Since the advent of the fourth industrial revolution, or Industry 4.0, the world has seen a tremendous change in everyday life activities. As compared to the first, second and third industrial revolutions, the fourth industrial revolution has the digitalisation of work at its core. As a result, the world is moving rapidly towards digitalising everyday tasks that consume a great part of our lives. Automation is the key towards that transition, particularly for the global supply chain processes.
Robotics, AI, IoT, and other emerging technologies have disrupted the supply chain ecosystem. Increased online shopping is one of the reasons for the massive adoption of warehousing technologies in the last few years. Such robotics automation has made supply chains more agile and resilient in terms of accuracy, cost reduction, and time management. As a result, warehousing automation has seen a tremendous increase in the past few years and the demand for smart warehouses is increasing.
According to Global Market Estimates, the global warehousing market is projected to reach USD 562 billion by 2026 at a CAGR of 11.25% as compared to USD 329.79 billion in 2021. The global market is showing impressive progress, but the Indian market is still nascent. Despite this, the double-digit growth witnessed in the last couple of years is quite magnificent. Many factors are responsible for this growing demand for warehousing such as the new and revised Goods and Services Tax laws, and the rapid growth of e-commerce and 3PL sectors.
During the pandemic, a slowdown in warehousing demand was witnessed. However, the long-term demand potential of warehousing properties continues to remain strong. As per Knight Frank’s ‘India Warehousing Market report 2021’ projection, warehousing annual transactions will grow at a CAGR of 19% to 7.08 million sq. m (76.2 million sq. ft) in FY 2026 from 2.95 million sq. m (31.7 million sq. ft) in FY 2021.
Due to the pandemic, many people were forced to opt for online shopping mode and became used to it. Besides the existing rally in e-commerce, FMCG, retail, and 3PL industries, the Government’s vision to push forward manufacturing in India with initiatives like Make in India and Production Linked Incentive (PIL) are enabling warehousing demand from other sectors like automotive, pharmaceutical, cement and steel to grow at a CAGR of 16% in the next five years compared to 15% in FY 2021.
The main goal of an effective supply chain is to reduce inventory levels in order to avoid locking up capital in storage or transportation and to maximise capital productivity. This strategy depends on the smooth operation of the whole supply chain, and this new tendency necessitates technological innovation in the supply chain across all industries. Grade A facilities that are well-organized, have advanced automation and required manpower are more suited to meet modern expectations, particularly for the e-commerce sector. For others to keep up with the innovation, warehousing automation is also expanding at this moment.
According to a market study, the Indian warehouse automation market will reach USD 512.2 million by 2026, compared to USD 86.2 million in 2020. Some of the trends that are likely to facilitate this need for automation are:
- Aggressive Adoption of Automation Technology
The adoption of automation technologies has resulted in massive advantages for warehouses. Also, demand for warehouse management and warehouse control software systems is increasing to extract more value from warehouse automation.
Moreover, warehouse automation has been very beneficial in meeting seasonal demands making warehouse automation a necessity. Also, the integration of automation technologies in warehouses leads to coordination between human workers and robots, extracting additional values for the business and driving high-speed and high-volume warehouse execution.
- Increased demand for AMRs
Since businesses have noticed substantial benefits of warehousing automation, they are yearning for more advanced technologies to adopt to add more value to the businesses.
There is a surge in demand for flexible automation solutions such as Autonomous Mobile Robots. According to an Interact Analysis report, the mobile robot market is expected to grow from $3.6 billion in 2021 to $18 billion in 2025. AMRs have several benefits, such as the movement of cartons/ totes to pick and pack the orders at their designated place, freeing up labour from walking around the facility to pick products. Additionally, the tasks of heavy lifting have been taken over by robots. Tasks which are repetitive in nature also take a good amount of time if performed by humans.
- Growing need for warehousing automation
Given each industry’s evolving and changing warehouse requirements, embracing automation for all warehouse material handling procedures, including product storage, retrieval, and relocation, is inevitable. Adopting such automation solutions returns a fast ROI in the long run, as automation is the solution to meeting rising throughput requirements of industries like e-commerce and 3PL.
Compared to developed markets, the adoption of automation and other technology like warehouse management systems is still quite low in India. However, due to its substantially greater service delivery requirements, e-commerce has been at the forefront of technology adoption in supply chain operations. Therefore, there is huge market potential in India.
However, we anticipate that this trend will also extend to other industries, prompting them to invest more in this area. Instead of retrofitting as was done in the past, industries will think about implementing technology at the design stage of a warehouse.
- Cold chain warehousing gains ground
The main driver of the cold chain industry in India is the expansion of organised food delivery and e-commerce. Food retailing has matured, and the country’s increasing adoption of organised food retail has forced the creation of effective cold chain supply management.
- Accelerated e-commerce demand would support in-city warehousing
The ongoing need to shorten delivery times made in-city warehousing’s debut into the Indian market inevitable. Micro fulfilment centres and nanofulfilment centres are becoming commonplace much sooner than anticipated because of the pandemic’s acceleration of the e-commerce sector’s growth and the introduction of businesses like the Tata Group and Reliance Group into this fiercely competitive market.
Warehousing technologies pave the way for more automated, safe and productive material handling. The usage of various technologies such as Robotics, AI, ML, DL, IoT, ASRS, picking technologies etc. is increasingly expected to become common in warehouses. With rapid advancements, more and more industries are opting for these technologies to stay competitive in the market and extract more value from businesses.