Building for Storage

01 Jun 2018 CW Staff

From design and IT to costs, material and equipment, CW takes a closer look at what goes into warehouse construction. Warehousing indeed plays a critical role in the entire logistics value chain. "The Indian logistics market is rapidly transforming into a highly competitive one with many players and sophisticated customers,"says Shrichand Chimnani, Director-Logistics, Schenker India. "Our focus on efficient processes, which save time and money, and an integrated solution-led approach help us keep our customers happy. Value-added services and supply-chain integration offer flexibility to meet their demands in almost every situation." "Keeping operation costs to a minimum is a top priority for most business owners as they strategise to reach maximum profit margins," says Samarnath Jha, CEO, Apollo LogiSolutions. "The need of speed in logistics may make the elimination of large warehousing centres seem like a good idea. However, warehousing remains a critically important part of the business supply chain." In his view, the considerable benefits of warehousing for a company's logistics include centralised location, better service implementation, value-added delivery component, and scaled or seasonal growth.  "Warehousing is an integral part of the logistics chain as it retains and manages attrition in transportation," says Praveen Somani, Director, Strategy & New Business Development, Inland World Logistics. "It also aids in data mining to a large extent." Building the warehouse <ul> <li>Many factors influence warehouse construction costs, such as market conditions and land cost, not to mention warehouse type. </li> <li>"As every project's needs are different, there's no cookie-cutter way to get an accurate estimate for warehouse construction costs," says Jha. </li> <li>Meanwhile, Somani pegs the construction cost at Rs 1,600-2,000 per sq ft. "It has become a single-window solution where everything related to warehousing is outsourced owing to high quality demand,"he says, adding that the most important consideration while setting up a warehouse is to test the floor strength in terms of capacity to store inventory and process goods and ascertain how strong it would be in handling equipment.</li> <li>In terms of setting up infrastructure in an e-commerce business, TK Balakumar, COO, Big Basket.com, elaborates, "We have designed our own layouts to support our business requirements. Typically, we have an area earmarked as FMCG products, then a separate area for fruits and vegetables because the process for storing and handling is completely different, and a third area called the "chilled area" for frozen products."  </li></ul> Materials and equipment The different types of warehouses include heated and unheated general warehouses; refrigerated warehouses; and controlled humidity (CH) warehouses. "Warehouses must be designed to accommodate the loads of the materials to be stored, the associated handling equipment, the receiving and shipping operations and associated trucking, and the needs of the operating personnel," says Jha. He adds that the design of the warehouse space should be planned to best accommodate business service requirements and the products to be stored or handled. The economics of modern commercial warehouses dictate that goods are processed in minimal turnaround time. As Somani puts it, pre-engineered structure and galvanised structure (vertical seam) are materials specifically used in the development of a warehouse. "These use more environment-friendly equipment for material handling, which includes battery-operated forklifts, greaseless shutters, galvanised roofs, etc." To this, Jha adds that there is a variety of manual, semi-automated and automated material handling equipment and technologies available to aid in the movement, protection, storage and control of materials and products throughout manufacturing, distribution, consumption and disposal. These include ARS, casters and wheels, controls, conveyors, dock equipment, hoisting equipment, IMHS, order fulfilment system, lift trucks, overhead cranes, packaging, protective guarding, racks, software and sortation. Warehouse designers should also focus on making the space functional and efficient. "Building image and aesthetics, landscaping, and worker safety and comfort become important issues," says Jha. In terms of costs, Balakumar points out to the two elements of capex and opex. "Typically, a warehouse of about 80,000-sq-ft carpet area can do about Rs 320-350 million of business from a particular place. And our capex will be about Rs 30-50 million. Fire safety systems, racks and other equipment will also go into the capex. Additionally, we need an energy facility considering regular power cuts. So a generator and high-tension power are required. Further, the flooring needs to be good as there will be constant movement of materials, people and manual or electric trolleys." Role of IT <ul> <li>Right from suppliers and customers to inventory movements, a warehouse management system (WMS) optimises all operations.</li> <li>"Usually, these systems have always been part of much bigger and more complex distribution functions," says Jha. "Execution of a warehouse management lets an organisation improve its competitive advantage by minimising direct overhead expenses, enhancing customer service, improving inventory accuracy and increasing flexibility and responsiveness." </li> <li>He lists the benefits of an IT system as quicker inventory turns; effective utilisation of warehouse space; depletion on inventory paperwork; enhanced cycle counting; and increased labour productivity.</li> <li>Indeed, especially for the e-commerce industry, there is no business without IT. "Our entire warehouse is Wi-Fi enabled and all operations are IT-enabled," says Balakumar. "Recently, we have also started moving into a cloud-based system, where we can reduce dependency on the server. The cloud gives us more opportunities to centrally control operations."</li></ul> Future expansion plans The industry is responding with new equipment, technology and systems that enable complete supply chain visibility, thus allowing customers to see how their investments are impacting their overall operations. According to Jha, Apollo LogiSolutions' investments are going to be more towards high-speed sortation systems and motorised roller (equipment); warehouse control systems and voice picking (technology and software); and communication and visibility. For Inland World Logistics, Somani says, "We have about 15 lakh sq ft of our own warehouse facilities and are planning for an additional 10 lakh sq ft in the near future." Big Basket.com is looking at doubling sales. "We want to achieve 2.5 times of what we did last year,"says Balakumar. He adds that the company is looking to double its space requirements in the next year. At present, the e-commerce firm has 25 main warehouses and another 50 smaller warehouses within cities apart from about 40 last mile hubs from where orders are delivered to customers' door steps. Policy matters For its part, the government has granted industry status to the logistics sector. "Adding to this, the GST rollout and E-waybill systems have only brought in more connectedness in the supply chain,"says Jha. Meanwhile, Somani believes the logistics sector should be recognised as an organised sector, attracting more investment and leading to increasing sales and profits. And Chimnani believes that the government could consider allocating funds to augment the capacity and infrastructure at dry ports in India. "This will support the ambitious Sagarmala project to be more effectively connected with industrial towns within India,"he says. "Also, we need a long-term plan and allocation of funds to develop inland waterways in a phased manner for freight movement."