COST REDUCTION STRATEGIES FOR WAREHOUSES

 

When operating a Warehouse, like any other business, the mail objective is to reduce costs and increase the profits. It is very difficult to implement this as the warehouse has lot of sections to it and the everchanging business climate making it difficult to achieve the cost reduction strategy.

Some of the constraints in running a warehouse or distribution centre is listed below:

• In the operation budget of a warehouse, labour consumer about 50-70% of budget.
• Difficulty in ensuring that the workers are doing productive work and not just busy.
• Warehouses must study about the latest technologies in the market. After considering the trade-offs of both whether to implement a technology or cost of not implementing it, a decision must be made.
• In order to stay ahead amongst the competitors, the warehouse must upgrade on the level of automation.
• By analysing the energy consumption of the different areas , effective alternatives should be implemented in order to save unnecessary energy costs.

Some of the cost-effective strategies to address some of these issues are mentioned below:

• Cost saving strategy to implement more labour management practises: Collecting data on the work done by all employees, their productivity levels, their targets is essential. Labour management software or even spreadsheets can be used to track the activity of all employees. There should be the right amount coordination between the HR manager and the Operation manager to find the right mix of employees , i.e part time and full time. The work culture in the warehouse to should practised so that employees feel free to approach their managers in case of any dissatisfaction. Provide accurate and timely feedback to employees is essential for management to improve the effectiveness of the employees.
• Increasing the dependency on technology to reduce the manual processes: Studying all the latest technological advancements and correctly implementing the right choice that helps to save time and money.  When new technology is enforced, accordingly the apt set of skilled workforces should be introduced.
• Implementation of Lean six sigma for continuous improvement: The lean six sigma is basically a data-driven system that tries to achieve continuous improvement. The working environment in these warehouses should be such that it fosters the efficiency of the employees. Standardising procedures  for handling the various processes  can help in improving the consistency. Objective data must be tracked to get an idea of the current performance and adjustments should be made accordingly.

 

 

 

 

 

Warehouse Automation in India

 

Hi I’m Arun R, student of Amrita School of Business, Ettimadai, and  in my last blog I emphasized more on the latest technological advancements of warehousing. And I’m continuing on this with focusing more on why this sudden rush towards automation or technological improvements concentrating more on India. A robotic revolution has started in India over the last few years by the warehousing technologies where we can see a rapid growth. This has made India a key market for warehouse management system especially in Asia. Additionally, with the low production cost in India, many manufacturers are coming to India to set up their units.

The reason behind the sudden surge in the automation in warehousing can be credited for many reasons and the main one is the improvement in efficiency and quality and reduces the human labor. And also, for a firm to become more competitive they have to balance between both the responsiveness and efficiency and warehouse automation helps in this regard for a certain extent. Flipkarts deal with Pitney Bowes- an Australian company, known for their automated parcel sorting and data capturing system is an example of how serious firms are on this. Also, many e-commerce companies like GreyOrange are combining with the PCG companies, like Myntra and Pepper Fry to set the base in India. They have already implemented in more than 50 warehouses in India and abroad.

Earlier the use of technology in e-commerce sector was more based on the shipment tracking. But the increase in competition and the expectation of the customers made the e-commerce firms to expand the technology for faster and safe delivery of the products to the customers. A shift in the dimension saw e-commerce giants competing on faster delivery and warehouse automation is considered as the backbone of these e-commerce firms.

Technologies like self-driving vehicles, automated inventory storage etc. are making it easier and helps them to become more competitive for e-commerce firms. They not only save money but also improves the efficiency. And with the current situation of Covid 19, where many employees cannot make it to the work area, this automation helps the e-commerce firms to deliver the products to the customers on time. With social distancing the new normal, and with less number of workers due to automation will also added advantage for e-commerce firms as they have to work under the standard operating procedures given by the government of India.

PICK -TO-LIGHT SYSTEMS!!

 

PICK TO LIGHT SYSTEMS

Pick-to-light systems are simple but efficient systems designed to streamline the warehouse picking operations, thereby increasing performance, productivity and accurate picking while reducing costs at the same time

These systems use special light displays to guide warehouse operators to the positions of the goods. They make it simpler for the operators to know which and how many products to choose. These systems are extremely customized and the technology comes with the ability to plan, monitor, and analyse volumes of picked orders.

Pick-to-Light Systems benefits:

·    Increased productivity from picking

·    Better estimation
·    Sorting of materials in real time or in order
·    Fewer defects

PUT TO LIGHT SYSTEMS

This system allows the operators guide how and where to allocate products for orders in a warehouse. When it comes to picking from bulk stock these systems are highly successful. Ideal for retail warehouses dealing with apparel, athletic products, personal care items, specialty foods, grocery stores and general merchandise, the technology.

Put-to-Light Systems benefits:

·    Fast speed sequence sorting capability

·    Lower operating cost

·    Ideal for smaller, but regular, orders per day

·     Less floor space

As new warehouse technologies evolve, Pick / Put-to-Light systems are also custom built to combine the resilience necessary to function in various warehouse environments with the smart intelligence required to perform changeable and complex workflows with complete transparency. The end result is technology you can rely on to fulfill your delivery needs.

The Next Gen Warehousing Labor

 Warehousing is seeing a tremendous change due to the influence of technology. Shuttle systems- a compact vehicle used in the warehouse for automatic operations, plays an important role in this. The products now come to the employees rather than they go for it. The demanding tasks of the workers searching for the products in different locations within the warehouse will come to end. Also, the work becomes easier for the workers in physically and also in safety. The twist, bend and reaching of the product is now eliminated using this. During the time of pandemic where social distancing is important, the number of workers need to be on site will also reduce. But also, the skill demands for the workers will also change as they need to know more about the computer technologies. Combination of both human and the technology is needed to for the effective use of the warehousing.

In the near future, supply chain using technologies like robots, autonomous vehicles etc. will be the dominant players. A very important reason for this is the boost in the efficiency of the workers. Technology take care of the tedious and dangerous work that previously an employee needed to do, and make it much easier. Also, seasonal workers are helped to become productive quickly by the autonomous vehicles since they knew the locations of each and every product. Also, the use of wearable helps to improve the productivity of the workers.

Use of automation also enhances the safety of workers and reduces the number of accidents to an extent. This reduces both financial and human injury costs. Since workers lifts only fewer products and those are weightless products the serious injuries become less. This will also help in maintaining social distances. Because of automation employees doesn’t need to come closer.

Automation has also some side effects. Even though automation reduces the employees to walk more, some jobs may require an employee to stand in a place, pick a product and send it. Automation also reduces the number of workers causing unemployment. Skilled workers will be required for the proper usage of this machines, which are rare in a warehousing job.

The Future Group - Reliance Retail Deal

 

Welcome Readers !

I am Sheerapthi Ramiya, 2nd Year MBA from Amrita School of Business, coming back with this week's read ! Hope my readers are doing well and I hope you enjoy :) 

This is hot news! The Future group has reached out to Reliance Retail to buy their business for an overall transaction value of Rs. 27,513 Crores! Future group owns well known brands such as Big Bazaar, Brand Factory, Buffalo, DJ&C, FBB, etc. The transaction takes place as a three-step deal:

-        All Listed Future Group companies to be merged into Future Enterprises Ltd.

-        Future Enterprises to transfer assets of retail and wholesale undertaking and logistics and warehousing business to Reliance Retail entities

-        Reliance Retail will also invest Rs. 2,800 crores for an up to 13% stake in Future Enterprises.

 

But why did Future Group sell out ?

The Kishore-Biyani founded Future group has been seeking funding support for several months as around Rs 15,000 crore is in debt to the company as well as substantial decrease in sales and cash flow on the account of pandemic and lockdown. The loss for Future Group was its excessive leverage. It did win a very small investment from Amazon Retail several months ago, however India's FDI (Foreign Direct Investment) rules restrict foreign ownership of multi-brand retail. This deal with Reliance Retail will avert any further financial crisis at the Future Group, which last averted a debt default at the minute. The Future Group deal is a big relief to banks like Bank of India, SBI, Axis Bank, Canara Bank and RBL Bank.

What in it for Reliance Retail ?

Reliance Retail runs several retail formats in the grocery, electronics and apparel space but it does not have a large reach as that of Future Group, especially in the grocery Business. With household retail brands like Big Bazaar, Fashion at Big Bazaar, Easy Day and Brand Factory going to Reliance, an in-house multi brand retail product will be obtained giving Reliance Industries an immediate edge in the retail market. The deal will lead to an stronger organised retail market giving Mukesh Ambani led Reliance Industries’ retail venture pole position in the close to over $700 billion retail sector in India. The deal will also add over 1,700 retail stores to Reliance's footprint of 10,900 stores across groceries, electronics and other formats. The deal gives a positive cash flow and will also make Reliance Retail become the largest grocery player in the country. 

 

 

What does this mean for Reliance Retail?

This deal includes - store front, warehousing and logistics. Future Groups loss is Reliance gain as it gets a readymade reach and supply chin built over the years and ready for further execution by Reliance. The execution in retail will be rolled out in months to come and also promise growth from an established platform. Access to Tier 2 and Tier 3 towns where the Future group has inherent presence in shall develop and build the overall franchise footprint in grocery, retail and lifestyle and other businesses. Over a period of time, warehousing and supply chain dynamics should aid in cost synergies and overall digitization of the Jiomart Platform. The opportunities to make a 360-degree presence through digital mediums, brick and mortar stores, supply chain backward operations should ensure Reliance Retail are able to take over the competition from global players. That's not all. The important part with the deal coming in is that they are not only acquiring the front-end stores but also the backend for retail, which is highly important because we will have the ability to earn a margin out of it unless we have a proper backend if we want to start a grocery business. Reliance doesn't have to only use warehouses, but can also use the available brick and mortar as small warehouses to strengthen their supply chain and logistics network. 

 

The Windup 

India's retail market is highly fragmented and dominated by corner stores or Kirana stores. However there is large headroom for the top 5 retailers to increase their market share from the current less than 5% to 10% - 12% in the next decade (BCG Report). Isha Ambani, Director, Reliance Retail Ventures says that the transaction will help in the evolution of modern retail in India. The will actively collaborate with small merchants and kiranas as well as large consumer brands to help grown momentum in the retail industry. This will help accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during challenging times says the press release. 

We can see how Reliance is trying to grab every single opportunity, to strengthen its position in the retail sector with the purchase of Sri Kannan Departmental Stores a few months back which is a local departmental store in across Tamil Nadu, the Purchase of the leading retailers - Future Group Retail and collaborating with technological companies to gain a dominant position in the Indian Retail Landscape. With Reliance's introduction of Jiomart and the availability of a large network of warehouses and brick and mortar stores and also the backend suppliers, logistics and supply chain will be seamless and digitized while reducing the delivery time in the modern age of India. 

What are your thoughts about this ? Give your comments below :)

If you haven't check out my last week's read, which is about Chennai being self sufficient and self reliant during lockdown, click the link below !

https://logisticsmatters.blogspot.com/2020/08/will-chennai-become-self-sufficient-by.html

- Sheerapthi Ramiya

ASB, Coimbatore