How Industry 4.0 solution can be incorporated in factories for effective inventory management?
Physical inventory is actual counting of all the materials in raw material store, semi-finished stores, shop floors, finished goods stores of the factory. Physical inventory audit is the statutory requirement for Internal Control and tax compliance and is mandatory for the companies. It has to be tallied with the books. The inventory audit is a big process and may take place – quarterly, half yearly or annually. It takes a big team to verify the systems data reconciled with physical data, which needs to match and the final report needs to be shared with the company auditors.
Conventionally, based on the volumes it takes 3 to 5 days for the inventory audit process to be completed and consumes a good time, money and resources to accomplish it. With Industry 4.0 solution, the inventory audit process could be completed in 1-2 days.
In an interesting recent case study, application of Industry 4.0 for physical inventory in a manufacturing set up helped OEMs to increase efficiency by 70% and save time by automating inventory auditing by 60%.
The case study proved that Industry 4.0 features can sync more than 50,000 items within two minutes. It can be well integrated with the running ERP of the client. The data can be accessed from any Android phone. The item code and location could be validated in an off-line mode. Manual efforts of tag writing and register maintenance could be brought down by 100%.
The physical inventory administrative time could be saved by 80%. The item, location selection was 100% accurate through online and off-line system. Bar code/OCR scanning of item code, location further reduces data capturing time.
The case study proved that a company of Rs 500 crore turnover can save up to one shift loss with the application of Industry 4.0, which saved the company a production loss amounting to Rs 15-20 lakhs.
In a non-automated environment, the audit happens manually through data entry. Many a times, hand writings become unreadable and result in a lot of errors during reconciliation. Automation achieves accuracy, saving costs, time and human effort.
How is Supply Chain and warehouse management evolving in the country?
Modernised Supply Chain and warehouse management system today is negligible in the country and has got a great growth potential. India is far behind many of the emerged and emerging economies as far as upgraded Supply Chain infrastructure is concerned. Amazon is the first thought leader who has brought this huge change in supply chain management by breaking all the earlier assumed notions. Amazon demonstrated that it is very much possible delivering goods to regions not thought to be accessible earlier and completing deliveries in record time. Whatever was thought to be non-achievable, Amazon proved all wrong.
Following Amazon’s success there is a great mindset change in Indian companies. They are realising that with the right thinking, logistics management and preparation, deliveries can be efficiently managed.
Amazon and Flipkart’s success have even transformed the courier companies who have reduced their average delivery time from 7-10 days to 2-3 days at the same costs.
Warehousing was among the last things in the minds of Indian OEMs and manufacturing companies. Success of e-commerce companies, have changed the tide.
What is the level of automation as far as warehouses are concerned in the country? What is the potential for growth here?
The level of automation in warehouses is negligible, may be around 5% warehouses are mechanized and have technology implemented. Only the big e-commerce companies are fully automated. Robotic automation, where robots are used to handle materials, is none in the country. Automated warehouses using automatic identification using Bar code and QR code would be 5%; semi-automated warehouses using end to end WMS software for receiving and dispatch would comprise of 20%, which will track inventory from the dock right till the exit, but will not be able to locate your product. The rest of the warehouses (around 75%) use manual processes to track inventory. They may be using some primary level software where only the Goods Received Note (GRN) and Invoices are prepared. However, there will be no tracking of – inventory within, the location, the back shop control, or the FIFO (First In First Out) control in true sense. Here lies the biggest challenge as well as the opportunity.
Some of the biggest OEMs and FMCG majors (principal companies) in the country are yet to fully automate and connect all their warehouses. Their third-party Logistics players (3 PLs) are unevenly integrated. So far, every company looked at saving costs on warehouses, without any allowance for system upgradation. Even 3PL outsourcing was with primary focus of saving costs.
However, off-late, the rising labour costs, increasing supply chain pressures, short delivery time, and competition from e-commerce companies, all have resulted in Indian OEMs and manufacturers giving a critical significance towards warehousing automation. The principal companies are now giving preference to 3PLs who have better IT system. In a few cases, the principal companies are recommending common software products across their 3PL agencies, ensuring a particular quality standard across their 3PL platforms ensuring a uniform quality data output.
Principal companies have begun realising that his customers, distributors and retailers are going to rate him on the basis of his systems, processes, and efficiency. He is becoming aware about the benefits that data analytics brings forth. Ware house management is going to be an important focus area for every brand. Every warehouse needs to be connected, which is the need of the hour. There is a great scope of growth here.
What are the services provided by Vritti Solutions in the area of factory and warehouse automation? What are your USP vis-Ã -vis competitors?
We provide Industry 4.0 solution for factory and warehouse automation using AI, ML and IoT-based technology. Our solution is end-to-end and customised based on the client’s requirement. I come from a core manufacturing background, having the experience of working with SKF for 13 years, which helps our team to develop a whole solution framework for any client-related problem.
Our systems are built on our complete ERP suite, which has end-to-end functionality. We can integrate any application to machine. We customise our solutions based on the functionality of the client as every factory or ware house can have different scope of operation.
Being an Indian company, we understand the technical requirement and vulnerabilities of companies manufacturing in the country from a grass roots level. We compete with all the leading multinational and Indian ERP software and give best service at competitive rates. We give the perfect ROI for our clients.
What is the level of tech penetration in manufacturing as far as SMEs are concerned? What is the scope for improvement?
A majority of the SMEs will have to be ERP compliant before adopting new age tech such as Industry 4.0. For Industry 4.0 Factory solutions, we are focussing on companies of the size of Rs 500 crore or more, who already have system such as ERP and software, which could be integrated with machines. In the next 4-5 years, we see a strong potential from mid-size and big companies.
How do you see the warehousing automation space 5 years from today?
In the next five years 100% warehouses in the country are going to become digital or IT enabled. As logistics would play a big role in a growing economy like India, every company will invest in this area. A large chunk of the costs in the manufacturing sector is borne by the logistics space. Cost saving has to be done in the space and automation is the only answer to it.