The global logistics segment has witnessed a significant transition over the years, with technology-driven methods overtaking manual methods in connecting sellers, third-party logistics partners and customers. Logistics companies have been adopting new technologies and integrating them into their day-to-day operations. This technology uptake has led to increased productivity, faster delivery, increased customer satisfaction, and reduced costs and errors in the supply chain. These advances have benefited all areas of the logistics industry and led to a sharp increase in demand for smart logistics and efficient supply chain management.
In India, however, warehouses are still rudimentary and far behind their global counterparts in terms of technological penetration. While the Indian logistics sector is not completely devoid of technology, its usage is minimal and basic. Limited technology is used by a few select logistics players, mainly e-commerce and third-party logistics companies. The unorganised nature of Indian warehouses, and the lack of technology-enabling infrastructure and large-scale availability of human capital are the prime reasons for the low technology intervention in the Indian logistics space. However, the entry of a few organised players has facilitated various technological advancements in the sector, such as the introduction of robots, albeit on a very small scale. The Covid-19 crisis has also fuelled the need for automation in Indian logistics.
Recent technology trends
Of late, the Indian logistics market has been observing a measurable emphasis on technology. Companies are now working towards automating and digitalising several back-end as well as on-floor activities, leading to cost and time efficiency and, consequently, more productivity. Today, more and more businesses are taking advantage of process automation, which helps organisations integrate the processes and systems required to receive and fulfil orders more efficiently. There has been a growth in the number of start-ups entering the logistics space, which are disrupting existing models with technology. These new-age start-ups, backed by technological advancements, are able to adapt to emerging imperatives such as agility, customer centricity and the need to constantly innovate in a better and more precise way. The use of technology has enabled them to drive efficiency and lower costs, as well as pursue new business opportunities. This disruptive technological transformation is leading the logistics industry towards a sectorial revolution.
Machine learning (ML) has revolutionised the industry to such an extent that the involvement of machines is now indispensable. ML is not only contributing to the growth of the sector, it is also creating employment by introducing a whole new range of job opportunities such as goods packaging machine operators, grab unloaders, crane operators and vessel operators. Artificial intelligence (AI) is also picking up pace in the logistics realm and becoming an essential part of it. AI now has a holistic impact on the sector with companies starting to use it at every stage. The current trends are pointing towards a lot more potential for AI that can be tapped.
Need for automation
In the Indian warehousing segment, space constraints have always prevailed. Even though various manual, semi-automated, and high reaching storage options are implemented, they can never compete with the high density that an automated storage (AS)/retrieval system (RS) can offer. An AS/RS can store 50-60 per cent more goods in the same space than a manual or semi-automated storage system. Besides, although warehouse operators have excelled in organising their inventory, quickly locating, tracking and controlling inventory remains a challenge. Automation can help in addressing the issue. In addition, automation enables the integration of a Warehouse Management System or a Warehouse Execution System, which provide total control of the inventory at a click.
With automated warehousing, storage, retrieval, conveyance and intra-logistics become rapid and efficient. Automating the material flow can drive the throughput up fourfold as compared to manual warehousing. Additionally, automation can easily manage fluctuations in throughput demands. Moreover, automation systems can perform tasks that are repetitive, monotonous and beyond human limits, thus freeing up resources from non-value-adding tasks. While the upfront costs of automation might seem high, rewards are seen in the long run when compared to manual labour. Besides, automation resolves issues pertaining to inaccuracies, limited operating time, process waste, human errors, overtime, labour dependencies and unreliable operations.
Opportunities in the wake of Covid-19
The Covid-19 pandemic has put unimaginable pressure on global supply chains, from medical supplies to household goods, with spikes in demand stress-testing logistics foundations. There is an opportunity for crewless delivery vehicles to assist in addressing this demand and help reduce the risk of Covid-19. The pandemic has also opened up opportunities for the use of additive manufacturing or 3D printing in warehouses and logistics processes. 3D printers allow cloud technology to store designs and build parts on the spot, bypassing the need for carriers to move goods from production facilities to warehouses, and finally to customers. Warehouses can also use robots to replace workers during the pandemic, including cleaning robots, goods-to-person robots, mobile picking robots, and collaborative autonomous mobile robots. These machines can perform repetitive warehouse jobs that have been deemed too dangerous for staff due to the risk of virus contamination, helping manufacturers meet demand during this tough time. Meanwhile, intelligent automation can help in demand prediction for inventory management. Amazon uses intelligent automation methods such as time series prediction and reinforcement learning systems in multiple aspects of day-to-day operations. Reinforcement learning is another branch of AI based on a risk and reward system that helps with inventory management. The current situation also calls for a faster shipping process. In this regard, AI can be used to decide on the best routes and ensure track route optimisation.
In addition, chatbots can be used to manage procurement and inventory management through innovative automated datasets: conversing with suppliers and accepting requests, placing purchase requests, and answering doubts regarding the procurement of the suppliers. Besides, computer vision systems can automate the barcode reading process and, therefore, accelerate and simplify it. They can also monitor the warehouse boundary and track employees, analyse data, and prevent violation of safety rules. Amazon has launched an AI-based tracking system to enforce social distancing at its offices and warehouses, to help reduce any risk of contracting Covid-19 among its workers.
Key issues and challenges
Although AI is slowly gaining traction in the country, its penetration in the Indian logistics sector remains low. The process of switching to automation has encountered numerous challenges. First, automation requires very high capital investment, and returns on the investment might take a considerable time to fructify. Given the high number of participants in the supply chain, any of them can be reluctant to include the obligatory (and necessary) technological solutions for automation. However, the emergence of start-ups may be able to address the issue. Moreover, due to low flexibility, it is difficult to standardise certain processes for execution through automation. According to Amazon, the point at which an Amazon warehouse is end-to-end automated is at least 10 years away. Meanwhile, the Draft National Logistics Policy has a separate provision to identify and fund initiatives aimed at scaling-up use of technology and automation in warehouses. Such policy fillips by the government are expected to drive automation in the Indian logistics sector. Going forward, automation will be a key factor shaping the future of storage and logistics in India.