SPECIAL FEATURE THE DYNAMICS OF WAREHOUSING CARGOCONNECT - AUGUST 2017

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1 THE DYNAMICS OF WAREHOUSING 36

2 The warehousing industry has been transforming at an unmatched speed over the years. Call it the rise of the machines or the wrath of technology. Constant innovation and new technologies have really made the growth possible in the warehousing sector. Tariq Ahmed tells the tale of how the dark, dingy warehouses have transitioned themselves and adapted to the changing needs of the industry. The general perceived notion about a warehouse is that it is considered to be a place to store things. Most plant modernisation efforts have typically ignored or bypassed the warehouse completely. But in today s competitive manufacturing and business environment, the vital role of warehousing has to be properly understood. The warehouse is a critical link between a manufacturing plant and the external world. It significantly affects the performance of the entire manufacturing and logistics system. The time to pay attention to the warehouse and to integrate it in the material supply chain is long overdue, especially in India. The newest technological trend in developed markets in the warehousing sector is using robots in warehouses and distribution centres to aid operations. It has been found that this brings down operating and fulfilment expenses. Not only do robots save labour costs, but they are also the bulwark against shortages in labour. Additionally, robots are a more effective way of managing warehouse operations, as they ensure speed and accuracy and increase productivity per square foot of warehouse space. If we talk of India, labour cost tends to be a fraction of those in developed countries. This makes it challenging to derive required financial benefits from implementing 100 per cent automation in a warehouse in India. Moreover, excessive automation can lead to an increase in the unemployment of Indian labourers. Hence, in India, the aim should be to find a right balance between automation and labour to get an improved and predictable productivity. Warehousing sector is set to witness numerous technological advancements in the coming years and digital warehouses will be in trend. Some of the key transformations would be: 1) Advancements in automatic identification and date capture, enabling optimum utilisation of resources and end to end tracking of cargo. 2) Warehouse management systems and other IT enabled solutions are enabling tracking, resource optimisation and increased service levels leading to enhanced customer satisfaction. 3) Big data analytics and Internet of Things: These improve planning and facilitate quicker replenishment. Also, they assist in maximising workflow, increase efficiencies and directly impact revenue by optimising warehouse inventory and floor space utilisation. IoT is about interconnecting and creating intelligence from all the devices around us. This game-changing technology will offer enormous cost savings and massive productivity enhancements in the future. The sheer volume of data is staggering, but it offers a world of opportunities for businesses to better manage inventory, improve customer relationships and enhance daily operations. 4) Cost effective and easy to use application on cloud is making scaling up of warehousing operations easier and quicker. Automation paving the way Automation in warehousing immediately conjures the image of a high-rise Automated Storage Retrieval System (AS/RS). Typically, AS/RS involves the use of high-rise racks with a storage machine operating within the aisle, serving both sides of the aisle. Loads are stored in the racks and retrieved either automatically or in a semi-automated fashion. The loads could either be unit loads that are palletised or, in some cases involve drawers and totes that are used to store smaller parts. The heights of AS/RS systems can vary, depending on the application. The highest systems are 100 feet high. But these are few and far between. As more automation is implemented into warehouses, it is critical that product moves seamlessly and effectively throughout the system. The use of plastic reusable totes, crates, pallets and other plastic packaging is one consideration that offers repeatable performance in all types of systems, including mini-load systems, conveyors, robotics, automated guided vehicles (AGVs) and full automation. Major trends are emerging as more facilities adopt sustainable and earth-friendly solutions. These are the five trends that we predict will make a big impact as automation and reusable packaging continue to gain a foothold in the logistics market. 1. Ergonomic handling: The handling of totes will dramatically change. Previously, totes and crates were packed based on strict weight or height capacity requirements, so that AUGUST CARGOCONNECT 37

3 Post GST, there will be some consolidation in warehousing requirements as customers will not consider having state-wise warehouse setups for taxation purpose. Hence, these central/zonal warehouse requirements will increase. The difference will be confined to the size of warehouses that would be needed; all operations activities will be in line with the current requirements. Akash Bansal, Head Logistics, Om Logistics Ltd workers could manually lift and move them. By implementing automation into the facility, manufacturers can increase the overall tote capacity and tolerance. Totes will be packed heavier and stacked higher because the automated systems and robots have the ability to handle taller stacks and heavier loads. 2. New tote configurations: Boxes and totes will take new forms and will be designed with customised automated solutions in mind to better fit the system s needs. For example, a semi-manual and automated facility will start to see reusable, plastic corrugated boxes with sealed edges, so that the flutes will not be exposed. This High density of storage by utilising the cubic space available and with the help of narrow aisles Better utilisation of storage and retrieval equipment Reduction in manpower will facilitate easier worker handling. The box flap will go back to its original place each time prior to entering the automated system. Collapsible, dividable compartments and hopper fronts are three more configurations that will emerge as tote and crate designs continue to evolve. 3. Standardised totes: The standardised tote sizes that can be purchased and ready for automation is the future and will bring significant value to end-users and integrators. Currently, the cost to build a mould for a custom tote can be challenging to financially justify and can add time to project plans. By removing the need to create a custom tote each time ADVANTAGES OF A HIGH-RISE STORAGE SYSTEM Increased space utilisation via random storage versus dedicated space allocated to different parts Tighter inventory control through computerisation resulting in higher inventory accuracy Reduced access in the aisles, improving the security of the material Ability to tie the storage system to the manufacturing and the distribution systems via computer control, permitting a higher level of system performance and creating a small group of standardised totes that can be handled by automation, manufacturers will be able to save design and engineering costs. Eventually, the industry may see a refined pre-packaged, out-of-the box solution with a proven track history being offered. In the end, this can reduce the overall amount of capital investment needed to build a new system. 4. Reduction in racking: Automation will allow for warehouses and distribution centres to move away from racking. By removing racking, manufacturers will have a cleaner work environment and better access to product, all within a smaller work area allowing for better space utilisation. 5. More traceability: Customers are demanding to know where their product is, once they ve clicked Submit Order and many industries need to be able to trace where product has been along the entire supply chain. This will result in more totes and crates with radio-frequency identification (RFID) tags being moved through automated systems with sophisticated warehouse management system (WMS) that can easily track and trace products. This will allow for greater visibility of each specific tote and crate as it flows within distribution centres and warehouses and is transported to the customer. Consumers have rapidly embraced online technologies in order to receive their products faster, which in turn requires manufacturers to adapt just as quickly. To ensure that the most cost-effective system solution is brought forward, first we need to determine the organisation s requirements and then find the right vendors to make it a reality. By readily embracing advancements in integrated automated systems, manufacturers and distributors can stay competitive while meeting customer demands. 38

4 SPECIAL FEATURE IoT is about interconnecting and creating intelligence from all the devices around us. This game-changing technology will offer enormous cost savings and massive productivity enhancements in the future. The sheer volume of data is staggering, but it offers a world of opportunities for businesses to better manage inventory, improve customer relationships, and enhance daily operations. R Shankar, CEO, TVS Dynamic Global Freight Services Ltd Warehouse Strategic Master Plan The correct approach to plan for warehouse automation is to develop a Warehouse Strategic Master Plan (WSMP). The WSMP provides the future direction for the warehouse over a five or ten-year period. It addresses the facilities, staffing, equipment and inventory required throughout to meet the corporate business plan. The role of warehouse automation is a significant portion of a WSMP. The automation plan should be regarded as one component of a broader view and not a separate end unto itself. Developing a WSMP is a methodical, five-step process: 1. Conduct Operational Assessment: The first step is to understand the present status of warehouse operations. Data should be collected on the following: Customer Service Layout Control Systems Equipment Methods Inventory Accuracy Equipment Utilisation Space Utilisation Building Facilities Labour Productivity Housekeeping and Safety Warehouse strengths and weaknesses should be identified. 2. Define Future Requirements: Once the present operation has been analysed, future warehouse requirements should be determined. This can be accomplished by examining a business forecast. A fiveyear projection is needed to answer the following questions: How will the order volumes change? Will the inventory levels change? Will the inventory turn rates change? What new types of material will be present? 3. Develop Alternatives: Once the weaknesses of the present warehouse and future requirements are known, various approaches to warehouse automation can now be considered and budget investment and operation costs can be developed. Potential savings in space and labour should be determined. 4. Evaluate Alternatives: For each alternative, an economic analysis should be performed. In addition, a qualitative analysis should be performed to consider issues, such as safety and ergonomics, that cannot be expressed in economic terms. The method of warehouse automation that is best suited to the particular operation and that is most justifiable, can then be selected. 5. Document the WSMP: A written description of the WSMP, including alternative analysis should be developed. The document should cover facility layouts, specify staffing levels and detail equipment and system descriptions. Once written, it can be presented to senior management to obtain funding and support. Using the WSMP approach provides a systematic method of properly confronting warehouse automation. The process provides clear direction as to the degree and type of automation to implement for any specific application. As the pace of warehousing quickens and customers demand better service, those who take a systems approach to warehousing and its automation will be the ones best prepared to meet the challenges of the future. 40

5 SPECIAL FEATURE Goods moving within a state have to be stored somewhere; they can t be sold immediately. Storage of goods at any place across the country leads to rise in cost. Now, with the GST regime, people will look at centralising their warehouses and keeping the number minimum. Yashpal Sharma, MD, Skyways Air Services How Warehousing Began to be Automated In the US, automated warehousing in the 1960s and 1970s meant AS/RS. One of the driving forces for this phenomenon was the doubling of the value of business inventories between 1962 to The value of the business inventories tripled between 1972 and The explosion in inventory in the 1960s and 1970s led to considerable growth in warehouse capacity and the need for significantly increased control of inventory. AS/RS was the solution of choice. The early euphoria of AS/RS in the 1960s and 1970s gave way to a rather flat decade in the 1980s. This was due to a much slower growth in manufacturing Inventories, which grew by only about 25 per cent between 1972 and The competition from the Japanese and the need to control manufacturing costs forced the U.S. manufacturers to find ways of reducing inventories. Suddenly, AS/RS the darling of warehouse professionals became something that people did not want to talk about. A number of projects were, in fact, abandoned mid stream. There were several AS/RS systems that were lying empty and had to be dismantled in the 1980s. AS/RS became a bad word during the 1980s when growth in business and industry came, not from a growth in inventories, but from an increase in inventory turns. The focus was on reduction of inventories, small batch production and just-in-time delivery. While no one can argue with the objectives of just-in-time and reduced inventories, the tactics adopted by business to adopt efficient manufacturing practices were too extreme and lacked sufficient thinking on the part of management when it came to warehousing. Companies began to indiscriminately cut any and all funding for warehouses, as inventory was evil. What a number of these companies did not realise is that although a number of the early applications of AS/RS were not justified, several others were doing an excellent job. The one area in which AS/RS was - and still is - a very viable option, is distribution. Also, another development had taken place in automated warehousing systems in manufacturing. A number of smaller, decentralised mini S/R systems made their appearance in manufacturing in the 1980s. Interestingly, the trend in distribution was quite the opposite. The trend has been towards greater centralisation and larger, more automated warehouses. Companies began to realise that, instead of higher inventories in several smaller distribution centres spread throughout the country, it was more efficient to centralise inventories and to ship to various outlets, from fewer distribution centres. Faster and reliable transportation systems made this possible. 42

6 If we talk about India, labour cost tend to be a fraction of those in developed countries. This makes it challenging to derive required financial benefits from implementing 100 per cent automation in a warehouse in India. In India, the aim would be to find right balance between automation and labour to get an improved and predictable productivity. Anay Shukla, VP, Business Development & Solution Design, Apollo LogiSolutions Evolution of the Forklift Forklifts have had the same basic function over the years i.e., moving a heavy load from one place to another, but the technology to get the job done is constantly changing. The forklift industry has advanced in its power source technology, mobility and automation; allowing for even more versatility from an already versatile truck. More environment-friendly technologies are being incorporated into forklifts partly because of rising fuel costs, but also because some energy-efficient forklifts can last 20 to 30 per cent longer than internal combustion engine forklifts. The Yale Company has a battery-powered forklift with regenerative braking to send power back to the batteries when it slows down and can also recapture energy while lowering a load as well. Aside from batterypowered forklifts, clean-burning and alternative fuels like liquid propane, clean diesel and hydrogen fuel cells are used as power sources as well. Aside from being more environment-friendly, forklifts have also changed in their mobility with the introduction of the sidewinder forklift. The sidewinder is built by Vetex and can move in any direction. Instead of traditional pneumatic or solid tyres, the sidewinder uses a series of rollers that are able to change direction. The sidewinder forklift can roll over obstacles up to 3 inches (7.6 centimetres) high and move a 40 ft (12.2 metres) long beam through a narrow entrance while driving sideways, both of which would be difficult or impossible for traditional forklifts to do. Another innovation in forklift technology is the automated forklift. These forklifts use guidance systems to manoeuvre themselves through a warehouse or building and pick up and drop off loads automatically. The automated forklifts are used in the aerospace, automotive, manufacturing, printing, newspaper and warehouse industries. There are several types of guidance systems including the laser, inertial, wire and optical. The laser system uses retro-reflective targets throughout a warehouse to bounce the laser beam off of and back to the forklift, so it can determine its location. The inertial system uses magnets placed inside the floor in straight lines. The forklift has sensors to locate the magnets and stays on course wherever the magnets are located. The wire system uses an antenna to determine where the forklift is; in relation to wires placed inside the warehouse floors and optical guidance systems use sensors to locate ultra violet strips painted on the floor. The WMS Impact A warehouse management system (WMS) primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions, including shipping, receiving, put-away and picking. A WMS is a database driven computer application, to improve the efficiency of the warehouse by directing cutaways and to maintain accurate inventory by recording 44 warehouse transactions. The system also directs and optimises stock, based on real-time information about the status of bin utilisation. It often utilises Auto-IDCapture (AIDC) technology, such as barcode scanners, mobile computers, wireless LANs (Local Area Network) and potentially Radio frequency identification (RFID), to efficiently monitor the flow of products. Once the data has been collected, there is either batch synchronisation with, or a real-time wireless transmission to a central database. The database can then provide useful reports about the status of goods in the warehouse. The primary function of a warehouse control system is to receive information from the upper level host system, which is most often the warehouse management system; and translate it for the daily operations. A common goal is to ensure a situation where warehouse

7 As far as warehousing or other things are concerned, the impact of GST is still being looked into and its effects are still being studied. We would not like to talk of its effects right now. Yes, we are definitely working closely with few of our customers to redesign their supply chain post GST. Nihar Parida, Director, Minerva Integrated Logistics Pvt Ltd employees never have to retype information because it already lies in one system, or is collected automatically. Warehouse control system is usually the interface that is used to manage processes, people and equipment on the operational level. Based on warehouse control system, there are three distinguished types of warehouse management systems: Basic WMS This system is apt to support stock and location control only. It is mainly used to register information. Storing and picking instructions may be generated by the system and possibly displayed on RF-terminals. The warehouse management information is simple and focuses on throughput mainly. Advanced WMS Above the functionality offered by a basic WMS, an advanced WMS is able to plan resources and activities to synchronise the flow of goods in the warehouse. The WMS focuses on throughput, stock and capacity analysis. Complex WMS With a complex WMS the warehouse or group of warehouses can be optimised. Information is available about each product in terms of where it is located (tracking and tracing), what its destination is and why (planning, execution and control). Outbound Handling Technologies In the new warehousing dynamic, customer satisfaction is seen as a major corporate objective and differentiator. Processes driven by customer need are playing a more important role in operations, with more automated packing, staging, loading and shipping functions taking advantage of load optimisation, real-time performance monitoring, reverse logistics and technology-enhanced traceability and accountability solutions. A wide variety of IT solutions are poised to help warehouse personnel provide outbound material handling operations that maximise efficiency, reduce costs and enhance customer satisfaction. Packing stations can be equipped with mobile wireless computers, scanning and RFID devices, as well as fixed mount kiosk solutions, to increase speed and efficiency while reducing errors and damage. Workers can utilise wearable devices to see real-time updates on pack and load plans. Robust wireless outdoor coverage will integrate dock and yard operations with the warehouse, providing end-to-end efficiency while integrated video capabilities can be used for quality control and proof of compliance. By readily embracing advancements in integrated automated systems, manufacturers and distributors can stay competitive while meeting customer demands. GSTified warehousing The location of warehouse is generally chosen to minimise the cost of delivery for both the company and the customer. Other factors considered are access arterial highways, access to highways, ports etc. for shipment and labour availability. The local state taxes are also a factor considered by companies before locating a warehouse. Some companies prefer to have warehouses in every state of the country to avoid local taxation while transporting from one location to another. With the implementation of GST, logistics companies can restructure their warehouse locations and can have one central warehouse or can go for warehouses at specific locations or can adopt a hub and spoke model. With GST the local state taxes are eliminated and there will be only one Goods and Services Tax across the entire country. This enables the companies to achieve cost efficiency in their operations and thereby transferring this cost benefit to the end consumer in the supply chain. Advantages on warehousing with respect to GST is that companies can consolidate stock at their warehouses. Demand variation at a particular warehouse can also be reduced. This in turn improves demand planning and improved inventory management. Disadvantages of GST with respect to warehousing is that companies face challenges during route planning while having to deal with deliveries across a bigger geography. Location of warehousing and network optimisation to reach the consumer is driven more by tax reasons rather than optimisation and efficiency driven reasons. With the GST, this will change substantially and there will be centralised warehouse. Their unique features would be: 1) Fewer and larger strategically placed Distributions Centres along with smaller warehouse for last mile delivery. This will however be sector-dependent and will need to take the replenishment cycle in mind. 2) Emergence of modern warehouse with focus on operational efficiencies and safety standards. Modern storage and retrieval systems with moderate to high levels of automation. 3) Higher levels of value addition like light assembly, kitting, packaging in these modern warehouses will be the order of the day. 4) Increased visibility and tracking provided by the use of technology. 5) Consolidated multi-client multi user warehouse will emerge in key hubs owned and operated by logistics service providers. Shared facility with infrastructure and technology will bring in efficiency. Interconnected systems will enable seamless and real-time flow of data. 46