The past year 2020 has proved to be a turning point for most industries across the globe. While the COVID-19 outbreak manifested itself as the saboteur of many businesses, it also acted as a catalyst for the growth of several others. In the case of India, the pandemic not only brought the warehousing and logistics sector into the limelight but also led it to get recognised as an ‘essential services’ sector - one of the crucial lifelines that the country was reliant on during the challenging period.  An accelerated and ubiquitous adoption of e-commerce and same/next-day delivery, decentralised demand, and higher penetration of e-commerce and omni-channel retail in hitherto under-developed and under-serviced locations, primarily owing to the rapid pace of digitisation in the country, further secured the warehousing and logistics sector’s increasingly significant status.

Technology adoption – An essential step forward

The warehousing and logistics sector in India has come a long way in the past few years, growing from a largely unorganised sector to observing the advent of organised players. Absorption in the sector has been growing markedly and in 2019 alone, the warehousing sector in India saw the gross absorption of approximately 40 million sqft of space, which was unprecedented till a few years back. Today, the need for considerations such as regulatory compliance, security and quality assurance has augmented the demand for modern warehousing, urging organised players to raise the benchmark of efficiency. Also, the fact that the supply chain industry is today at an inflection point portends an increased demand for grade A warehousing infrastructure in the next few years. The outbreak of the pandemic has further pushed the sector towards embracing and exploring technological innovations more aggressively than before.

Automation and smart technology no longer an extravagance

With technology increasingly becoming an integral part of businesses all across the world, customer bases have been accelerating at a rapid pace as well. E-commerce demand had been recording healthy growth in the last few years, with its share in warehousing demand increasing from 14% in 2017-18 to 23% in 2019-20. Such a scenario called for quicker deliveries, supported by efficient processes that left no room for error. Besides, with diversified activities ranging from material movement to sorting, packing as well as handling complex SKUs stretching the limits of warehouse managers in the absence of skilled/semi-skilled labour, other pertinent tasks such as adhering to multiple sales channels also widened the scope for automation to step in. Thus, in order to achieve sustainable growth of businesses, warehouses enabled with automation and smart technology has become quite vital in the present context.

Automation and smart tech solutions aplenty

There are a multitude of warehouse automation solutions in the market. These solution provide automated material handling, projection of demand and replenishment of orders, sortation, geo-tagging of containers and deliveries linked with Radio Frequency Identification (RFID) as well as warehouse management systems with Electronic Data Interchange and robotics. The advent of Internet of Things (IoT) in warehouse and logistics management has turned out to be a veritable boon for warehouse managers, as IoT devices, along with sensors and RFIDs, allow them to understand the accurate location of a product, thereby ensuring faster operations. The benefits of adopting IoT in warehousing space involve instances of reduced labour costs and increased precision in shipments, augmenting the confidence of retailers in the establishment. Innovations such as Quick Response Code are also being offered as smart solutions to encode data to computer-compatible digital data. Additionally, there are other IT-enabled and machine learning technologies that include voice tasking technologies and wearable technologies for carrying out warehousing functions. Plans are also in the pipeline regarding the usage of drones for last mile delivery, driverless trucks, ‘intelligent’ robots, et al.

Opportunities in the horizon

With a gradual shift anticipated in the Indian warehousing industry towards adoption of smart tech, automation and robotics, there exists vast opportunity for such companies to foray into the budding Indian market. As per industry reports, the warehouse automation market in India is expected to expand at a CAGR of ~13.38% during the period 2020-2024, touching INR 421.5 billion by 2024. Warehousing in India also expects to benefit from GST implementation and significant growth is envisaged in manufacturing and e-commerce segment, largely owing to the ‘Make in India’ concept promoted by the government. There are also several key industrial and freight corridors coming up across the country, leading the interest of several organised players towards the warehousing sector. These companies are prepared to spend a substantial amount on technological innovations in order to gain from increased returns on their investments, thus boding well for the automation market in the sector.

Challenges

Despite the imminent adoption of automation and technology in warehouse management, there are quite a few roadblocks towards its successful and willing implementation - one of the major challenges being inconsistency in technology implementation in the country. Unlike the western countries, India would take time to arrive at a seamless integration of technology, considering the profusion of cheap labour in the region and the resistance shown by organisations owing to high initial investment cost on account of putting infrastructure in place. Besides there are apprehensions regarding increased maintenance costs, higher power consumption, complex supply chain systems as well as a relative dearth of trained workforce.

Outlook

In the forthcoming period, given the lessons learnt from the pandemic, it would be critical for the warehousing sector of the country to assess and adopt appropriate technology that future-proofs the sector. At the same time, it is equally important to find a balance between technology and manpower while implementing automation. Keeping factors like operational efficiency and customer satisfaction as the primary objectives, investment in technology upgradation should essentially boost the productivity of employees, thus achieving an optimal level of warehouse management. More importantly, with the pandemic impacting the economy adversely and constricting the budget strings of prospective clients, the integration of smart technology should be such that a warehousing project offers affordable yet efficient warehousing solutions.  The warehousing sector in India is, thus, poised for significant growth on the back of such modernisation and infrastructure development and we expect the sector to play a prominent role in the revival of the Indian economy.