Role Of E-Commerce In Driving Technology Adoption For Indian Warehousing Sector, Post COVID

Global supply chains and logistics sectors have undergone a major disruption during the past few months, thanks to the pandemic. Several first-time users logged on to e-commerce websites to make safe, virtual purchases for essentials and had a contactless delivery experience at their doorstep. The sector also witnessed a major shift in popular categories, from luxury and lifestyle purchases to shopping for basic essentials such as groceries, medicines, office and school supplies, e-learning tools and even food delivery. As per an impact report released by Uni-commerce, titled E-commerce Trends Report 2020, e-commerce has witnessed an order-volume growth of 17 per cent as of June 2020, and about 65 per cent growth in single brand e-commerce platforms.

However, in-spite of challenges such as manufacturing slowdown, shortage of labour, transportation bottlenecks, and disruption in national and international movement of cargo, the massive rise of e-commerce has brought about faster digital adoption and enhanced the potential for overall growth of the sector. With a focus on meeting consumer expectations for speedy delivery, customization, product availability and easy returns while handling complex globalization of supply chains, warehousing trends have witnessed major shifts. Some key technology adoptions that are helping make this shift include, but is not limited to, are as follows.

Cloud-based supply chain software (WMS/TMS/BI)

Leveraging big data for managing complex supply chains in an efficient and timely manner is the key to speedy and error-free operations. While data analytics is helping predict, plan and optimize performance; a cloud-based warehouse management system helps collect, monitor, store and effectively use this valuable data for enhanced operational efficacy on a daily basis. Leveraging blockchain and big data is also helping predict and manage surges in demand, handle and avert unexpected supply chain crises and facilitate seamless operations. From tracking inventory, ensuring end-to-end supply chain visibility, and receiving real-time analytical insights into all facilities on a single integrated window. A cloud-based integrated solution further helps organize, manage and drive efficient operations across geographies, and time zones, reducing human dependency.

AI and automation

This has been one area of disruption for warehousing technology. From use of autonomous mobile robots (AMR) for physical tasks, self-managing inventory systems, automated picking and packing tools, to even driverless forklifts and automated vehicles (driverless vehicles) for cargo, automated storage and retrieval (ASRS) processes, are some of the latest technology adoptions that are changing the face of a once labour-intensive industry.

IoT and business integration

Integration has been a key word in digital adoption, especially for the logistics and supply chain sector. Application of Internet-enabled connected devices such as wearables, RFID, BLE, smart sensors and surveillance devices, offers superior cargo and vehicle tracking and managing larger warehousing operations. Enabling and leveraging integrated systems to employ smarter processes for handling volatile situations and respond quicker in the dynamic environment.

While the above tools have ensured logistics and supply chain management is enabled with the latest in technology adoption, e-commerce has also impacted organizations' structure for future growth for Indian warehousing. Key developments include:

Focus on more grade A warehouses in tier II and III towns: A report by ClickPost, India's largest logistics intelligence platform, states that tier III and IV towns contributed to 70 per cent of sales coming in through online channels, even as Internet penetration, fintech and access to smartphones grew. This, along with the availability of affordable commercial real estate space in these geographies, is leading to the shift of development of smarter, grade A warehousing to tier II and III towns.

Proficient last-mile deliveries: E-commerce has changed the face of last-mile delivery dramatically from when it first started. The pandemic has further disrupted this by innovating trends such as contactless deliveries and the diminishing need and use for cash on delivery. A surge in demand of FMCG and perishable goods that demand same day or quick deliveries and the emerging categories that require a robust temperature-controlled supply chain, like temperature-sensitive food and pharmaceutical products, have all impacted the accelerated tech-adoption for enhancing consumer experience.

Sustainable supply chain and warehousing: As global businesses shift to sustainable practices, Indian warehousing and supply chains too have adopted sustainable practices. These range from advanced, energy efficient warehouse design, consolidation of shipments, enhanced use of technology for tracking and optimizing energy consumption, adopting paperless documentation to replacing plastic with more eco-friendly packaging material, reducing waste and recycling, are some areas which are helping make the sector relevant to global business trends.

Larger role in ancillary, non-storage functions: Lastly, the pandemic has brought about a major change in the dynamics between 3PL-4PL service providers and manufacturers. From being vendors and supply chain facilitators, the modern logistic service providers are evolving to become valuable partners to their client, helping them tide over the crisis by offering several value added benefits. While the trend had already become significant before the advent of COVID, the pandemic has accelerated this partnership, with more manufacturers depending on their logistic service providers for tasks like services of just-in-time packaging, product assembly, product customization, and even end to end reverse logistics, for cost optimisation and seamless operations.

The Indian logistics and supply chain sector is set to grow at a tremendous rate, aided by accelerated digital adoption, supportive government policies, better transportation infrastructure, increased PE funding in warehousing real estate and shift in service sourcing strategies. Further, key warehousing trends, like increased stocking levels, changing focus to essential supplies that is set to drive cold supply chain growth, institutionalisation of warehousing segment and faster construction and expansion of grade A warehouses in tier II and tier III cities, is set to drive the warehousing sector growth in the coming years.