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

Cargo Talk - - Cover Story -

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  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  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.

OM Lo­gis­tics

„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.

Rad­hara­manan Pan­icker

Akash Bansal

G Balaraju

Su­u­nil Dabral

An over­view of OWS ware­hous­ing fa­cil­ity in Visakha­p­at­nam Spe­cial Eco­nomic Zone

Vi­neet Sharma

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