Introduction
The word “Warehouse” evokes the scene of a Bollywood movie with a dilapidated godown (aka “Godhaam”) and a “Sethji” chortling with glee as he plots his next scheme. In the background are khaki-clad workers scurrying around carrying gunny sacks. However, the warehouse is evolving dramatically, both in its business models and technologies.
India has come a long way in a century since 1928, when the Royal Commission on Agriculture in India initiated warehousing in the country. The Indian Parliament passed the Agriculture Produce (Development and Warehousing) Corporations Act, 1956, leading to the creation of the National Cooperative Development and Warehousing Board.
What are Warehousing Hubs?
A warehouse is essentially a storehouse. Today it is much more than just a godown. Every single item is bagged and tagged and placed such that it can be quickly, efficiently & precisely put-away or retrieved, through the eponymous automatic storage & retrieval systems (ASRS).
A warehouse’s purpose is to receive, store, and reship goods. The reshipment can be by cross-docking (Intact pallets) or trans-shipment (Sorting & palletizing). Other benefits of warehousing are inventory accuracy, reduced overheads & staff and improved goods security & flow.
The term ‘Hub’ is derived from the “Hub-and-spoke” model of a bicycle wheel – a central hub with spokes radiating from it. Just as a hub transfers energy to the wheel via the spokes, the warehousing hub is a central storehouse which feeds the sub-warehouses (spokes) in its ambit.
Warehousing Hubs in India – Opportunities & Challenges
In the 2010s, the demand for warehousing has shown a compound annual growth rate (CAGR) of 15% (Source: JLL). However, COVID-19 is likely to cause an inflexion point in this industry as evidenced by Gofers’ 25X+ (2020 QoQ) traffic growth in Gurugram.
The Opportunity
Interestingly, COVID-19 has awakened India’s innovative instincts and fuel the growth of e-commerce. Consumers are making a virtue of a necessity – combining social distancing with the convenience of home-delivery within a service level agreement (SLA), resulting in an explosive demand from all regions, from Tier1 cities to villages!!
All of this demand, combined with high availability, short turnaround time (TAT) and high precision makes for a high-stakes-winner-takes-all opportunity. This penetration into India’s hinterland is achievable only through supply chains supported by warehousing networks.
The Challenge
Although the opportunity is clear, there are many a slip between the cup and the lip. Pirojshaw Sarkari, CEO, Mahindra Logistics also opines that this growth in warehousing hubs can easily get derailed due to factors such as lack of large land parcels with clear title, location, price, etc.
Conclusion
India is no stranger to the launch and explosive growth of several sunrise sectors – BPO/ITeS (90s), IT (2000s), cloud (2010s) and now warehousing hubs (2020s)! While the similarities are obvious, there is one crucial difference – India is going be a consumer and a key player in the global supply chain by being a warehouse hub for Southeast Asia (SEA) & Japan and Asia-Pacific (JAPAC).
Learners’ Opportunity
Warehouses are integral part of supply chain. Online MBA program from IFHE provides ample scope to learn and explore situations in planning, evaluation, product development and inventory control which are essentials of supply chain. Various eLearning and flexible learning methodologies support this. Check out @ https://online.ifheindia.org/
Discussion Question
Assume that you are managing a warehouse. List the top three areas you would concentrate to improve the efficiency. Why?
Source Articles
- History & Present of Warehousing Management Industry in India, accessed July 25, 2021.
- What Is Warehousing? What Are the Elements and Advantages of Warehousing?……….. accessed July 26, 2021.
- Transportation | Logistics | Aviation News | Shipping | Warehousing | Supply Chain.
- Why-india-is-betting-on-big-storage-sheds.
- Indias-warehousing-challenge-set-to-get-aggravated-by-2020.