MANAGEMENT IN INDIA
Warehousing industry in India is undergoing rapid changes thanks to the adoption of a broad outlook and contemporary technologies. With huge demand for scientific warehouses that cater to 3PL (third party logistics) outsourcing market for fast growing pro
WHILE GREAT EFFORTS ARE BEING MADE TO BUILD GOOD WAREHOUSES, MOST WAREHOUSES ARE BUILT WITH LESS THAN 15 MT HEIGHT AND WITH LESS THAN 1,00,000 SQ MT FOOTPRINT. THIS DOESN’T ALLOW FOR USE OF AUTOMATION AND ECONOMY OF SCALE
price-only, but also service parameters and ability of service providers to meet the SLA (service-level agreement),‰ he added. Further, said Panicker, while great efforts are being made to build good warehouses, most warehouses are built with less than 15 mt height and with less than 1,00,000 sq mt footprint. This doesn't allow for use of automation and economy of scale.
Akash Bansal, head logistics, Om Logistics, put his perception in this way. „Necessity is the Â mother of inventions. Today, we have very costly manpower supply and also do not have modern warehouses. However, we are still hesitant to venture deeper into automation. I feel, that the current cost of automation is more compared to the current manual function for those activities. Rather, we are ready for any innovative means which can bring some value addition in the existing value chain. Otherwise, we would not be competitive in terms of cost (as we would be over priced),‰ Bansal argued. He felt that there is an extensive demand for modern warehousing. However, as it leads to an increased cost, the same can be Â built -to-suitÊ basis for those who require it. „This would be a future model that everybody should be ready for, as we are witnessing steep increase in manpower cost in India. The increasing cost leads logistics companies to plan for more automated systems to overcome the pressure,‰ he emphasised. Suunil Dabral, country head, India, Schaefer Systems International, maintained that historically a warehouse has been defined as a commercial place for storage which was influenced by various factors like market geographies, seasonality, economies of scale, safety stock to manage the transit time from distant factories, etc. However, what differentiates a modern warehouse from a conventional warehouse is the Intrafunctionality of the warehouse. Unlike a conventional warehouse, a modern warehouse acts as a catalyst for smooth running of the supply chains.
According to Dabral, in the modern warehousing process, the focus is on the space, time, quantity throughout and resources management rather than simply space management. All this is made possible by a thoughtful integration of various technologies available today like pallet racking, shelving, Man to Goods - RF terminals, Pick to Voice, Pick to Light, Man to Goods - Mini Load, Pallet Load AS/RS and many other advanced Robotic systems.
„As these technologies come for a price, so a clear vision is needed. Seeing all this in context of Indian warehousing systems, I would say that there is definitely an increasing awareness about using modern warehouses today,‰ Dabral said. He viewed that, contract logistics has played a vital role in spreading the outsourcing benefits to the customers. „The expectations from a modern warehouse are ever increasing today. I think this is the right trend as users of those warehouses have a control on losses and shrinkages, visibility of the inventory with better inventory management, reduced labour costs in order picking, resulting into transfer of benefits to everyone in the value chain. A modern warehouse equipped with all modern technologies can actually reduce response time to the market demands; ensure product availability yet commanding savings across the supply chain,‰ he explained.
G Balaraju, managing director, Sindhu Cargo Services, observed that modern warehouse commands more activities and facilities than a mere storage and delivery. „Earlier, most of the warehouses were either industrial sheds or buildings built for some other purpose which were lacking safety and not suitable for entry of vehicles. „Even today, there are not much operators who have expertise in providing entire warehousing solutions,‰ he said.
Anil Arora, managing director, MJ Logistics Services, endorsed BalarajuÊs viewpoint. In his opinion, initially warehouses were built just to store goods where there was limited focus on productivity and efficiency. But today, customerÊs expectation and emphasis have changed to quality in handling, speed in
receipt and dispatch, and better output. Thus demand for modern warehouses is increasing and ample modern warehouses are being built.
However, he pointed out the difference between a modern structure and an efficient structure. „Just putting fancy roofing, PEB (pre engineered buildings) structures, etc., may make the warehouse look modern, but real efficiency comes with investing in productivity enhancing designs and features. Also comprehensive focus on EHS ( environment, health and safety) equipment and installations is missing as it adds to construction cost without any additional revenue. Hence, most warehouse developers give it a miss. There are only limited warehouses which are fully equipped with all modern amenities and technologies and are WMS enabled,‰ he underlined.
PRODUCTS IN PLACE
Oil Field Warehouse & Services (OWS)
According to Vineet Sharma, director, Oil Field Warehouse & Services (OWS), in the present scenario, with more international companies coming to India as well as an increased exposure of Indian service providers to the international market, there is an increased demand of modern warehouses. „Based on the standards prevalent in the international market today, OWS already meets or exceeds all requirements. But there is a conscious effort to keep ourselves abreast with the latest developments to ensure we are early adopters and not imitators,‰ he said.
He asserted that OWS has always believed in being early adopters of technology rather than followers. „In fact, we at OWS believe in taking risks by trying and testing new technologies and new ideas that can improve the lives of our employees and the business of our customers,‰ he said. Sharma also claimed that OWS was the first service provider based around the Indian SEZ act by providing warehousing space that not only slashed the logistics costs for all the operators and contractors in India, but helped increase the overall efficiency of the industry by cutting down lead times. „In spite of the fact that OWS was started with zero external funding or debt, we implemented a WMS that was at par with international standards. Our beginnings were small and humble but we did not compromise on quality of services at any step. Both the facility and the WMS in place has passed the strictest of scrutiny by international companies known for their quality standards and they are our customers today,‰ he added.
Cargo Service Center
CSC offers a single window air cargo handling solution in its facility at Indira Gandhi International Airport, Delhi, unlike others who offer only physical handling activities. „Airlines are forced to either carry out the remaining activities like document and IT handling themselves or find another agency. In our facility, the airlines don't need to attend to any handling related activities or engage another party to do such activities,‰ Panicker said, highlighting a crucial aspect of air cargo handling at the terminal/temporary warehouse.
Besides, in the second phase, CSC will be implementing part automation of package storage for imports and export cargo on cityside at the same time by implementing automated ULD management system. „This should be ready by September 2013. This will ensure that human intervention to store and retrieve packages or ULD is reduced to bare minimum ensuring higher degree of reliability, efficiency, security and control,‰ Panicker shared.
„We have always been a customer- driven organisation and are ready to take on any such challenge,‰ said Bansal. But at this stage, Om Logistics is focussing more on customer specific requirements and would try to innovate as per its customers. „ We are trying to have more modern and innovative solutions, which we can incorporate at a yet nominal cost in our present green field projects under construction. It should be kept in mind that all the possible MHE (material handling equipment) and systems are available on a modern warehouse with the current cost line. It is desired to be practised by all organised logistics companies,‰ he continued.
Schaefer Systems International
Dabral informed that Schaefer introduced award- winning products like SOS (Schaefer Orbitor System) for high density storage, mobile racking, pallet live racks and push back racks, conveyor systems, Schaefer Carousal System (SCS), order picking systems, Logimat, etc. „Schaefer is the only company which is fully capable of offering seismic design compliant solutions. Apart from these, we also have our own warehouse management system (WMS) as ÂWAMASÊ, AS/ RS and Schaefer Robo Pick (SRP) systems which makes use of the ÂMachine Vision TechnologyÊ,‰ said Dabral.
SINDHU CARGO SERVICES HAS ESTABLISHED A STATEOF-THE-ART WAREHOUSE AT BENGALURU MEASURING 65,000 SQ FT AND COMPLETELY EQUIPPED WITH FIRE HYDRANTS, RACKS, STACKERS AND OTHER FACILITIES. THESE FACILITIES ARE WELL SUPPORTED BY TRAINED MANPOWER AND ROBUST WMS SOFTWARE
He asserted that the most unique fact about Schaefer is that all these systems are developed in-house and the company is an expert in end- to- end integration of all these technologies, thus making Schaefer a One stop solutionÊ for all intralogistics needs. „Being a German company, in the last 75 years, Schaefer has made its mark for quality and the results. Our result driven approach motivates us to recommend one solution that fits all,‰ he stressed.
Sindhu Cargo Services
Sindhu Cargo Services has established a stateof-the-art warehouse at Bengaluru measuring 65,000 sq ft and completely equipped with fire hydrants, racks, stackers and other facilities. These facilities are well supported by trained manpower and robust WMS software. „Besides, we operate warehouses at Chennai, Mumbai, Hyderabad, Cochin and Delhi and can cater to any customer requirement. We have our own fleet consisting of more than 200 vehicles to support distribution all over India,‰ Balaraju added.
MJ Logistics Services
Arora informed that MJ Logistics Services has created approximately 2,00,000 sq ft of modern Logistics Center at Palwal ( Haryana), which provides both ambient and temperature controlled warehousing under the same roof. It is operational at full occupancy. „We have the capability to expand the same to up to another 3,00,000 sq ft. We have also successfully implemented Red Prairie's WMS at our cold chain division at Palwal,‰ he shared.
Challenges and Recommendations
According to Panicker, development of FTWZ augers well for the development of modern warehousing infrastructure in the country. Moreover, there is a need for a logistic policy and a warehouse development policy with tax incentives as warehouse is a capital intensive activity. Besides, there has to be a defined warehousing zone in the country in the major cities in each state, with a single window clearance system.
SINCE THE LOGISTICS INDUSTRY IS NOT RECOGNISED AND THERE IS NO SUPPORT FROM THE GOVERNMENT AS REGARD TO REDUCTION OF INTEREST RATES AND PROCURING LAND FOR WAREHOUSES, IT IS VERY DIFFICULT TO DEVELOP THE INDUSTRY
Panicker believes that the main challenge today is the shifting timeline for implementation of GST in the country. It would create a major upheaval in the way the warehouse is to be developed and where to develop. Secondly, outsourcing in the country has not reached a level where service providers can comfortably make long- term expansion plans.
„Everyone knows that size matters, but if the demand doesn't keep pace with the increase in capacity, then the industry is doomed. In this respect, the Union government and all state governments need to quickly decide on the opening of the retail segment to FDI at the earliest,‰ he appealed.
Bansal reiterated that the only challenge in modern warehousing is cost. As more automation means increased cost and delayed ROI (return on investment).
„Moreover in India, the logistics model is predominantly influenced by the cost and not by quality. I feel once we have a mix of these variables in place, it will enable logistics players to have a more enhanced warehouse model,‰ he maintained.
According to Bansal, logistics should be first given an accreditation of an industry. This would enable logistics players to be close to their customers at some proposed industrial parks.
„ I feel this would further enhance our capabilities and help us reduce cost in the value chain. Such cost savings can always allow room for modern warehouse management,‰ he urged.
Balaraju maintained that since the logistics industry is not recognised and there is no support from the government as regard to reduction of interest rates and procuring land for warehouses, it is very difficult to develop the industry. Besides, road conditions and other infrastructural deficiencies make it very difficult for a warehouse operator to meet delivery deadlines especially for companies operating on JIT ( just in time) inventory management. Moreover, there is acute shortage of skilled manpower.
„Government should create Warehousing Zones at strategic locations and allot land at subsidised rates. Adequate emphasis should be given on building roads and highways to international standards as we are competing in the global market. There should be more recognised institutes or colleges aided by the government to focus on warehouse management courses,‰ Balaraju recommended.
Arora also felt that the lack of large land parcels, lack of clarity in the policies pertaining to warehousing and logistics, clubbing warehousing sector with the real estate instead of infrastructure and customer reluctance to pay in accordance to modern warehousing facilities are the major challenges need to be addressed by the government as well as industry stakeholders.
„I think the major challenge will be price acceptance. Warehousing companies will have to educate their customers about the benefits of the efficiencies that can be brought into the system by adopting modern warehousing,‰ suggested Sharma.
According to him, the concept of the total cost of ownership is still not that well adopted in India. Some customers who may tend to look at the cost on its own are bound to miss out on the tangible and intangible benefits that will eventually add both to the top and bottom line.
„ Not just modern warehousing, but warehousing, in general, needs somewhat of a boost from the government. Today, one of the common complaints we hear from other warehousing companies is about unclaimed or abandoned goods and unsettled invoices. The laws in place need more teeth and faster execution. In such cases not only is the company suffering loss but its space, which is its inventory, is also getting locked up, thereby adding to the vows,‰ Sharma said, unveiling the one critical area that requires sincere efforts by all for the greater interest of the warehousing industry.
An overview of OWS warehousing facility in Visakhapatnam Special Economic Zone