Warehouses lack the sex appeal of the slick, consumer-facing showrooms, though, they are probably as important, if not even more, for any consumer products company that wants to win in the marketplace. Strategically placed warehouses allow the company to deliver the product quickly and service the customer better. They are the not-so-visible parts of a company's supply chain, but they form the crucial link between the factory and the customer.
There is a veritable revolution taking place in Indian warehouses now for multiple reasons. First, GST has completely changed the rules of the game for all companies when it comes to choosing the spots where they will set up their warehouses. Earlier, different taxes in different states played a huge role in deciding the placement of warehouses. Today, after GST has been rolled out, companies can decide warehouse locations solely based on how they want to service key markets and the end-customer.
A few other things are happening simultaneously. The scale of the average warehouse is changing as is the amount of technology being used in it. New warehouses that are being built are not only far more massive than the earlier generation buildings, they also use far more technology - from robots that can load and unload and shelve stuff to scanners that can automatically keep track of things coming in and going out. Specialised warehousing firms setting up third-party warehouses and servicing multiple clients from the same warehouses are also becoming big businesses. Global warehousing giants are also coming to India. It is the new real estate boom, and even lease costs of warehousing space is shooting up.
The amount of money being put in is staggering. Over the next two years, `45,000 crore will be pumped in to set up new warehouses, says one study. It will add over 100 million sq.ft. of fresh space to the 140 million that exists today.
Warehouses have always existed and have played a crucial role in any logistics planning but it was really the rise of Amazon in the US, which put the spotlight on what was essentially a backroom story till then. In order to achieve more efficiency while squeezing costs, Amazon depended on its warehouses - and it invested heavily in technology to see how it could improve customer service, shave off minutes from its delivery times, and shelve and unshelve products at maximum speed. It experimented with robots, just like it is now experimenting with drones to achieve better deliveries. In essence, it upped the warehousing game, just as the famed Japanese innovations had changed the standards in manufacturing in every sector from consumer durables to automobiles a few decades ago.