IMPACT OF GST ON TECHNOLOGY ADOPTION IN INDIAN WAREHOUSING SECTOR

Posted on 9th June 2017

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With Goods and Services Tax (GST) just round the corner, most of the organizations are trying to overhaul their business models. Business owners are looking GST implementation as a strategic opportunity to gain a competitive edge, streamline their current business methods and move towards higher profitability.

With the inception of GST there will be a huge impact on warehousing industry and complete supply chain will have to be restructured. Until a few months back, companies tried to locate and design their warehouses in such a way so that they can steer away from implications of multiple state taxes. GST on the other hand will lead to the unification of various taxes & uniformity in rates across states and also elimination of Central Sales Tax (CST). One of the World Bank report “India Development Update” has estimated that GST will help in taking decisions on warehousing and distribution without making any tax considerations. This would ultimately result in consolidation of warehouses and further closure of smaller warehouses.

Since most of the smaller stock-transfer warehouses will be merged with larger warehouses, it is believed that this will be a stepping stone to a better infrastructure and eventually it will also speed up the pace of technology adoption in Warehousing Sector. Though the Indian warehousing industry is growing at a decent rate of over 10% annually, but it is the implementation of GST which will give this sector the much required boost.

Presently, business models in this sector are not so stable because of over-reliance on manual workforce throughout the supply chain. The moment some raw material enters in a production facility and till the time a finished product is delivered at the doorsteps of customers, there are too many human touch points involved. This often reduces process visibility and makes the supply chain highly unpredictable. With the amalgamation of smaller warehouses and shift towards spoke-hub distribution model, there will be a rise in operational complexity at these bigger warehouses. In fact the efficiency at which these warehouses operate becomes even more critical since entire supply chain pressure will be now on these concentrated spots. It will be unwise to follow current warehouse management methods and expect high levels of productivity. SCM teams need to relook every single process and identify their weak links. Be it inventory management, Inbound/ Intra/ Outbound logistics and even workforce management, every aspect is pivotal.

So as to make this transition smooth and easy, it is important for Indian Warehouse Managers to start exploring new technologies and adopt which suits them best. “Warehouse 4.0” which is influence of “Industry 4.0” technologies on warehouses has simplified the process of implementation of smart technologies which can monitor & control warehouse operations and optimize supply chain networks for the new demands placed upon them. Few popular technologies are:

Connected Autonomous Mobile Robots: These are smart self-driving vehicles which are used to transport material throughout the warehouse by using advanced laser & vision sensors. They can carry goods stored in different forms like trolleys, racks, pallets, bins etc. These robots are controlled by a Centralized Control Unit which communicates with Warehouse Management Software (WMS) so that every movement can be easily tracked.

Driverless Material Handling Equipment: Conventionally human drivers are appointed for running MHEs for shifting material inside the warehouse. In case of high material movement these tasks can be tiresome for drivers which may lead to accidents. As per a study, in a year, every 10th forklift is involved in an accident. These accidents cause damage not only to humans but material also which can have widespread repercussions on the supply chain. Using driverless MHEs which are powered by LiDARs and industrial controllers, these situations can be prevented. These self-driving MHEs run continuously and ensure high productivity 24 x 7.

Follow Me Robots: These robots are designed to work in collaboration with human operators. Studies show that in a warehouse, more than 50% of order completion time is consumed in travelling and approximately 55% of operational cost is determined by the order picking process. If instead of operators, robots do these movements, huge cost can be saved by minimizing operator fatigue and maximizing productivity.

Guided Picking Systems: These systems are quite common in current warehouses, but with time they have evolved from voice based picking to vision based picking which is powered by AR and IOT. These picking solutions enable pickers to find objects faster and more accurately, thus improve accuracy in processes such as replenishment, processing, and loading. These systems have great potential to reduce training time for new employees and can greatly impact warehouse layout and inbound/outbound logistics productivities.

Automated Storage/Retrieval Systems: Since a lot of time is consumed in moving high volumes of loads into & out of the storage area and no value addition is done in this process, it is necessary to automate. There are different types of storage/retrieval systems like Mobile Case Flow System, Unit-load AS/RS, Mini-load AS/RS, Mid-Load AS/RS, Vertical Lift Modules, Horizontal Carousels and Vertical Carousels. While selecting one out of these, firstly it should be determined that along with matching the required throughput which system will offer maximum storage density, high flexibility for the future, better space utilisation and requires minimum changes in existing infrastructure.

Data Management & Analytics Tools: Enormous data is generated in a warehouse while different transactions are processed and equipments operate. Conventional softwares which just log this data and give standard reports are not much helpful for improving existing processes. There are many new intelligent tools which synergise Big Data & Artificial Intelligence and further integrate all cyber-physical systems using IOT which make it possible to analyse data, discover trends, create new analytical models and take data-driven decision for enhancing the performance of the supply chain.     

It’s quite clear now that there’s no escaping the fact that GST is going to be implemented very soon and present day systems need to be upgraded or replaced. All of the above mentioned systems will play a decisive role in gaining & maintaining competitive advantage in the warehouse business. Also, there would be a favourable direct impact of GST on technology adoption in this sector as problem of delayed payback for implementing these sophisticated technologies in smaller warehouses will not exist now. It’s high time that Indian professionals in this sector proactively assess the potential benefits of these Warehouse 4.0 technologies and start implementing them, as it can be very effective in handling the transitions brought by GST and also other upcoming challenges in near future.

@Hi-Tech Robotics, we are transforming current supply chains with our state-of-the-art Autonomous Systems. In case you are interested to know more about how we are creating supply chain of the future for our customers, just get in touch.

Topics:   GST.