WHITE PAPER

Leveraging Warehousing Technology

for India’s Deeper Integration into
Global Supply Chains

Co-Authored by
Prof. Jitamitra Desai
Chairperson, SCMC, Indian Institute of
Management Bangalore
Dr. Aditya Gupta
COO, SCMC, Indian Institute of
Management Bangalore
Mr. James Christopher
President, TMX Asia
Mr. Poul V. Jensen,
Managing Director, European Business and
Technology Centre (EBTC)

APRIL 2022
LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Content
1. Acknowledgement and Contributions: 1

2. Glossary: 2

3. Introduction: 3

4. Introduction to the Warehousing Industry in India: 4

4.a. Overview 4

4.b. Value Chain for Warehousing in India 5

4.c. Warehousing Growth Drivers 6

4.d. Geographical Distribution 8

4.e. Technology and Automation in Warehousing 8

5. Macro Trends and Developments in the Warehousing Industry: 9

5.a. Impact of Policy Changes 9

5.b. Emergence of e-commerce players 10

5.c. Pricing Models – Recent Trends 10

5.d. Impact of COVID-19 10

5.e. Move Towards Hyperlocal 11

5.f. Digitization 11

6. Challenges Faced by the Industry: 13

6.a. Resistance to Adoption of New Technologies 13

6.b. Inefficient Regulatory Environment 13

7. Using Technology and Automation to Resolve Challenges: 15

7.a. Why Invest 15

7.b. Automation versus Manpower 16

7.c. Way Forward 16

LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Content
8. Profiles of Key Players: 17

8.a. Mahindra Logistics Ltd (MLL) 17

8.b. TVS Supply Chain Services Ltd 17

8.c. Embassy Group 18

8.d. CapitaLand India Logistics Fund 19

9. TMX Case Studies: 20

9.a. Constructing the warehouse of the future 20

9.b. Strengthening supply chain through automation 21

9.c. Conclusion 22

10. Conclusion: 23

11. Profile of the Authors: 24

Annexure I: Modern and Traditional Warehouses in India 25

Annexure II: SWOT Analysis of the Warehousing in India 26

Annexure III: Growth in warehousing space in India between 2016 – 2020 27

Annexure IV: Analysis of the warehousing sector in India 28

Annexure V: Classification of warehousing potential across India 29

LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

1. Acknowledgement and Contributions:

The authors of this paper are grateful to industry leaders in taking time to offer their inputs and perspectives
in the preparation of this White Paper.

In particular, the authors of this paper are grateful to Mr. Davinder Sandhu, Co-Founder and Chairman of
Primus Partners, for his insights into the regulatory environment in the logistics and warehousing sectors.

The authors of this paper would also like to express their gratitude to Mr. Alok Bansal, Chief Executive Officer,
BuildMyInfra for his inputs and perspectives on the most recent developments related to the adoption of
automation and technological solutions in the warehousing sector in India.

The authors would also like to express their thanks to all external stakeholders that have contributed to the
consolidation and preparation of this White Paper.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

2. Glossary:
3PL Third-Party Logistics ML Machine Learning

AI Artificial Intelligence MMT Million metric tonnes

AMR Autonomous Mobile Robots NBHC National Bulk Handling Corporation

API Active Pharmaceutical Ingredient NCML National Commodities Services

Management Limited
BIS Bureau of Indian Standards
NCR National Capital Region
C&F Clearance and Forwarding
PEB Pre-Engineered Building
CAGR Compound Annual Growth Rate
PLI Production Linked Incentive
CFS Container Freight Stations
RCC Reinforced Cement Concrete
COD Cash on Delivery
RFP Request for Proposal
CWC Central Warehousing Corporation
RO/RO Roll-On Roll-Off
DC Distribution Centre
SaaS Software as a Service
FDI Foreign Direct Investments
SKU Stock Keeping Unit
FMCG Fast Moving Consumer Goods
SWC State Warehousing Corporation
FTWZ Free Trade Warehouse Zones
TCI Transport Corporation of India
GST Goods and Services Tax
TMS Transportation Management System
IBEF Indian Brand Equity Foundation
ULB Urban Local Body
ICD Inland Container Depots
WMS Warehouse Management Systems
IPO Initial Public Offering

JIT Just-in-Time

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

3. Introduction:
In recent times, the Indian government has made However, with the logistics sector being granted
significant efforts to enhance the logistics and ‘infrastructure status’ in India in 2017, this has led
warehousing sectors. Flagship programmes of the to eased financing for projects; and moreover, the
Indian government such as ‘Make in India’ and National Logistics Policy together with the newly
‘Atmanirbhar Bharat’ schemes seek to catalyse launched Gati Shakti National Master Plan for
domestic manufacturing in India not only for the multimodal connectivity have significant potential
domestic market but to facilitate exports as well. to transform the entire logistics sector in India.

Indeed, India is ideally positioned between the The continued rise of the e-commerce sector and
‘east’ and ‘west’, with significant potential to the main players therein, as well as increasing
position itself as a global logistics hub. competition between suppliers and retailers along
with increased expectations and price sensitivity
However, to achieve this objective, several of end-consumers, are likely factors in the
challenges and shortcomings need to be increased adoption of automation, technologies
addressed. According to various estimates, and digitization in the sector.
logistics costs account for as much as 14% of GDP
in India, well above the 8-10% seen in advanced This White Paper seeks to provide an overview of
economies. the present state of warehousing in India, the
factors contributing to current and expected
While this figure may be substantially lower than changes, the level of automation and
the 20% of GDP seen in some South-East Asian technological adoption in this space in India,
countries, these higher costs undoubtedly have an profiles of key players, as well as an overview of
impact on the ability of India to become a regional potential technologies and solutions that could be
and global logistics hub. adapted to- and adopted by- the sector in India.

This challenge is further compounded by issues

related to the lack of standardized guidelines in
line with international frameworks for
warehousing space, transit transport and
automation in the sector, as well as the lack of a
coordinated and detailed National Logistics Policy.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

4. Introduction to the Warehousing

Industry in India:
4.a. Overview: Broadly categorized, Indian warehousing can be
divided into two segments: agricultural and
With a population now nearing 1.4 billion, India is industrial warehousing.
one of the largest consumer markets in the world.
Transportation and warehousing are critical links 4.a.i. Agriculture Warehousing
in the supply chain that connect manufacturers to
Agriculture warehousing accounts for more than
end-consumers. Today's warehouses not only
half of the warehousing space in India. The Food
provide storage but also a variety of value-added
Corporation of India (FCI) is the nodal agency in
services such as packaging, labelling, grading,
charge of storing all food grains across the
sorting, kitting, processing and more. Warehouses
country.
are increasingly becoming a nodal part of the
supply chain linking goods from producers to The Central Warehousing Corporation (CWC), a
consumers. government-owned entity, operates 422
warehouses (with a combined a storage capacity
In comparison to industrialised economies, India's
of 9.98 MMT) as of 2019.
per capita warehouse space remains low. India
carries a per capita warehousing space of only “Across India, there are 19 State Warehousing
0.02 square metres, compared to 4.4 square Corporations (SWC) consisting of 2,145 centres,
metres in the United States, 1.09 square metres in with an operating network capacity of 34 MMT as
the United Kingdom, and 0.8 square metres in on March 31, 2019. Though government agencies
China. have traditionally dominated this sector, several
new private players have emerged, including Star
In terms of transaction volumes, the industrial and
Agri, Shubham, NBHC, and NCML.”
warehousing industry in the United States
transacted 20.4 million square metres (220 million
square feet) in 2020, more than seven times that of
India in FY 2021.

The Warehousing Industry: Where does India stand?

Per Capita Warehousing Space United States

United Kingdom
China
India
*square meters
per capita

0.02
0.8
1.09

4.4
Total Transaction Volume

United States of America 20.4 India 2.9

*million square meters

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

4.a.ii. Industrial Warehousing average size of warehouse space is very small, at

around 10,000 sq. ft.
Warehousing of industrial products is primarily
supplied by private sector players. The following is Unorganized sector players , control nearly 90% of
a broad classification of warehousing in India. the storage sector. The existence of a
considerable number of Reinforced Cement
• Private Warehouses: These warehouses are Concrete (RCC) structures in the Indian
held by private companies or individuals and warehousing industry, as opposed to mostly
are generally used for storage of goods Pre-Engineered Building (PEB) constructions
belonging to various business organizations. around the world, is another distinguishing feature.

• Public Warehouses: These warehouses are A SWOT analysis of the warehousing sector in
owned by government agencies like CWC and India can be found in Annexure II.
licensed by them to private entities to store
goods for various business organizations. 4.b. Value Chain for Warehousing in
India:
• Bonded Warehouses: These are special
warehouses that Indian Customs has granted The warehousing sector in India is made up of
permission to keep imported goods till the warehouse developers, warehousing service
customs tariff is paid. providers, and warehousing service users. In this
section, we take a closer look at these key
• Container freight stations (CFS) and Inland components.
container depots (ICDs): CFSs/ICDs are
Export-Import (EXIM) gateway warehouses 4.b.i. Warehouse Developers
where export and import cargo is consolidated
and deconsolidated. Developers design and develop their own
warehousing infrastructure. They invest in land,
• Cold Storage: These are build warehousing structures, and potentially lease
temperature-controlled storage areas for warehouses to 3PL companies. Traditionally,
perishable products in the agriculture, dairy, warehouses in India are owned by unorganised
pharmaceutical, and food industries. sector players.

“Modern” Indian storage began a little more than a However, in recent years, several private equity
decade ago, when logistics corporations began players have made large investments in the
constructing state-of-the-art warehouses in the logistics sector, and in particular, warehousing.
country. Though there are no official
classifications, new modern warehouses are 4.b.ii. Warehouse Service Providers - 3PL Players
sometimes categorised as Grade A and
3PL players are providers of logistics services,
conventional warehousing as Grade B in India.
including the provision of warehousing services.
For more information on the qualification of They own warehouses, or rent them from
modern and traditional warehouses in India, see developers, and operate them with material
here. handling equipment, technology, labour, and
management expertise in order to provide
Presently, the warehouse market in India is highly warehousing services to the user industry.
fragmented. Unlike developed countries, the

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Unorganised players, commonly referred to as 4.c. Warehousing Growth Drivers:

clearance and forwarding (C&F) agents,
dominated the 3PL market in the past. Such Warehousing: A Rapidly Growing Sector

enterprises usually operate in a single state or Growth in Indian

Consumer Spending

region.
Growth in Cold
Chain Warehousing
However, many organised 3PL players have Growing Share of India
in Global Trade

entered India in the last decade. Several

multinational 3PL businesses, including Schenker, Government Focus on

DHL, Kuehne + Nagel (K&N), Yusen and LF Warehouse and Logistics

Growth Drivers Institutionalisation of
the Warehousing Sector
Logistics are now present in India.

Several organised Indian businesses have also

E-Commerce Sector Make in India Program,
Aatmanirbhar Bharat and Production
Linked Incentive (PLI)
entered the 3PL space. They include Mahindra,
TVS, FutureGroup, and Reliance, and pure play
logistics providers such as TCI and Allcargo.
The Indian warehousing sector is growing swiftly.
Players in the express and transportation
The following are some of the factors that are
industries, such as Gati and Safexpress, have also
fuelling this growth:
integrated into the 3PL market. Several start-ups
have also recently emerged in this segment. Growth in Indian Consumer Spending

4.b.iii. Warehouse Service Users The last three decades have brought about a
general betterment of livelihoods across the Indian
Traditionally, FMCG and consumer durables used
population. Greater personal disposable incomes
to be the largest consumers of warehousing
and increased internet access have also led to a
services. However, with the advent of modern
transformation of Indian retail and e-commerce
retail and e-commerce in the last decade, they too
sectors.
have become one of the key users of warehousing
services in India. Growing Share of India in the Global Trade

Paints, auto ancillaries, chemicals, tyres, India's growth trajectory has been extraordinary,
pharmaceuticals, and cement are the other large particularly since the turn of the century. Over the
users of industrial warehousing services in India.

India: Rising Share in Global Trade

35

30

25

20

15

10

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Imports Exports Source: World Bank

Global Share
Imports Exports
0.7% 0.7%
1.7% 2.4%

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

last 25 years, Indian exports have grown 17 times The E-Commerce Sector
while imports have increased 19 times. India's part
of global merchandise exports increased from 0.6 Over the last five years, the e-commerce sector
percent in the early 1990s to 1.7 percent in 2016, has emerged as one of the most important drivers
while its percentage of imports increased from 0.6 of warehousing growth in India.
percent to 2.4 percent during the same time
According to IBEF, the e-commerce market In India
period.
is expected to reach USD 200 billion by 2026 from
The rise in imports reflects rising Indian USD 38.5 billion in 2017 .
consumption and warehousing requirements.
According to estimates, e-commerce warehousing
Demand for container freight stations and
absorption in FY 2019-20 stood at 8.5 million
multimodal logistics parks are also expected to
square feet, growing at a CAGR of 55% during the
increase, particularly due to increased export
period FY 2017-20 .
volumes.
Even though e-commerce adoption has expanded
Institutionalisation of the Warehousing Sector
manifold in recent years, India's proportion of
A growing economy, and an outsized consumption overall trade in e-commerce is still minimal in
base, is attracting large investments into the comparison with other developing nations. In
Indian warehousing industry. The Indian 2019, e-commerce penetration as a share of total
warehouse sector is slowly, but surely, moving retail was only 4.7% in India as compared to 15.9%
away from being an unorganised to becoming an in China and 19.2% in the United Kingdom.
organised sector, attracting investment from E-commerce is expected to continue to expand,
private equity firms, known for their expectations with a corresponding impact on the Indian
of high returns. warehousing sector.

Larger, organised players - both Indian and Amazon, Flipkart, and Reliance JioMart are
international – are increasingly managing actively looking for warehousing space to grow
warehouses that are closer to international their operations across major cities. According to
warehousing norms and standards. industry estimates, ecommerce companies like
Flipkart and Amazon have leased over a quarter of
Make in India Program, Aatmanirbhar Bharat and India's entire warehouse capacity in the last two
Production Linked Incentive (PLI) years. According to Colliers, leasing in Grade A
industrial and warehousing premises in the top
The Indian government’s flagship ‘Make in India’ five Indian cities of Bengaluru, Chennai, Delhi NCR,
programme on domestic manufacturing has Mumbai, and Pune totalled 10.1 million square feet
propelled domestic manufacturing for domestic in H1 2021.
consumption and exports. In a complementary
approach, the government has also launched Indian Government’s focus on Logistics and
several policies, such as the ‘Aatmanirbhar Bharat’ Warehousing
scheme to significantly enhance domestic
manufacturing. The Indian government is increasingly focused on
the logistics sector, including the warehousing
The PLI scheme is currently active in more than ten sector, through various actions such as granting
sectors, including semiconductors, electronics the logistics sector “infrastructure status”. This
manufacturing, food processing, battery storage, allows for 100 percent FDI in warehousing, setting
automobile components, and specialty steel, and up a Logistics Department within the Ministry of
several more schemes for other industries are Commerce, the enactment of the Warehousing
expected. The increase in manufacturing activities (Development and Regulation) Act, 2007, and the
is also driving the growth of the warehousing designing of two policies (still to be tabled) on
sector on the production side of warehousing. National Logistics and Warehousing, and the

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

announcement in the latest Union Budget on there are tier-II cities which are emerging as new
February 01, 2022 on the establishment of hubs for warehousing in India.
multimodal logistic parks and free trade
warehouse zones (FTWZs). These include ‘frontrunners’, such as the National
Capital Region of Delhi, Mumbai, Chennai,
Growth in Cold Chain Warehousing Bengaluru and Hyderabad; ‘challengers’, such as
Surat, Vishakhapatnam, Nagpur and Chandigarh;
The expansion of the organised food industry and and ‘newcomers’, such as Vijayawada, Coimbatore
e-commerce is the primary driver of expected and Jamshedpur.
growth in India's cold chain business. Food
retailing has matured, and the country's increasing Classification of warehousing potential across
penetration of organised food retail is India can be seen in Annexure V.
necessitating the establishment of efficient cold
chain storage management. 4.e. Technology and Automation in
Warehousing:
The pharmaceutical industry is yet another major
demand generator for temperature-controlled In comparison to industrialised countries, in India,
storage and distribution. COVID-19 vaccines and the adoption of automation and other technology
API medicinal formulations, in particular, will including warehouse management systems is still
necessitate substantial expansions in India's cold low. Due to high initial expenses, perceived long
chain warehousing capacity. payback periods, substantially smaller labour
rates, insufficient connectivity, lack of awareness
4.d. Geographical Distribution: of options and possibilities, and a host of other
challenges, warehouse operators have been
Warehousing stock in India is growing at a rapid sluggish to adopt automation in warehouses. This
pace. As per the ‘India Real Estate Outlook – A new is covered in greater detail in Section 7 of this
growth cycle’ report by JLL, India’s total paper.
warehousing stock stands at 238 million sq. ft. in
2020 with top 8 cities, which includes, NCR Delhi, There is still a dominance of ground storage over
Mumbai, Bengaluru, Chennai, Pune, Kolkata, racked storage within the overall Indian
Hyderabad and Ahmedabad accounting for almost warehousing industry, and the use of racking-in is
two thirds of the space. still hampered by a lack of standardized flooring
specifications of warehouses, perceived high
Growth in warehousing space in India between racking costs, and a lack of a long-term
2016 – 2020 can be seen in Annexure III. perspective.

Nearly 60% of India's Grade A warehouse stock is Due to its substantially greater service delivery
concentrated in just six cities: Bengaluru, Chennai, requirements, e-commerce, as a key occupier
Ahmedabad, Mumbai, NCR, and Pune, with Kolkata segment, has been at the forefront of technology
and Hyderabad rounding out the top six. use in warehousing in India. Other segments too,
mainly high-volume products, are now slowly
This is driven by the concentration of
moving in this direction.
manufacturing activity and the existence of a
significant urban population in the vicinity of these For optimal results, technology adoption happens
clusters. This trend is expected to continue in at an early stage of design, rather than retrofitting
these areas, due to factors such as infrastructure at a later stage. Increased long-term agreements
quality and labour availability. between the users and the 3PL companies is
expected to allow 3PL players to invest in
Analysis of the warehousing sector in India can be
technology and automation. The necessity for
seen in Annexure IV.
warehouse operators to manage large numbers of
Aside from these major metropolitan centres, SKUs and handle rapid cargo movement has
created and increased the need for technology.
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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

5. Macro Trends and Developments in the

Warehousing Industry:
There have been several recent policy adoptions reducing logistics costs, which are approximately
by the Government of India that impact the 14% -16% of GDP, substantially higher than the 8%
logistics and warehousing sectors. -10% in China and 12% -13% in the United States,
but lower than the near 20% seen in some
Indeed, the government’s emphasis on increasing South-East Asian markets .
the country’s “Ease of Doing Business” rankings,
while at the same time, its recognition of the need Under the Warehouse Development and
for a made-to-order National Logistics Policy, are Regulatory Authority, the Indian government has
expected to accelerate the growth of the wider also announced plans for geo-tagging of goods
logistics sector in India. and the development of modern warehouses for
the logistics sector .
Furthermore, the growth of cities and Urban Local
Bodies (ULBs) across the country, as well as the The guidelines laid by this Authority, farmers and
increased adoption of e-commerce during the self-help groups will be given incentives to
COVID-19 pandemic, is expected to substantially construct modern warehouses to enable storage
increase the need for standardised, efficient and at the local/regional level, with an eye to prevent
digitized warehousing, supply chains and logistics. food wastage and loss.

5.a. Impact of Policy Changes: These policies could provide an impetus to

increase warehousing supply while
India has achieved great progress by constructing simultaneously providing opportunities to both
logistics infrastructure and implementing key domestic and foreign players to expand their
legislative and structural changes the last few presence in the Indian warehousing segment.
years. Various programs, such as, the Pradhan
Mantri Gram Sadak Yojna, Industrial & Dedicated Prior to the implementation of the goods and
Freight Corridors, Bharatmala and Sagarmala services tax (GST), inventory considerations
projects, and Jal Marg Vikas have contributed to dictated the location and number of warehouses,
the development of logistics infrastructure. A the implementation of GST has provided
scheme to create an Integrated Cold Chain and businesses with additional leeway in establishing
Value Addition Infrastructure is underway by the their warehouses across India.
Ministry of Food Processing Industries, under the
Pradhan Mantri Kisan Sampada Yojana scheme. As we have seen before, in-house logistics
providers formed the foundation of supply chain
In recent times, the government has implemented activities before the advent of GST. However, 3PL
several major policy decisions with regard to the players' specialized storage and distribution
logistics sector. These include the Pradhan Mantri services have grown at a CAGR of about 8% , and
Gram Sadak Yojna, Industrial & Dedicated Freight are poised to account for a majority of warehouse
Corridors, the Bharatmala and Sagarmala projects, demand in recent years.
and Jal Marg Vikas scheme. Lately, the
government has also introduced the PM Gati According to data, the warehousing and logistics
Shakti Master Plan for Multi-Modal Connectivity. sectors received approximately USD 100 million
This seeks to provide integrated and seamless between FY 2005-16. However, since the
connectivity for movement of people, goods, and implementation of GST in 2017, the segment has
services from one mode of transport to another. witnessed substantial new investments - receiving
over USD 2.14 billion in funding during the period
These policy changes are aimed at substantially 2017 to H1 2021.
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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

5.b. Emergence of e-commerce players: Kong, and Japan, limited land availability has led to
the vertical development of multi-story
As we have seen in Section 4, increased warehouses.
competition amongst e-commerce players in India,
particularly with regards to expedited deliveries On the other hand, there are multiple warehousing
and rising pricing wars, is driving developments in pricing models up on offer to fulfil the needs of
the warehousing and logistics sectors. It can be different businesses. Transaction or Unit Rates
expected that this will push businesses to opt for Models accord greater financial control to
in-city warehousing, which can not only reduce shippers and protects them from downside
delivery times, but also reduce inventory levels of variability, but this comes at the expense of a
perishable items, thereby reducing wastage. higher margin and profitability risks are high.

In-city warehousing is becoming more widely Other business models include contracts for fixed
recognized as a critical infrastructure requirement, warehouse space. In such cases, the price
particularly in major consumption centres in cities
Unit Rates Model
and ULBs.
Pros Cons

E-commerce has forced warehouses to shift their

Suitable for diverse
focus from massive bulk purchases to tiny business requirements
Higher margins

batches and even single items. Consequently,

there is expected to be a shift from container loads Minimise variability Profitability risks

or cartons of individual products picking, and

Accurate financials
shipping individual products.

To accommodate these developments, warehouse

managers must increasingly consider investing in
structure is based on a fixed monthly fee that
warehouse solutions such as slotting optimization
includes the cost of storage space and
systems, inventory management systems, and
infrastructure and any kitting, assembly, picking
warehouse mobility to efficiently process smaller
and packing expenses.
and more frequent orders.
Fixed Warehouse Space
In this sector, warehouses’ abilities to properly
manage returns is crucial. Consumers expect not Pros Cons

just to receive their purchases swiftly but also to

Doesn’t account for
Fixed fee
have a simple and expedited return process. variability

May be expensive for

Returning items necessitates more time and Pre-decided facilities
small businesses

expenditures and a significant quantity of

warehouse space. With the growing expansion of
e-commerce, learning to manage returns promptly On the other hand, revenue sharing models work
and efficiently has become essential. through percentage sharing of total sales. This
model necessitates a lot of forward and
5.c. Pricing Models – Recent Trends: backward-looking analysis and forecasting to
maintain accuracy.
As the logistics sector continues to grow, notably
in and around major metropolitan centres in India, 5.d. Impact of COVID-19:
the need to ensure that adequate warehousing
facilities are located close to the end customer, as The COVID-19 pandemic has had a significant
well as the limited availability of such locations, is impact on the warehousing sector in India. While
driving-up warehousing costs. on the one hand, the abrupt impact on the global
economy halted increased foreign and domestic
In dense urban areas, such as Singapore, Hong investments in the sector, the increased demand

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

for contactless deliveries, digital payments, as well The hyperlocal delivery market worldwide is set to
grow at a CAGR of 17.9% to reach USD 3.63 billion
Revenue Sharing Model
by 2027 . In India, the trend of hyperlocal deliveries
started in 2014 with major restaurant aggregators
Pros Cons
like Zomato and Swiggy. Hyperlocal logistics
Mitigates risks
Complex model with forward providers not only deliver a wide range of products,
and backward analytics
including groceries, home care, personal care,
Flexible as per
business needs
medicine and food to customers' doorsteps but
also empower people to become digitally active.

as reduced footfalls in retail outlets increasing the Hyperlocal delivery models are penetrating beyond
shift towards e-commerce. urban centers to smaller towns and cities.
Hyperlocal delivery provides convenience and are
Estimates suggest that the warehousing market therefore becoming a preferred choice of
will expand to cities and ULBs driven by an customers.
increase in local consumption11 of daily
requirements. Hyperlocal deliveries are backed by advanced
technologies that enable single-pick multi-drop,
Although, lean manufacturing is expected to secure payment processing, including
remain important, the ratio of Just-in-Time (JIT) Cash-on-Delivery (COD), route and delivery
inventory to safety stock is expected to shift. In prioritization, and real-time tracking. New age
manufacturing lean philosophies are expected to platforms use AI and ML to automate, optimize
retain additional inventory (buffer stock) on hand and make delivery more efficient.
to avoid future inventory shortages and production
shutdowns. This is expected to push upwards the It is expected that hyperlocal logistics will be built
demand for warehouse space and capacity. on the back of a combination of locally owned
warehouses that are integrated with local stores
Brands are likely to decentralize their warehouse for a robust supply chain framework. Today’s retail
locations to achieve same-day or next-day delivery. outlets are expected to transition to
Being closer to consumers lowers transportation micro-fulfilment centers to meet customer
costs and the risk of supply chain disruptions. demands quickly and cost effectively.
While some manufacturers may want to construct
these decentralized storage facilities in strategic 5.f. Digitization:
areas, others may wish to collaborate further with
To meet the increased velocity of the order
established 3PL providers.
fulfilment process, automation and robotics usage
5.e. Move Towards Hyperlocal: in material handling and warehousing is likely to

Hyperlocal Service Market

Massive Growth Potential Multiple Services Significant Advantages

3634.3

Food Grocery and Rural Real

Delivery Household Items Penetration Time Tracking

Repair and Medicines and Cost Secure

38.5 Servicing Facilities Personal Care Optimisation Payments

2017 2027
* Figures in USD Billions Personalised Services

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

foresee a major increase over the course of the

coming years.

In Southeast Asia, autonomous mobile robots

(AMRs) and comparable systems being adopted in
warehouses. AMRs are small enough to fit into
existing warehouse spaces, easy to deploy, and
cost-effective. Mobile robotics' flexibility allows
them to be readily and swiftly integrated within
warehousing facilities. Companies don't require
the same height level, floor loadings, or changes to
current services that what would normally be the
case.

As an example, Indonesia is also benefiting from

international investments and trade in
warehousing. As a result, warehouse automation
in the region is expanding. Just like India,
e-commerce is the biggest push, projected to
enable the rapid growth of the sector from USD 16
billion in 2019 to USD 62 billion by 2025. With
foreign investment, particularly from Australian
developer Logos to build the three-level ramp-up
Metrolink Logistics Hub for lease to e-commerce
firms, the country’s warehousing sector is
increasingly moving towards automation.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

6. Challenges Faced by the Industry:

Challenges in warehouse technologies in India With the rise of larger warehouses catering
can, in general, be classified on the basis of either exclusively to the burgeoning e-commerce sector,
resistance to adoption of new technologies or time and cost efficiencies, which are crucial to
challenges arising due to the regulatory players in this sector, can be expected to
environment. accelerate the adoption of such technologies and
equipment in India.
6.a. Resistance to Adoption of New
Technologies: On the other hand, the competitiveness and
razor-thin margins of warehouse space end-users,
The table provided below highlights the main particularly from the e-commerce segment, as well
issues related to warehouse automation arising as the lack of willingness to pass on higher costs
due to a general resistance to the adoption of new to end consumers, pose a significant challenge to
technologies. the industry. The expected consolidation of
warehouse space users in coming years, may
provide an opportunity for the increased adoption
Classification Context/Impact
of automation in warehousing in India.
Small warehouse sizes Precludes WMS and racking
systems At the same time, abundant access to a relatively
inexpensive manpower base and the perceived
Low manpower costs and
lack of awareness of cost, higher costs of automation and technologies in
Cost time and productivity warehousing, as well as the perceived attendant
efficiencies arising from higher maintenance costs of such systems, are
automation
also longstanding issues being faced by the
Razor thin margins of 3PL sector.
Lack of cost-effective
solutions players and price sensitivity
of end consumers As competitiveness between warehouse
end-users continue to grow, and consumers
Need for dedicated continue to expect expedited deliveries and
Perceived high
maintenance services and
maintenance replacement of products, the need for warehouses
fears of disruption
to stack larger quantities and categories of
Lack of continuous products, is expected to grow.
Issues related to Internet coverage of internet
continuity services in non-urban 6.b. Inefficient Regulatory Environment:
warehousing areas
Despite recent policy changes either implemented
or proposed by the central and state governments,
One of the most significant challenges associated
existing regulatory challenges remain.
with the adoption and implementation of
automation, technologies, and digital solutions in While the Indian central government has
warehouses in India is the relatively small size of implemented various policies to enhance the
these warehouses. This lack of space stands as an warehousing sector, the absence of a consistent
obstacle for the implementation of efficient National Logistics Policy has proved to be a lacuna
Warehouse Management Systems (WMS), as well for large-scale investments that can bring about
as equipment for the efficient unloading, handling, rapid change.
storage, loading and distribution of materials.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Major regulatory obstacles for warehousing in The ever-rising migration towards urban
India are land associated issues. Regulatory metropolitan areas and significant urban
policies on the acquisition and reclassification of infrastructure developments in areas adjoining
land differ from state to state and frequently face major cities, make purchasing land for
obstacles in the issuance of permits, warehousing prohibitively expensive. While this
environmental clearances and the reclassification may entail the establishment of warehousing hubs
in close proximity to urban centres, as opposed to
Classification Context/Impact within major towns and cities, it can be expected
that the increased time and cost efficiencies due
Cumbersome regulatory
procedures for acquisition to automation in these hubs, may significantly
Land acquisition issues
of land and delays due to catalyze their adoption and implementation in the
government clearances warehousing sector in India.
Red tape associated with
reclassification of agricultural The lack of digitization of land records and the
land for warehousing; traditional communal family ownership of land,
Reclassification of land
different policies particularly in smaller peripheral towns and cities,
implemented by each state
government may also pose an obstacle for the greater
development of warehouses in India.
Prohibitively expensive
Cost of land prices of land, in particular The lack of specific regulations and guidelines for
in metropolitan cities the warehousing sector in India, and particularly
with regard to standards related to floor
Lack of digital land
ownership records and specifications, illumination guidelines, the height
Title of land traditional communal family of the warehouse, the bay design, plinth height and
properties result in other parameters, pose significant challenges to
difficulties in purchase
enterprises.
Lack of clear guidelines in
ensuring standardization The structure of these warehouses may vary from
Lack of uniformity and uniformity of multi-story RCC to a prefab structure. Due to a lack
warehouses; lack of
of standardisation, enterprises may need to spend
applicable BIS standards
money and effort in upgrading the space and its
Revenue streams and last specifications to support their operations.
orders are usually made in
Month-end peaks
the last few days of each Finally, a common challenge with the warehousing
month
industry in India is the ‘month-end peak’
phenomenon. For a majority of warehouses in
of agricultural land to industrial usage for India, more than two-thirds of the billing happens
warehousing. during the last three days of the month.

At the same time, the classification of the logistics This skew in volumes leads to errors, process
sector as infrastructure is set to substantially inefficiencies, and higher costs. The manpower
facilitate further investments in the sector. utilisation is suboptimal due to the variability in the
Additionally, the National Logistics Policy being volumes being handled. The cost of transportation
considered by the central government and the also goes up due to the month-end volume surge.
recently announced Gati Shakti National Master Although several companies are trying to mitigate
Plan for Multimodal Connectivity , are expected to the situation with weekly targets and other
significantly resolve regulatory issues and solutions, the phenomenon is still very much
enhance incentives in the sector. prevalent.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

7. Using Technology and Automation to

Resolve Challenges:
7.a. Why Invest: high-cost investment and long payback involved.

The warehousing industry in India continues to Mobile robotics are now enabling smaller players
evolve at a rapid pace. As a result, brands and their to consider integrating automation into their
partners are now contemplating various warehouses to better meet growing consumer
warehousing automation and digital solutions to demands, particularly the fast delivery expected
better serve their customers. This is particularly out of e-commerce. Furthermore, with increased
prevalent in the last-mile delivery space. competition from other countries, the level of
capital needed to automate warehouses using
To keep up with customers’ expectations, mobile solutions is now comparatively lower, and
technology is a must. The conventional approach businesses can also enjoy a shorter return on
of adding extra labour is not a solution to derive investment.
the necessary speed and accuracy required to
meet burgeoning customer demand. On the other This type of mobile automation can also be
hand, adding automation or technology, without deployed within months, rather than years, and
changing processes will likely not solve the scaled as a business grows. For newer
problem at hand. Therefore, any handpicked e-commerce players, whose volumes are growing
solution will need to address both technological rapidly, or growth levels are not yet quantified, the
capability as well as process improvements as mobile robotics solution gives businesses
part of the investment. flexibility.

Investment in technology and automation is now Additional robots can be ordered quickly to cater
far more accessible than it once was driven by to fluctuations in growth, and the portability of the
innovation, smaller capital investments, and solution means that it can also be easily relocated
alternative financing models. to a new site should a business outgrow its current
site.
Automating a warehouse was hitherto deemed
feasible only if the building was purpose-built for The same is also true for implementation of
the integration of the technology. The four walls of software solutions. Software as a Service (SaaS)
a warehouse building would essentially be built is now commonplace and being offered by smaller
around a pre-identified automation solution. players in the WMS, TMS, and OMS spaces. This
implies that there is not a huge capital outlay at the
However, the flexibility of AMRs and mobile commencement of any software implementation.
robotics ensures that they can be easily and
quickly adopted inside any warehouse These solutions can also be used for more
configuration. Companies do not necessarily need ‘off-the-shelf’ products, than they once were, and
the height, floor loadings, or upgrades to existing multiple systems can be used in parallel and work
services that was conventionally required. Existing seamlessly due to increased linkages in the back
sites with a flat concrete floor can be readily end of these systems. This also assists in giving
utilised and do not need to be bespoke to the the visibility that is required in modern supply
automation solution. chains to ensure products are tracked throughout
the entire journey.
This has democratised automation. Traditional
warehouse automation solutions were typically
only adopted by larger businesses due to the

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

7.b. Automation versus Manpower: 7.c. Way Forward:

Even with improved accessibility and low-cost While having automation solutions in warehouses
options offered by mobile automation and SaaS is needed as part of modernising supply chains,
solutions today, there remain barriers in India in there are important questions that businesses
taking those first steps towards automating should consider before implementation.
warehouses. This is mainly due to the relatively
low labour costs given the large base of manpower One key element to consider is management of
available. pain points of existing processes and how a future
optimal process flow would reshape such existing
Although automation is known to increase output mechanisms. Having a good understanding of
and reduce time taken to process an order, there is these and mapping them correctly can help ensure
a counter debate that adding more labour can that the right type of automation is implemented,
achieve the same at a lower cost than investing in be it physical or digital. The last thing that a
a machine. However, it must be noted that business would want while implementing a new
automation does not necessarily mean replacing automation solution is to replicate existing poor
people or taking significant labour out of their processes.
operations, but rather supplementing growth and
allowing people to be retrained and upskilled. Beyond this, it is also crucial to ensure that
employees are willing to embrace change.
The rapid advent of e-commerce and more Implementing solutions that are as transformative
consumers going online per the “Digital India” as mobile robotics can result in significant
drive, demand continues to be at an all-time high. changes to workflow, day-to-day operations and
Even hiring an additional 100 people might not be the type of skills needed from the workforce. An
a solution to fulfil customer orders in a timely effective change management plan that seeks to
manner. Evidently, increased usage of position new automation solutions as further
technologies, IT solutions and automation in the augmenting current employees’ work should
sector can provide a critical boost to the therefore be established and prioritised when
timeliness and accuracy of orders, which undertaking the automation and digitisation
additional manpower may not be able to provide. journey.

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

8. Profiles of Key Players:

8.a. Mahindra Logistics Ltd (MLL): It offers warehousing services for order
management, inventory control, material supply
management, kitting, sequencing and line-side
delivery, bundling, unbundling, light/sub-assembly,
packaging, re-packaging, re-boxing, labelling,
sorting, reverse Logistics, returns management
and audit support.

It deploys technology in warehousing in the form

of WMS, Disha (Dock Management Software to
Overview of the company reduce dock congestion), Class (Warehouse
Layout Design Software for optimal space
Mahindra Logistics Limited is a leading integrated utilisation) and Pick to Light Systems.
logistics and mobility solutions provider in India.
The Transport Management System (TMS)
It offers customised end-to-end logistics solutions, platform is also used by the company to foster
including transportation and distribution, collaboration, visibility, and transparency among
warehousing, in-factory logistics, and value-added stakeholders such as customers, business
services. associates, and freight partners. The company
also operates Control Tower Operations (CTO) to
Its asset-light business model, with solution
keep an eagle’s eye on our fleet of vehicles,
design capabilities, enables the company to serve
ensuring smooth and timely delivery.
over 300 domestic and multinational companies
operating in several industry verticals in India, The company is now building smart warehouses
including the automotive, engineering, consumer using technology (warehouse management
goods, pharmaceuticals, e-commerce, and bulk systems, handheld terminals, yard management,
virtual reality led training), processes (pick to light,
Key clients include the Mahindra Group,
system directed pick up and put away, etc.) and
Volkswagen, Vodafone Idea, Thermax, JSW Steel,
people (training, referrals, salary advances).
Ashok Leyland, Siemens, Bosch, BMW, 3M, and
Mercedes-Benz.

It is a listed organisation with a market 8.b. TVS Supply Chain Services Ltd:
capitalisation of around INR 31 billion
(approximately USD 410 million).

For the fiscal year 2020–21, its revenue were INR

32.64 billion (approximately USD 435 million) and
profit after tax were INR 290 million
(approximately USD 4 million).

Warehousing Capabilities

The company manages over 17 million square feet Overview

of warehousing space spread over more than 500
TVS Supply Chain Solutions (TVS SCS) is among
locations across the country. These include a mix
India’s largest and fastest growing integrated
of built-to-suit, dedicated, and multi-user
warehouses.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

supply chain solutions providers in India. It operates in-house warehouse management

system named Visibility, which allows integration
It is part of the USD 8.5 billion TVS Group. with customer ERP through API-based
connectivity.
An Indian multinational 3PL company with a global
footprint, it has a presence in 19 countries with It operates a control tower to monitor pan-India
over 17,000 employees. It serves more than 50 of operations.
the Fortune Global 500 companies.

Its services include - supply chain consulting,

warehousing solutions, transportation and 8.c. Embassy Group:
integrated logistics, material handling and
management, integrated returnable packaging
solution, technology and project logistics, as well
as sourcing and procurement management.

Its global operations generate revenue in excess of

USD 1 billion. At the end of the fiscal year March
2021, the revenue from Indian operations was
estimated to be INR 13.45 billion (approximately
USD 180 million). Embassy Group

The company is planning for an Initial Public Embassy Group is a privately-held real estate
Offering (IPO) in year 2022. developer operating in verticals including the
commercial, residential, hospitality, industrial
Warehousing Capabilities warehouse spaces, services, retail and education.
In May 2021, Blackstone Capital recently acquired
The company manages over 13 million sq. feet of
the entire Embassy Industrial parks portfolio for
warehousing space spread across 180 plus
INR 52 billion (approximately USD 680 million).
locations in India.
Industrial and Warehousing Development
It serves clients in industries including the
automotive, engineering, auto components, FMCG, Embassy Industrial Parks was a 70-30 joint
consumer durables, e-commerce, retail, venture between Warburg Pincus and Embassy. It
energy/power, chemical/paints, pharma/medical has 22 million sq. feet logistics assets across the
equipment and telecommunications sectors. country’s six major cities including Chennai, Delhi
NCR, Hosur, Hyderabad, Pune and Mumbai,
It offers warehousing solutions in the form of
covering a total size of around 200 acres. These
in-plant warehousing, after-market warehousing,
warehouses are primarily dedicated towards
finished goods warehousing and free-trade
e-commerce and retail players. Currently they have
warehousing.
35 million sq. feet in ongoing/future development
It offers specialised solutions for critical parts work.
storage and last-mile delivery.
The Blackstone Group in Warehousing:
Its key customers for finished goods warehousing
Blackstone entered the Indian warehousing sector
include Titan, Hitachi, Daikin, Panasonic Anchor
in 2019 through a joint venture with a Hiranandani
and Mitsubishi. Its key customers for in-plant and
group firm, Greenbase. This 50-50 JV plans to
after-market warehousing include Hyundai, Fiat,
invest over INR 25 billion (approximately USD 330
Saint Gobain, Ford, Apollo Tyres, Daimler, Ashok
million) in the upcoming three- or four-year period
Leyland, JCG and Cummins.
to develop around 12 million sq. feet assets across
India.

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

So far, it has developed 2 million sq. feet in

warehousing space. After Blackstone’s second
deal in the sector with the Embassy Group, it now
has a portfolio of over 40 million sq. feet
developed and future assets with its partners
Hiranandani and Allcargo.

8.d. CapitaLand India Logistics Fund:

CapitaLand India Logistics Fund

The Singapore based CapitaLand has launched its

second SGD 400 million (approximately EUR 270
million) logistics private fund in India. This fund
will look at investments in warehousing space in
the six major metropolitan areas of Ahmedabad,
Bangalore, Chennai, Mumbai, National Capital
Region (NCR), and Pune, as well as in emerging
markets such as Coimbatore, Guwahati, Jaipur,
Kolkata and Lucknow.

The new CapitaLand India Logistics Fund II of

2021, follows the deployment of its first logistics
fund, the SGD 400 million (approximately EUR 270
million) Ascendas India Logistics Programme,
with an aim to focus on warehousing projects in
Bengaluru, Chennai, NCR and Pune in 2018 that
had as its objective the creation of 12 million sq.
feet of warehousing space.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

9. TMX Case Studies:

With e-commerce skyrocketing over the last few 9.a. Constructing the warehouse of the
years, and consumer demands becoming future:
increasingly discerning, warehouses need to
operate efficiently to keep pace with the current One example of a business that understands the
marketplace. Robust warehouse technologies and merits of leveraging automation is one of the
infrastructure are no longer a 'good to have' but a largest bottlers in Japan. The company recognised
‘must have’ in supply chains for businesses the need to optimise its operations, as its existing
looking to improve productivity, overcome barriers, network was complex and inefficient, leading to
and cut costs. greater cost pressures. These costs escalated in
the face of barriers such as labour shortages,
While today’s warehousing technologies present rising costs, and an increasingly fragmented
tremendous potential to optimise supply chains, customer profile.
there is no one-size-fits-all solution. Different
regions, markets and industries present their own Recognising these challenges, the bottling
unique challenges and opportunities and require company entrusted TMX as its partner of choice to
the right warehousing solution to meet their strengthen its supply chain through advanced
specific needs. end-to-end automation, with the development of
its new mega automated distribution centre (DC).
This is especially the case in the dynamic and
vibrant Asia-Pacific region. For example, TMX supported this project with the objective of
businesses operating in markets that have improving its logistics efficiency and streamlining
advanced digital ecosystems like Japan or processes, ultimately achieving reduced costs and
Singapore have the opportunity to explore more even stronger customer service. To achieve this,
sophisticated automation systems, data analytics, TMX applied its 3-step network strategy
and robotics. Meanwhile, those in emerging methodology, making the end game simpler, safer,
markets like India, and many other markets in and lower-cost.
South and Southeast Asia that are still on the cusp
Consolidating a number of its smaller sales
of supply chain modernisation, are looking at
centres, the bottler established a central hub that
warehousing technologies that can make use of
supported its logistics network and connected its
their existing infrastructure and workforce, while at
manufacturing and logistics processes. This
the same time provide simple, user-friendly
helped to achieve timely end-to-end deliveries
solutions to improve their operations and help
from the production site all the way to end
them meet the rising demands of e-commerce.
customers.
As an Asia-Pacific business transformation
The hub features an end-to-end automated
consultancy focused on helping businesses
material handling system:
optimise their entire supply chain, from
top-of-the-funnel demand generation right through • Automated storage systems (AS/RSs)
to final fulfilment, TMX works with diverse clients requiring only half the space of conventional
with wide ranging needs, budgets, goals, warehouses;
opportunities and constraints.
• Sorting Transfer Vehicles that ensure efficient
This experience has given us a deeper knowledge movement of goods between processes;
of in-market challenges and opportunities as well
as the technological innovations that will help • Automated case picking shuttles and
build competitive logistics and supply chain Automated Case Pick (ACP) for pallet building;
networks across all our markets.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

• RORO (roll-on/roll-off) stations which reduces One of the key improvements included planning
loading and unloading times by half, and more. and developing a new DC, which involved
redefining warehouse processes, proposing the
Automation and robotics clearly play a key role in right partners, developing land and managing the
improving the speed and accuracy of routine consenting and building process.
operations. For example, palletising robots not
only quickly stack cases, crates, and totes of As part of the business transformation, it was
varying sizes, but do so based on the most evident the capability of the people, processes,
efficient stacking pattern, which is automatically and systems were not where they needed to be to
calculated by the robots’ software. A first in Japan, support a highly automated DC. To address this,
the RORO stations also fully automated the TMX proposed a Business Improvement program
loading and unloading of truckload batches. to lift its current processes, systems, and people
capability in readiness for the proposed
In response to the project, the scale of the automated DC.
transformation designed by TMX was recognised
by the client as a “once in a generation opportunity This included optimising transportation to reduce
for the company”, achieving over 10% estimated costs and improve delivery times, which also
annual OPEX savings delivered by the strategy. involved managing an RFP process to select the
The bottling company was able to address the best transport provider.
forecasted labour shortage challenge unique to
Japan, and ultimately achieve a scalable, agile To ensure the operations team was engaged, and
solution. team capabilities were lifted to sustain
improvement efforts, teams on the retailer’s side
9.b. Strengthening supply chain through had direct engagement with TMX team members
automation: in upskilling sessions, and CEO and Deputy CEOs
were given ownership of change and appointed as
Vietnam is another market that is witnessing advocates of the transformation program.
burgeoning investment towards state-of-the-art
technologies in its industries, and warehouse Other improvements included re-engineering the
development is ramping up. The country is well on layout, systems, equipment and manpower across
its way to become one of the most advanced the retailer’s sites and reducing excess inventory
manufacturing hubs in Asia. across DCs and stores to reduce overall supply
chain costs. A master plan helped support the
TMX worked with the largest retailer in Vietnam, client’s continued rapid growth and made sure it
which was facing a number of logistical was ready to handle an influx in ambient,
challenges, namely low productivity, high logistics temperature controlled, convenience and online
costs, high inventory and a need to improve distribution demands.
services in three ambient DCs and retail stores
across Ho Chi Minh City. Notably, TMX also introduced Peak Period
Planning to address the retailer’s challenges
Originally brought in to lead a workshop, TMX during festivities, which helped to reduce labour
identified several opportunities to improve cost costs through improved labour structure,
savings and operational efficiency and was then transiting away from vendor-managed labour
appointed to lead the retailer’s supply chain source.
transformation programme. Working closely with
a cross-section of team members from the client TMX’s transformation project ultimately saved the
side, TMX consultants created a new strategy that retailer USD 10 million in capital costs and around
helped the business grow and adopt automation in USD 500,000 in operational costs.
stages, saving millions in the process.

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 LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Overall, the Business Improvement Program

achieved 5% transport reductions, 25% in pick
productivity, and 12% in inventory reduction. The
new DC program achieved 15% footprint savings
and saved USD 15 million in capital expenditures.
The retailer was able to utilise the gains from the
Business Improvement Program to fund the
program costs of its new DC and Business
Improvement program.

9.c. Conclusion

Warehouse technology and innovation will

continue to play an increasingly important role in
advancing supply chains, with technological
advancements crucial to improving warehouse
management processes. These two case studies
demonstrate a variety of solutions designed and
managed by TMX consultants, which made
automation accessible for two very different
markets.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

10. Conclusion:
The warehousing sector in India presents owners to implement such changes, which could
significant opportunities, specifically in terms of dramatically increase their efficiency, can be
the adoption and implementation of automation, attributed to the low level of awareness of the
technologies and IT solutions. benefits of automation and technology.

However, along with those opportunities, India None the less, the ever increasing presence of new
presents investors with a set of varied challenges. and diverse firms and investments, coupled with
the consolidation of major enterprises in this
Whilst the sector is growing at an exponential rate sector, bodes well for a higher uptake of such new
with changes in end-consumer buying patterns automation and technology solutions in both
and the development of the e-commerce and brownfield and greenfield warehousing projects.
hyperlocal retail segments, the warehousing space
in India remains highly fragmented, with the The Government understands that efficient
majority of warehouses still operated by logistics, including efficient warehousing, is a
unorganised sector players. The demand pattern pre-requisite for economic growth, and is currently
change is however driving a consolidation of implementing a variety of support measures,
activities, thereby attracting an increase of both including an upcoming National Logistics Policy, a
domestic and international investments in the Warehousing policy, and a plan to grant the
sector driving growth. warehousing sector an industry status nationwide.
This will in essence give a further incentive for
This is happening despite the fact that the sector stakeholders to invest and warehousing sector,
is also to a certain extent constrained by boosting both growth and efficiencies.
razor-sharp margins amongst the largest group of
the users of warehouses: the 3PL players. In conclusion, there is every reason to expect that
international best practices, including automation,
The warehousing sector lacks standards and technologies and IT solutions, will witness a
regulations, both of which would further fuel high significant uptake within the warehousing sector
growth. Large scale adoption of automation, in India. This shift is happening at an opportune
technologies and IT solutions within the time, with global supply chains in flux and
warehousing industry in India is happening only at re-designing, so such evolution in domestic supply
a very slow pace, whereby the sector is chains and warehousing standards will enable the
experiencing lower than possible efficiencies. better, swifter and customised integration of
More often than not, such capex investments are Indian supply chains into global supply chains.
weighed against fairly easy access to a skilled and
relatively low-cost workforce. Indeed, the first
actual warehouses that became semi-automated
in India recorded swift returns on investment,
thereby showing that the hesitation of warehouse

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11. Profile of the Authors:

Prof. Jitamitra Desai is Associate Professor of Operations Research in the
Decision Sciences (DS) group at the Indian Institute of Management (IIM)
Bangalore. He is also the Chairperson of the Supply Chain Management Centre at
IIM Bangalore.
Prof. Desai’s research interests are centred around mathematical/computational
decision analytics, particularly in developing large-scale (big-data) optimization
algorithms and their applications, notably in aviation, transportation and location
theory, energy analytics, and wireless communication networks.

Dr. Aditya Gupta is the Chief Operations Officer at the Supply Chain Management
Centre of IIM Bangalore.
Prior to his present position, Dr. Gupta has over 24 years in Supply Chain
Management, General Management, Finance and Sales in organizations such as
TVS Group, Tata Group, Virgin Group, Moser Baer, Jindal Group, Essar Group. Dr.
Gupta’s areas of expertise include Warehousing, Transportation, Import/Export
Management, Planning and Inventory Management.

Mr. James Christopher lead’s TMX’s Asia business, having joined the business in
2013. He has over 20 years of construction and property experience successfully
delivering complex, automated and high bay facilities across the region for leading
national retailers and logistics companies, including Schneider Electric, the
supermarket company Woolworths, retailer Kmart and the national postal services,
Australia Post and Singapore Post.
James’ expertise lies in managing the design and integration of automation into a
building.

Mr. Poul V. Jensen is the Managing Director of the European Business and
Technology Centre (EBTC), a project advisory and facilitation organization that
seeks to enhance the Europe – India Business Corridor.
Poul holds a Bachelors in International Trade from the Copenhagen Business
School, Denmark and a Master’s in Business Administration from CASS Business
School, London, and is currently Chair of the National Council of Logistics of the
Associated Chambers of Commerce and Industry of India (ASSOCHAM).

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Annexure I: Modern and Traditional

Warehouses in India
Key parameters Traditional warehouses Modern warehouses

Size (footprint) Usually up to 5,000 sq. Ft. > 10,000 sq. ft.

Height 12~15 ft >20 ft.

Storage Floor stacked on pallets Floor + racking option available

Flooring Standard paved Reinforced hi-grade concrete

Reinforced walls + prefab sheets

Structure Standard brick or RCC structure
and bespoke roof design

Material
Single-point entry/ exit Multiple docks/ bays with levellers
discharge/ loading

Full-fledged warehouse
IT Limited
management system

Extensive usage of material

Material handling Limited material handling equipment usage
handling equipment

Significant scope for palletization,

Value-added services
Limited bar coding, MRP labelling, pick
(VAS) capability
and pack, and shrink wrapping

Fire extinguishers, ventilators and

Cargo safety/ security Basic
CCTV surveillance standard

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Annexure II: SWOT Analysis of the

Warehousing in India
Strengths

• Large distributed Spread across every State and key production and consumption Markets.
• Rational Warehousing Space Rates.
• Strong interest by new MNC and PE players in Warehousing.
• The development and growth of 3PL and 4PL industry in managing Warehousing.

Weakness

• Lack of Organized players

• Lack of Standardization.
• Lack of Mechanization and Technology in Warehousing
• Challenges in Land Acquisition and conversion.
• Small Box Sizes.
• Too many RCC and Old structures

Opportunities

• Large scope for Organized players in Warehouse Space and Management.

• With the GST, consolidation of Warehousing at Strategic Locations.
• Large scope for Vertical Storage and Mechanization and Automation of Warehouses.
• Implementation of Pay-per-use kind of Models with Flexible spaces.

Opportunities

• Warehousing spaces created only with Fiscal considerations may not find takers.

• The rising Minimum wages are pushing up the cost of Warehousing.

• Lack of Formal education and Training in the Warehousing.

• Industries adopting more and more leaner practices and reducing the inventory in the system thus
reducing Warehousing requirements.

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Annexure III: Growth in warehousing space in

India between 2016 – 2020
Warehousing stock in Million sq ft
500

450

400

350

300

250

200

150

100

50

0
2016 2017 2018 2019 2020

Grade A Grade B Total

Source: JLL

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Annexure IV: Analysis of the warehousing

sector in India
Total Total Developmnt
warehousing warehousing Existing Stock potential in Development
Market land FSI Potential in in mn sq m Vacancy mn sq m potential
(Acres) mn sq m (mn sq ft) (mn sq ft) multiple
(mn sq ft)

NCR 4,178 9.3 (100) 5.3 (57) 13.90% 4 (43) 1.75

Chennai 2,361 4.6 (49) 2.2 (24) 14.70% 2.3 (25) 2.02

Bengaluru 2,210 4.5 (48) 2.3 (25) 29.70% 2.1 ((33) 1.89

Pune 1,814 3.9 (42) 2.4 (26) 21.80% 1.5 (16) 1.61

Ahmedabad 1,587 3.4 (37) 1.7(18) 13.20% 1.8 (19) 2.09

Hyderabad 1,291 2.7 (29) 1.2(13) 22.40% 1.5 (16) 2.19

Kolkata 1,098 2.6 (28) 2(21) 20.60% 0.6 (6) 1.29

Total 21,163 46.5 (500) 28.3 (307) 15.50% 18 (193) 1.63

Source: Knight Frank Research

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LEVERAGING WAREHOUSING TECHNOLOGY FOR INDIA’S DEEPER INTEGRATION INTO GLOBAL SUPPLY CHAINS

Annexure V: Classification of warehousing

potential across India
Category Characteristics Locations

• Existing logistics hubs

• Primarily the major metros with a very

large consumer base- Excellent NCR, Mumbai, Chennai, Bengaluru,
Frontrunners connectivity Ahmedabad, Kolkata, Hyderabad,
Pune
• High availability of skilled labour and
managerial workforce

• Large cities and towns - connected by

existing roads and to be better connected
by new corridors

• Location of major infrastructure projects

such as ports - mix of rural and urban Surat, Vishakhapatnam, Nagpur,
Challengers consumers Chandigarh, Guwahati, Kochi
• Target of consumer products and retail
companies

• Growing pool of skilled, yet less costly

workforce

• Mostly smaller cities and towns

• High availability of labor but low on

managerial workforce

• Linked to infrastructure projects

Vijayawada, Coimbatore,
Newcomers Jamshedpur, Lucknow
• Promising because of large development
initiatives

• Existing infrastructure is not very

conducive to logistics

Source: Miebach Research

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