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The Way Forward

Warehousing forms an important constituent of the supply chain as it is where manufactured

goods are collected, stored and distributed to the point of consumption. Warehousing in India,
accounts for about 20% of the Indian logistics market and is expected to grow at a rate of 35
to 40% annually, displaying high potential for growth over the next few years. Changing
business dynamics and the entry of global 3PLs has led to the re-modeling of the logistics and
warehousing services in India. From a mere combination of transportation and storage
services, logistics is fast emerging as a strategic function that involves end-to-end solutions
that improve efficiencies. The growth of organised industry sectors such as retail, automotive,
manufacturing, pharma and agriculture, etc, in India is expected to give rise to more
integrated supply chains requiring better services, processes and storage facilities.
Increasingly, warehouses are being used to serve several important functions, beyond mere
storage of products, requiring warehouse service providers to expand their scope to include
more sophisticated services. Dynamic market requirements have made it imperative for
Indian warehousing players to overcome challenges and maintain, improve and sustain
competitiveness. Various measures such as skill development, policy initiatives and
government measures, IT adoption and increased investments in the sector can be effective in
increasing the competitiveness of the Indian warehousing players. However, this journey can
be smoothened and simplified if the challenges and concerns are addressed with collaborative
efforts among all stakeholders including the government and its agencies, policy-makers,
entrepreneurs, investors, logistics service providers, manufacturers, farmers and sellers. The
mutual integration among them will rewrite the success story for the logistics and
warehousing industry. Various initiatives will have to be undertaken to reduce the skill gap in
the warehousing sector in India. This will necessarily require a multi-pronged approach by
various industry stakeholders. In addition, the training needs to be tailored to the requirement
of warehousing such as cold chain, ICDs, etc. The training methods will also need to be
upgraded using technology such as e-learning, online distance courses and practical classes
through simulation. In the changing market scenario mass awareness initiatives need to be
identified to reveal the importance of warehousing and career opportunities in this sector. The
roll-out of GST is expected soon but the full implementation could take few months. The
government will have to work overtime for its pan-India implementation. Along with GST,
the government will need to increase its coordination with state governments at all levels.
Indias warehousing technology market is growing steadily, with the upswing in demand
from the logistics, retail, and manufacturing sectors, as well as through government
promotion. Increase in IT adoption and knowledge infrastructure is seen to provide a boost to
the growth and maturity of warehousing players in India. IT adoption carries the potential to
increase the competitiveness of warehousing players by delivering substantial operating
savings while also improving the quality of order fulfillment.
With the value from warehouse automation becoming more accessible, there are other
compelling reasons for retailers to act now. As with any other new technology, the experience
curve in automation rewards early movers. Additionally, several of todays automation
providers are hungry for business, which can result in creative pricing opportunities.

The pressures on todays retailers to reduce costs, improve service, and find ways to innovate
and grow are a call for action on supply chain performance and even on operations strategy
itself. A shift in strategy, in turn, presents an ideal opportunity for considering how well a
companys infrastructure serves its business needs. Conversely, an infrastructure
improvement such as automation can also begin conversations throughout the supply chain
that can lead to transformational change.
Currently, the organized sector has only a minor share, approximately 10 percent or about 50
million sq. ft of the 500 million sq. ft strong warehousing industry, which is valued at an
estimated 50 billion annually. However, when it comes to value, the organized sector claims a
higher share of the pie, approximately 15 percent, or 8 billion because of the premium it
could attract from customers on account of superior quality. Invariably, this sector is the
preferred choice for investors, who are eager to know how it will turn out in future. The low
presence of organized sector players in the industry is primarily due to two reasons: First, the
Indian industry is yet to completely wake up to the outsourcing scenario. With nearly 40
percent of the warehousing space being owned by companies themselves, the entry of
warehouse providers is restricted. Second, the Indian logistics industry as a whole is in a
nascent stage of maturity and the shift from storage go-downs to logistics centres has only
just begun. While the transformation is in its early stages, it has been steadily picking up. The
organized sector is expected to grow at 25-30 percent per annum, while the warehousing
industry as a whole is estimated to grow at 9-10 percent between 2014 and 2018.

Reasons to Act Now

Now is a good time to reconsider preconceived ideas about automation, as a number of
factors are combining to make the value of automation, including its potential strategic value,
more accessible than ever before. Competition among solutions providers and lower space
requirements for automation technology are resulting in lower costs. Higher throughput and
other automation-related performance improvements, coupled with lower costs, are
increasing potential return on investment (ROI).
More processes can now be automated than in the past, and individual machines can handle a
greater variety of tasks. In many instances, installation flexibility allows for brownfield
warehouses to be retrofitted, reducing real estate costs. And the scalability of todays systems
means that investment in additional capacity can be deferred until needed. In still other
situations, investment in automation can help mitigate the risks of labor supply constraints,
shocks, and regulation.
Underlying all of these developments is the automation industrys increasingly successful
effort to address the variability of warehouse process needs. The evolution of automation
solutions is being driven, in particular, by the most variable and expensive warehouse process
picking and sequencing. While case-pick solutions have been the focus of the most recent
wave of innovation, there is an opportunity for further innovation with each-pick solutions.

The Smart (Scalable, Mechanization-compatible, Accurate, Responsive, Transportation)

Warehouse Need Of The Day
A major reason behind this growth is the changing perception of companies. An increasingly
mature Indian industry is viewing supply chain not as a cost centre, but as a profit centrea
strategic arm which could be leveraged to increase revenue and the over- all profitability of a
company. In this supply chain, logistics is a crucial element holding the key to both better
customer satisfaction as well as cost reduction. Modern logistics centres require better
processes, technology, equipment, a trained workforce and of course, better infrastructure.
But for Indian companies, all this also comes with a riderthe need to justify the investment,
increase in rentals and other costs, thus boosting the need for the smart warehouses.