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Let us talk about the meaning of warehouse logistics, its importance in business, and future in India. According to a recent report by CREDAI and Anarock, since 2021, there has been a steady rise in the lease of Grade A warehousing space in India. Across Mumbai, Pune, and five other cities in India, approximately 160 million sq. ft. was leased for Grade A warehousing. (Source: Financial Express, Nov 2022).
The pandemic caused several prominent transformations in the logistics and supply chain ecosystem. Same-day delivery catapulted the growth of eCommerce businesses, leading to the rise of micro-fulfilment centres or micro-warehousing to support last-mile operations in logistics. Several other trends in logistics and warehouse management have also emerged over the years, including the expansion of the warehousing industry in Tier 1 and Tier 2 cities across India.
In this article, we’ll take a closer look at the definition of warehouse logistics management, its role in supply chain and logistics, and the future of warehousing and storage in India.
What is warehouse logistics?
Warehouse logistics refers to the planning and management of the flow of goods within the warehouse. It includes receiving goods, collating, sorting, and storing them, and shipping them to the end user. It also involves managing and analysing all related data on the flow of goods (e.g., product expiry date, shelf number, storage and packaging instructions, etc.) for drawing business insights.
There are two key activities in warehouse logistics:
- Receiving goods: This involves receiving raw materials, finished products etc., sorting, storing them in shelves/bins, and updating records in the database
- Releasing goods: This involves getting sales orders, awaiting fulfilment orders, packaging and labelling goods, shipping them to the customer, and managing returns and refunds, usually through an external third-party logistics partner
In both cases, warehousing efficiency contributes to organisational supply chain efficiency.
Types of warehouses in Indian logistics
Depending on the nature of business and activities involved, there are several types of warehouses in logistics that businesses can consider:
- Smart warehouses: AI enabled warehouses for seamless automation across all processes, requiring minimal manual intervention
- Public warehouses: Government or semi-government owned storage facilities, affordably priced and ideal for businesses without own storage spaces
- Private warehouses: Storage spaces owned by independent warehouse logistics companies for long- and short-term storage
- Distribution centres: Large, technology-enabled storage spaces, for timely movement of goods from suppliers to customers (usually used in eCommerce to store products from different suppliers)
Popular warehousing companies in India: Stockarea, Gati Limited, Mahindra Logistics Ltd., Allcargo Logistics Ltd., TVS Supply Chain Solutions Limited among others.
In most cases, these companies also specialise in logistics services for goods transportation. For instance, if you are a business owner in Karnataka, when searching for a goods transport service provider in Bangalore, check with them on their warehousing services as well. Many times they have fulfilment centres across states; if not, they have partnered with local service providers to offer the required services.
Role of warehouse logistics in supply chain management
The role of warehouses in logistics systems have changed over the years, especially in the light of eCommerce business and D2C selling, where packaging and timely deliveries are key differentiators.
Supply chain vs logistics vs warehouse management
Supply chain and logistics are different processes in business. Supply chain management refers to the overall process of procuring, storing and delivering of goods. Logistics is a part of the supply chain system and focuses on the receiving and transportation of goods. Warehousing and inventory management plays a vital role in both processes.
Difference between warehouse and logistics management
|Focus is on the transportation of goods, including packaging and delivery
|Focus is on storage of goods as per prescribed standards and requirements
|Involves inbound and outbound logistics, including receiving raw materials for production and transporting finished goods
|Controls inventory and internal movement of goods, including sorting, materials handling and data management
|Manages reverse logistics, returns and refunds for eCommerce businesses
|Involves micro fulfilment centres to manage eCommerce demand
While small businesses may be able to manage warehousing and logistics inhouse, the scope and challenges scale as the business grows. Third-party warehouses have emerged as one of the most effective ways for businesses to conquer warehousing challenges cost-effectively. 3PLs with their wider network and expertise can manage the entire order fulfilment process, through smart storage solutions, order tracking and deliveries.
The importance of warehousing in logistics systems
When it comes to the importance of efficient warehouse management, there is little doubt on the role in plays. Warehousing and logistics are related services. Inefficiency in one, will directly impact the other, and in turn the overall business and supply chain operations.
For instance, when considering eCommerce and micro-warehousing solutions, an error in storing goods in optimal condition can affect the overall customer experience. e.g., lack of temperature-controlled storage for dairy products. Similarly, incorrect order processing, will lead to returns, loss in revenue, and increase in customer dissatisfaction. Reverse logistics management is a key challenge almost all businesses encounter – and efficiency in warehouse management can help with it.
The role of warehouse in logistics system extends to production, delivery, and customer experiences. On the one hand, optimised inbound logistics processes can ensure timely receiving of raw materials for storage and production, whereas outbound logistics can enable appropriate packaging and shipping of finished goods.
Some of the benefits of warehouse management in logistics systems are:
- Providing storage solutions before final delivery
- Managing data for optimising storage space, inventory control, stocking, and reordering to avoid deadstock (i.e., placing orders by reorder quantity formula), damaged goods, returns and wastage
- Digitising storage and inventory management, moving from traditional to e-logistics systems to bring efficiency, cost optimisation, and agility
- Identifying risks involved in storage, forecasting demand, planning and managing inventory to avoid transportation bottlenecks
- Driving efficiency through error-free order fulfilment
The future of logistics and warehouse management in India
In the last few years, new technologies like Artificial Intelligence, Internet of Things, robotics, warehouse automation has changed the warehousing landscape in India. Some of the trends in warehouse management to look out for include:
- Use of cloud-based WMS: Cloud-based warehouse management systems enables businesses to store all relevant data in a centralised place online. It provides real-time data update, user access control, and transparency for efficient inventory control, planning, and reordering.
- Adoption of warehouse automation: Automation in warehousing brings increased accuracy, security, and efficiency in processes. It helps to maximise productivity, maintain inventory records accurately, avoid returns etc. Use of robots in automated warehouse logistics for routine tasks such as sorting, packaging, inspection, has saved businesses time and money. Automated Guided Vehicles (AGV) has replaced conveyors and solved the challenges of managing warehouse spaces.
- Implementation of AI in warehouses: Modern warehouses are AI powered. From computer vision to machine learning and augmented reality, there is use of AI and data analysis for warehousing efficiency. For example, mobile robots equipped with AI capabilities can quicken the order pricking process.
India is adopting digitisation and automation in warehouses at a breakneck pace. However, the adoption is predominantly visible in large businesses. Automation requires planned investment – something that micro and small businesses refrain from making impulsively. When it comes to professional logistics warehouse and storage, it is still primarily a labour intensive role for MSMEs, though there is gradual use of software especially in urban sector businesses.
How to improve warehouse logistics management
Managing warehousing and logistics transportation systems is important for your business. As a next step, here are some tips to manage warehouse logistics for your business:
- Find reliable logistics partners (e.g., 3PL providers) for managing your warehousing and transportation challenges. There are risks with 3PL providers and may require some trial and error, to identify partners who can offer logistics management services that meets your business needs and budgets. You may consider parameters such as location of warehouse, costs involved in transportation, types of storage solutions available, vehicles used (e.g., trucks and vans), loading-unloading capabilities, experience in materials handling etc.
- Build a strong pool for suppliers to maintain a steady inflow of goods (e.g., raw material). As a pro tip, try to find local suppliers to keep costs and timelines low, and get better deals and rates.
- Identify software solutions to streamline processes and automate warehouse management. Provide training to all stakeholders and monitor their progress.
- Plan for managing returned goods. With the eCommerce sector making returns convenient, adequate warehousing infrastructural capabilities needs to be in place. Strategize how reverse logistics works for your business (e.g., disposal, repair, recall, resale, refurbish, recycle etc.) to control costs.
With a warehouse management system, it is possible for even small businesses to optimise warehousing and logistics operations. You may also consider building an integrated logistics system in time to manage all aspects of logistics. The secret lies in working collaboratively with your identified logistics partners and finding a sustainable, economical solution that will enable and support your business growth.
(This article was originally published in Feb, 2023 and updated in June 2023 for relevancy)