In India and many other emerging markets, businesses need warehousing solutions that can integrate technology, processes and automation. These will provide them with a competitive advantage. To achieve this, progress must be built on a foundation of robust standards. These will facilitate e-commerce and omnichannel operations, key drivers of future growth for both brands and retail or e-commerce operators.
As demand for Grade A warehousing facilities in India increases due to the boom in e-commerce and the effects of the Covid-19 pandemic, manufacturers, distributors and logisticians need to drive up standards. Currently, buildings are of low quality, processes are weak and there is limited traceability.
The sector is disorganised and there is a lack of skilled labour
The Indian warehousing industry is highly fragmented with many unorganized players operating in the market. It is estimated that around 90% of the warehousing space in the country is controlled by unorganized players managing small-sized warehouses with superficial processes and little or no mechanisation (1). The majority of warehouses measure less than 10,000 square feet or 900 square metres (2).
In addition, it is difficult to find the skilled manpower required to introduce more stringent working practices. Across Indian society it is estimated that less than five percent of the workforce has received formal skills training (3).
Why change needs to happen
Warehouse services are a vital part of the logistics chain. Improvements in efficiency here will have a direct effect on optimising the cost of operations and improving delivery times. Change is essential to respond to consumer demands for speedy delivery and accurate tracking.
For distributors there are questions to be answered in terms of compliance and reducing risks. As an example, without more robust working practices to ensure high quality data management, new technologies and innovations cannot be successfully introduced.
How (localised) technology is part of the answer
Indeed, technological advances can help. India has the advantage of having a highly adaptable innovation capability – locally developed, cost-effective solutions can be found. Adapted to local conditions, their reduced cost should allow smaller companies to benefit too. Examples include drones to scan stock more rapidly and pick-to-voice, also known as voice-directed warehousing. Workers wearing headsets linked to computers are guided to specific locations and given precise instructions of what to do, using verbal prompts. This could be useful in overcoming some of the difficulties in finding skilled workers.
Automated guided vehicles have proved their worth in warehouses around the world and they can be found in a limited number of warehouses in India today. They will need to be used more widely. Advanced automation in warehouses, using robots, requires major investment. Many Indian companies are unlikely to see a return on investment in the short-term and so may be reluctant to take the plunge.
Setting uncompromising standards
It is not just about financial commitments. It is also a question of committing to aligning with standards and a certain level of compliance, to reduce risks, in particular those related to fire, theft, health and safety. There is some resistance to this from companies unwilling to implement processes as they do not see the concrete advantages.
This attitude has to change, says Alexandre Amine Soufiani, FM Logistic’s Managing Director for India. “Warehousing operations need to be more compliant when it comes to fire regulations, licences and certifications, and to fully consider environmental concerns. Compromises should not be made.”
FM Logistic, and other major 3PLs in India, already ensure that their warehouse operations provide a high quality of service. Soufiani explains that “the intrinsic values of our company compels us to move in the direction of full compliance and to take into consideration broader objectives such as our social responsibility”. One example is gender balance. According to the World Bank, India has a current workforce that is 20% female nationally (4). FM Logistic aims to have a 35% female representation in its operations in India by the end of 2022.
Warehousing must evolve to support future growth
It is essential that the logistics sector develops warehousing operations that support current consumer trends and accompany growth. Customers are better served when warehousing operations play their full part. They can deliver optimised distribution, ensuring timely fulfilment, tracking, reliable delivery and a great customer experience. Optimisation is not a choice; it is a competitive necessity to meet customer expectations.
Undeniably, a warehouse has a role to play in matching demand with supply, but this narrow view prevents businesses from realising the potential of warehouses. The warehousing function should be seen as a source of competitive advantage.
More accurate, time saving, efficient operations have direct consequences on customer satisfaction and improve delivery performance.
(4) World Bank Group, “Labor Force Participation Rate, Female (% of Female Population Ages 15+) (Modelled ILO Estimate) – India,” The World Bank Databank (2020).