply chain. Trends are heading towards adopting the latest technological advancements, such as Artificial Intelligence, Digitisation of Supply Chain, IoT and Blockchain, Robots & Drones that fasten the process of warehousing automation.”

Automation adoption There is not as much automation in India because the labour in India is a lot cheaper. Viral Shah, executive director, V-Trans India Ltd, observed, “Automated management has only been implemented in 20 percent of the world’s warehouses.”

V-Logis, the warehousing solutions division of V-Trans, offers Warehouse Management System(WMS) for being connected to the goods in the warehouse, inventory management, integrated transport facilities, reverse logistics, in addition to value-added services for logistics cost optimisation.

Shah stated the manually run warehouse processes resulted in shipping delays, wrong product dispatch and additional costs. However, technology has changed how things are done in different industries.

The benefits of automation have to outweigh the costs before customers agree to go for it. For example, an autonomous vehicle like a forklift with a sensor that reads bar-codes when it goes across in the warehouse aisle can cover the entire inventory counting in two days instead of one month for just A-class items. This could reduce the dedicated manpower employed for just inventory processes, which can offset the cost of investing in this technology.

Amine Soufiani, MD & CEO, FM Logistic India, said, “I see a very positive trend in automation adoption for warehousing business in India. Earlier, low-cost warehouse options were most favoured due to multiple State and Central level taxes, which limited the focus on automation and higher throughput.”