Should Automation Be Restricted to Within the Warehouses?
Supply Chain is a key part of India’s GDP and while the country is adopting warehousing automation solutions and is reaping benefits from it, there is a dire need to ensure automation runs through the entire supply chain function.
The supply chain sector represents billions of dollars in enterprise revenue. It is estimated that India spends 13% of its GDP on logistics, third only to China and Thailand and 3% more than the United States. The size of the Indian warehousing industry (a major component of the complete Supply Chain function) is currently estimated at USD 11 billion and is growing at over 10% annually. But, despite its size and importance, it is fraught with losses and inefficiencies resulting from inter-state policies, transportation infrastructure and massive manual paperwork delays. Although warehouses are becoming smarter and quite technological advanced, the overall supply chain function still suffers from various inefficiencies owing to legacy processes.
To understand the disparity better, imagine stepping into your favourite multi-brand apparel store inside a mall. Now, imagine a fully automated and cognitive experience where as you enter, the security system also scans your body to determine the size that would fit you across products and brands (considering not all brands have uniform sizes). Now, instead of walking up to various racks, imagine giving instructions to the in-store system and receiving the desired items, of your size, while you sit on a couch. Or being told by the in-store system (kind of Jarvis from Iron Man) exactly where to find what you’re looking for. Found what you were looking for? Fits perfectly? Even left a note with the system to notify you of what you couldn’t find on the day? This seamless experience isn’t something too far in the future given how rapidly IoT and AI are progressing. In fact, sales systems in the near future would also be capable of collating data from one’s public profiles online to determine one’s personality, and data from sales records to determine one’s shopping preferences at various time periods/ seasons etc. to proactively suggest SKUs. This would clearly prove to be more efficient and convenient compared to running around a huge store, moving from rack to rack, trying clothes to find the right fit.
Now imagine walking out of that store and having to manually show a receipt to the security personnel for exiting the store. Entering another store with that package, handing over the package in return of a token and retrieving your package on your way out in exchange for the token. This exchange is done each time you enter another apparel store. Do also imagine walking down to the underground parking and having to stand behind cars to manually pay the parking fee, driving out and then again getting into a queue to pay the expressway toll. Not a very seamless experience?
The former, a fully automated and predictive in-store shopping experience, to an extent reflects the sophisticated automation solutions that are being developed or conceptualized for manufacturing units, warehouses and fulfilment centres. Automation solutions are being successfully deployed at warehouses of various sizes, across categories and industries with the intent of increasing efficiencies and augmenting throughput. Such solutions have also shown considerable ROI in the short span of time that they have been introduced. However, the automation and operational efficiencies within the warehouses are only a part of the complete supply chain process that still suffers from a lot of legacy procedures.
Supply chains today are inherently complex, encompassing many parties across functions and geographies. Many supply chains face inefficiencies that have significant implications in terms of cost, speed, and (product) quality. Once the goods leave the warehouse, there is a high proportion of manual (paper) work, lack of interoperability, and limited information on the product’s lifecycle or transport history. Especially in India, paperwork at various touch points and record-keeping is a tedious task and a lot of overall inefficiency in supply chain can be attributed to the legacy record keeping systems.
What the Supply Chain function needs is a major technological influx and a seamless, all-encompassing centralized system to ensure the entire process and all stakeholders operate in harmony and with complete transparency. Enter BlockChain!
One of the biggest problems faced by companies with complex supply chains is a lack of transparency. If one has multiple suppliers across multiple states and countries, it can lead to an arduous amount of paperwork and also make it hard to keep track of each movement. Also, from a monitoring viewpoint, pinpointing issues could be difficult because of all the moving parts. This is where something like Blockchain could be leveraged to ensure that the automation inside the warehouses is also reproduced across the entire process, enabling the warehouses to talk to the various external functions such as logistics, legal, finance etc.
Because of the way transactions are recorded and tracked using Blockchain technology, it makes it much easier to track everything happening in real time while eradicating unnecessary manual intervention and delays.
As a distributed ledger that ensures both transparency and security, Blockchain has the potential to fix the current problems of the supply chain function. Blockchain would be able to register the transfer of goods on the ledger as transactions that would identify the parties involved, as well as the price, date, location, quality and state of the product and any other information that would be relevant to managing the supply chain. Also, the current reliance on manual paperwork could mean that the logistics manager might not have the most recent transactions. It might take hours — or even days — before a system is updated. Blockchain could bridge this gap as well. Another problem faced by 3rd party logistics providers is the demand from their customers to offer dedicated warehousing space in case working with the latter’s competitors. While justified to an extent from a business viewpoint, this causes wastage in terms of investments in real estate, headcount increase and general overall inefficiencies in storage. Blockchain, being a secure, digital ledger, will evoke greater trust in such customers and help the logistics providers.
While Blockchain has been widely popularized as a financial innovation – the popularity of Bitcoins is there for all of us to see – a few brands have started experimenting with Blockchain to ascertain the positive impact it can have on their supply chain function. Walmart, in association with IBM and Tsinghua University in Beijing, is working on a pilot to create a new model for food traceability, supply chain transparency and auditability for the retail giant’s two high-volume product categories with large markets. There have been other pilots across the world too, for more specific uses.
Supply Chain is a key part of India’s GDP and while the country is adopting warehousing automation solutions and is reaping benefits from it, there is a dire need to ensure automation runs through the entire supply chain function. In addition to reducing inefficiencies and increasing throughput, Blockchain will help in enabling more intelligent business processes because of its distributed trust and transparency, which in turn will bring more people into connected supply-chain networks.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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