warehousing industrial

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Warehousing - Industrial &Logistics (WIL) - Emerging Industry Leader
By
Zubin Poonawalla
Warehousing, Industrial & Logistics (WIL) is the sunrise sector &
attracting private equity players across the world to invest in India, given
economical, technological &regulatory reforms that have taken place in
last 3-4 years.
Logistic sector contributes 13-17% to India's GDP & 25% of logistic cost is
warehousing cost. Warehousing investment alone accounted for 26% of
total private equity investments in real estate sector for around USD 3.4
billion of institutional capital.
Unlike India, all major developed economies have an average 7-8%
logistics to GDP cost ratio, presenting a quality improvement
opportunity for WIL providers. As a major step towards developing WIL
sector, GST & industrial corridor developments have already reduced
transport time & logistic cost.
As per Dr. Juran's 'fitness for use' defination of quality, quality or
customer delight is a combination of offering right product/service
features (right location, space, quality construction and customisations
facility) for market share & revenue generation & defect free operations
(faster land acquisition, faster sales, low maintenance cost, zero billing
errors, faster & simplified handovers) to optimise operating cost.
Warehousing demand is largely dominated by third party logistics
companies, e-commerce, manufacturing and retail sector companies and
with reduced travel time & cost, these sectors have been able to
consolidate and operate from larger warehouses, leading to 25%
reduction in inventory level and over 30% increase in inventory
turnover, thus improving profitability. Understanding these sectors and
their customer demand drivers would be essential for warehousing
providers to identify right locations, space requirements & value added
services required for a long term relationship.
Grade A warehousing rentals are 10-15% expensive than Grade B & is
preferred in DEL NH8, BLR & PNQ markets by 3PL, E-Commerce &
Automobile companies. Grade A quality warehouses help reduce
maintenance cost, provide conducive working conditions & build scale as
& when required. Hence faster construction, customisation &response
time are essential to create consistent customer experience & higher
renewal rate.

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On technology side, AI &IoT will enable real time management of supply
chain operations & supply chain networks will be optimised using big
data analytics. IoT offerings would further aid the sector by developing
smart parks, providing real time monitoring & management of supply
chain operations.
Asia Pacific e-commerce sales are projected to increase by a CAGR of
23.4% between FY18& FY22, rising from US$1,798 billion to US$ 4,168
billion, in the process generating robust demand for new logistics space.
Likewise, under Make in India, share of manufacturing to GDP would
increase to 25% by 2025 from current 16% and hence as per estimates,
warehousing space in India is expected to grow between 33% - 35% until
FY20.
With increased demand and competitive rivalry in warehousing sector,
organisations are expected to improve quality standards, create
customer delight, improve & innovate product & processes, benchmark
for industry first practices & ultimately achieve business excellence to
emerge as industry leaders.