Retailers have become highly efficient in terms of utilisation of space, and warehouses have become larger and systematic. Warehouses are now more technologically oriented and help in linking stocks with the retail store in an accurate way.
Setting up a warehouse
Setting up a warehouse demands a certain amount of space as it deals with stocking of all the merchandise. Having a proper logistics in place for the movement of goods is a vital part of warehousing. Ankur Minda, Manager- Construction, Om Logistics Ltd explains, “Warehousing is an indispensable part of supply-chain management. In its simplest form, ‘warehousing’ is the storage of goods until they are needed. The goal of warehouse operations is to satisfy customers’ needs and requirements while utilising space, equipment, and labour effectively.” Retailers usually set up a central warehouse and many regional warehouses. The regional warehouses help in timely order fulfillment at stores across the country.
Warehouses are set up at locations on the outskirts of the city where it can get the amount of space required at a lesser cost as compared to setting it up inside the city. The property prices start coming down once you start moving away from the city limits. Mr Minda tells, “Warehousing can be set up at any given area. They generally vary from 1000 sq ft to 10, 00,000 sq ft. As such there is no limitation on the build-up area required for warehousing. Investment requirement for constructing a state-of-the-art warehouse, including the land cost and providing all the infrastructure facilities (heavy duty racks, conveyor belts from picking to packing to staging area dock levelers and material handling equipment like fork lifts, pallet, stackers, etc) is somewhere around Rs 3000/sq. ft.”
Purpose of a warehouse
The purpose of setting up a warehouse is to have a place for the storage of goods which cannot be kept in the store but can be required at any moment. Balvinder Singh Ahluwalia, President, Koutons Retail India Ltd. tells, “The primary role of warehouses is to stock the garments for which orders have been already placed by our franchisees. Warehousing makes business sense. Koutons is supported by distribution and infrastructure to handle million garments per month. The whole team of professionally trained people are connected via ERP system. All the stocks can be seen at the company, all warehouses and franchisees.” The database managed at warehouses provides useful reports about the status of goods in the warehouse. The progress of products in the warehouse is monitored which involves physical warehouse infrastructure, tracking systems and communication between product stations.
In house v/s Outsource
Quite a few brands have set up their own warehousing facilities but had to make the process more viable for them. Mr Ahluwalia says, “We have an in-house warehousing set up. The positive part of in-house warehousing is that it is directly under the supervision of the company. Other than that there are also some disadvantages of outsourcing warehouses like it is usually contract bound with no flexibility/adjustments (time or space). However, we also find brands that have outsourced their warehousing needs to 3 PL (Third party logistic) players. They feel that the set up and management costs are lowered and the 3PL are professionals who can manage the process very efficiently. If the 3PL partners are professional and can manage things well then outsourcing can bring in a lot of benefits to the retailer.”
Warehousing is an essential part of the supply chain process undertaken by a retailer. With time, necessary and appropriate changes need to be made to keep
the warehousing needs up to date.
Requirements for the state-of-the-art warehouses