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Coign Consulting signs up as Supply Chain Consulting Partner of India Logistics Expo and India Supply Chain Summit.

'Make in India Week' by Shri Narendra Modi ( Prime Minister ) invites Mr.Arif Siddiqui, Director of Coign Consulting.

Arif Siddiqui, Founder & CEO of Coign Consulting talks about "Pre Occupation Site Audit - The Next Best Practice" -SCM PRO.

Arif Siddiqui, Founder & CEO The power of integration and need for caliberation.

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Awarded as the Best Supply Chain Consultant in India in the year 2015 by Supply Chain Management Professionals.
"Coign Consulting has been awarded an NSIC-CRISIL rating of MSE-3. The rating MSE-3 indicates "Good credit worthiness in relation to other MSE's".

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FIRSTCRY.COM

Mother Warehouse for South India distribution [1.8 Lakhs Sq. Feet. of built up area


Overview

Firstcry.com is a leading eCommerce company in the field of baby care and related products. They supply to a wide variety of entities; from owned retail outlets to various institutions. Prior to starting operations in Bengaluru, they were servicing pan India requirements through their large mother distribution centre in Pune, Maharashtra.


Business Challenge

  • Identification of ideal storage system which could optimally accommodate more than 2 lakhs SKUs in their respective volumes.
  • Identification of the ideal pedagogy of storage of the SKUs such that they can be efficiently put away and picked, at runtime.
  • Identification of new and effective methods of picking, sorting, consolidation and dispatch to fast pace the order fulfilment rate.
  • Identification of optimal mix of human efforts, mechanisation and automation to complement the dynamic nature of the business and the fast-paced backend operations.
  • To seamlessly integrate the various processes, related to man, material and equipment movement, inside the warehouse to the existing and new infrastructure, such that the intra-logistics layout complements the business at the time of peak season.
  • To make the environment human friendly for maximum productivity from the human resources.

The values we added

  • Multi-tier Shelving System of Ground + 3 levels [4 Levels] was designed to accommodate 8the varied SKU types, which ranged from a nipple to a full-sized pram.
  • The shelves were designed by figuring out the best possible shelf-dimensions which could accommodate the SKUs in their respective volumes, with the least amount of wastage of volumetric space. The storage system, as a whole, was designed to have quick and efficient man, material and equipment movement on each of the levels. The less the criss-cross of man, material and equipment movement, the less is the possibility of mixing of material and faulty put away and dispatches, and accidents.
  • The put away and picking individuals were equipped with trolleys to do an efficient put away and picking. These trolleys were designed by Coign to integrate with the storage system. The entire process of transferring the material picked of single, multiple and institutional orders from across the levels to a particular point of consolidation and dispatch was automated. Each of the levels of the storage system was functionally divided into operating zones from where the material picked was collected and transferred to the consolidation area, without any human intervention. The consolidation area was equipped to incorporate and conduct a dynamic put to light and pick to light operation. This entire system is designed to service more than 2,500 orders per hour. This system is supported with packaging set-up of more than 120 packers, with a design provision of further extending it. The packaging set up is integrated with the dispatch process in such a way that the packaging throughput is matched with the picking throughput with the help of semi-automated & automated dimensioning and weighing, and labelling machine integration at the point of dispatch. The benchmark for inward and outward vehicle TAT is set to a maximum of 1 hour* (*the TAT varies as per the vehicle on hand). The reverse intra-logistics of empty bins and pallets to their respective locations is also designed to well integrate with the on-going simultaneous processes. The packaging material, rejected material and scrap management processes are also studied and facilitated with their own storage and replenishment resources and mechanism for an efficient throughput.
  • All the processes were studied and evaluated against making them mechanised or automated or human effort driven, in terms of cost, flexibility and most importantly –Necessity. The effort was to keep the human intervention as limited as possible but to an extend where the cost of mechanisation / automation did not overwhelm the cost of human deployment. Coign ergonomically designed the various processing stations, like Quality checking stations and packaging stations, make the process very human effort friendly. Similarly, the various put away and picking trolleys were also designed to complement the individuals involved in these processes. The overall environment is designed to complement the various resources involved in the distribution operation.
  • In the case of Firstcry.com, the warehouse is rented. The warehouse building was not particularly designed to house an ecommerce operation. Thus, it was a challenge for Coign to integrate the existing infrastructure with the processes and to design the new intra-warehouse infrastructures in such a way that they seamlessly integrate with the existing building. The entire external and internal layout design was a tough challenge in itself, given the constant nature of the building on hand. Coign designed the completed external layout plan for efficient inward and outward vehicle throughput, intra-warehouse logistics layout, process automation, Electrical, Fire prevention, safety and fighting design. And designed these in such a way that they not only serve the purpose but also integrate with each other in a way that complements the overall process.
  • The executive staff was equipped with corporate-like office facilities, the warehousing operations staff was provided with an environment where adequate and necessary air changes, temperature, lux levels, operating stations & equipment, refreshment centres and safety was maintained.

Insight views of the facility-3D View.

INDIA’S FIRST E-COMMERCE WAREHOUSE WITH OVERHEAD CONVEYORS & SORTERS (AUTOMATED SYSTEMS) DESIGNED BY COIGN CONSULTING.
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By ARIF A SIDDIQUI
Founder Director, Coign Consulting

The power of integration and need for caliberation

Logistics costs to the economy are variously estimated at around 9 per cent of GDP for the United States, 11 per cent for Japan, 12 per cent for France and Korea, and 18 per cent for China. Cost estimates for India do not appear to be as robustly calculated, and various studies have provided a range of 12 to 15 per cent of GDP. The high level of coordination required between the many fragmented and specialized participants in the logistics industry in India is sometimes cited as a cause for the relatively high proportion of logistics expenditure in GDP. In one panel study, it is noted that a 0.5 per cent decrease in logistics costs (relative to GDP) leads to a 2 per cent increase in trade and a 40 per cent increase in the range of products that are exported out of a country.

The current state of the logistics sector in India can be crudely characterized as largely unsophisticated, lacking in organization, somewhat neglected by policy, and hamstrung by a shortage in skills. This has manifested in inefficiencies of the sector.

The logistics firms are moving from a traditional setup to the integration of IT and technology to their operations. The industry as a whole is moving to the positon where they (dream to) provide end to end supply chain solutions to their customers.

The competition to the organized players is from the unorganized markets. The market, as a whole, is highly fragmented and dominated by local logistics service providers.

Due to Government policies with respect to Infrastructure development, FDI in logistics and the implementation of GST, it is estimated that the Logistics cost will be reduced by 20% in the next 4 to 5 years.

The analysts forecasted that the Third-party Logistics market in India will grow at a CAGR of 13 to 15% over the period 2014-2018 and will be worth US$ 270 billion by 2020.

The industry has generated employment for 45 million people in the country in comparison with the IT and ITeS sector which employs approximately 4.3 million people

Key Drivers to India’s Economic growth and Infrastructure spending are -

  • Increasing FDI
  • Implementation of GST
  • Improved Market reforms and regulations.
  • Growing Consumption levels
  • Outsourcing of manufacturing activities – Hi Tech, Auto, Pharma, RMG, Industrial Equipment, Retail, e-commerce
  • Entry of Global organized players in Retail and eRetail
  • Increased market sophistication and changing consumer expectations
  • Pressure on managing cost more efficiently

Customerswill demand 3PLs to complement their warehousing capabilities with national distribution capabilities and “integrated” services will become important for differentiation.

Many companies will face a situation of Increasing customer demands exceeding own capabilities & service range

  • Time bound distribution capabilities will increase in demand – Companies outsourcing the transportation element will face challenges due to Transactional based Customer-Vendor Sourcing Model
  • This may lead to loosing critical mass in key segments

The Challenge though will be to get -

  • FTL and LTL business contract with large value sensitive customers.
  • Good spread of industry
  • National Load spread and return freight balance.

Regional and National distribution capabilities will gain prominence.

Acquisition of small and medium transportation companies will happen.

Choices will be between Traditional transportation models like –

3PLs Hub and spoke model

Large fleet ownership

And emerging models like -

  • Virtual Transporter Model - like a transport exchange
  • 2 driver model
  • Relay Model - Changing drivers on the go.

We are yet to test the scalability of some of these emerging new-age full-truck-load models and to what extent they address the challenges faced by traditional players

The biggest challenges impeding scale up of organized players in India are-

  • Driver shortage
  • Return Load Imbalance
  • High Cost of Asset Ownership
  • Pricing (pressure especially from unorganized players)
  • Poor execution/ management

Looking at GST and its implications on the supply chain strategies

  • This will enable a reduction in the number of warehouses and allow companies to focus on building fewer, larger and more strategically located warehouses. Regoinal nodes will be more popular.
  • This will help in bringing down the cost and improve service levels through economies of scale and will also build higher service pressure on transportation / distribution.
  • Supply chains will become leaner and efficient in terms of Distribution and fulfillment centres. Distribution and sourcing decisions will be taken on the basis of operational efficiency rather than tax avoidance mechanism.

The whole logistic environment will change dramatically – trans boarder distribution capabilities will become key.

There is another phenomenon which is rapidly changing the logistics landscape. This phenomenon is the penetration of ‘technological innovation’ in almost all areas of logistics. 

Technology impacts businesses looking to condense the supply chain waste of time and resources, bringing in efficiency in road transportation, rural delivery, logistic infrastructure or the urban first and last mile delivery scheduling. Almost all areas of logistics has technology impacting the ‘business as usual’ — compelling businesses to gear up and get prepared to embrace these changes.

Moreover, in anticipation of the rollout of GST, significant re-organization of warehousing space in India is in progress. Large hubs are being developed in key areas, coupled with smaller spoke warehouses nearer to production and consumption centers. This re-organization is leading to significant investment in modern warehousing coupled with transshipment infrastructure and technology to manage them. Technology used in the warehouses varies from warehouse management systems to warehouse automation and control systems. The expansion of e-commerce around the world has been driving change in fulfillment requirements, which requires greater speed and responsiveness compared to traditional replenishment methods.

Customers today are increasingly using multiple channels to buy products, ranging from retail stores to e-commerce platforms. Thus, growing complexity and dynamism of supply chains require increasingly advanced Information Technology solutions.

With such changing and evolving logistics opportunities, I see a huge scope for 3PLs to develop in-house logistics and distribution capabilities in India.

New markets like Cold Chain, Chemical Storage, Hazardous Material Stores and Pharmaceuticals storage are good areas to evaluate and quickly build capabilities for.

In this today’s world of rapidly changing landscape in collaborative, cost centric and digital supply chain management. Cross-sector best practice to cut costs whilst meeting customer expectations with the focus on collaboration and digitization.

It is going to be about advanced analytics and machine learning!

Of all the technological advances improving daily life, advanced analytics and machine learning in supply chain has perhaps flown under the radar a little – outside of technology circles at least. Most people remain blissfully unaware that sophisticated machine learning algorithms are working behind the scenes of many consumer technologies that most people know and use every day.

It is an exciting time to be a Supply Chain professional. The very technologies that are driving so much of complexity are also providing a new set of tools to increase awareness of what is happening in the value chain and improve our ability to respond. We have seen how Digitization of the Supply Chain allows for increased responsiveness. We see a deeper, more customer centric approach driven by predictive analytics. We continue to see the global supply chain transformation into a strategically leveraged network of local supply chains. The new set of skills required for the next generation of Supply chain leaders and operations teams are slowly emerging by the virtue of their integration to the new environment.

The Supply Chain sector is positive and awaits the opportunities emerging out of the government policies with respect to Make in India, 100% FDI in various sectors of Manufacturing & Service, Skill India development initiatives and encouraging the youth through the Start-up India policies. Implementation of GST, recognition of the logistics sector as an industry, proper zoning of the land for transport and logistics hubs at strategic nodal points across the country will remove the impediments that come in the way of the growth of this sector.

Private Investments in modern logistics park to build efficient and effective infrastructure aligned to the processes and functions of our distribution centers is the next wave. This wave will clear the path for automation as Smart Facilities / buildings will develop, integrating green building concepts for sustainability as in considering the environment and the human, with man material flows and machine paths in mind.

We now enter into the Second machine age, Piles to Pallets, Pallets to boxes, Boxes to Pieces, Pieces to eaches and now eaches re-packed, couple by “I want it now” attitude are creating huge challenges. The introduction of disruptive technologies, digitization, smart machines, robotics are changing the way we do things. The convergence of Smart machines and algorithmic business machines doing business processes are thoughts to dive in.

Capacity optimization, speed and efficiency have taken the center stage. With the increasing growth in transaction volumes and diversity in the chain, it is imperative for companies to be continuously innovative while remaining lean.

Recent years have seen a global shift towards e-Commerce, with India being no exception. The country has seen remarkable growth in online retail activity, supported by rising internet penetration, the immergence of numerous payment options, better value products, increasing confidence in online payment processes and evolving consumer perceptions. As a result, the e-Commerce industry in India is estimated to be around USD 22 Billion and is forecast to develop into USD 100 Billion by year 2020. This is providing opportunities for investors, consumers, developers and logistics players alike.

It is therefore imperative to calibrate all that we have created or invested in such that we maximise the out put, increase productivity which is a product of efficiency and effectiveness.

With changing environment, Key Performance Indicator also need to be augmented. The challenge is to come up with new SLAs that well help view the services and business from a new perspective and to define & implement a robust performance measurement and analytics system so as to take corrective action and continuously raise the service level bar.

The Use of modern transportation models, optimum path routing and develop warehouse operation competency and competitiveness with focus on velocity, safety & accuracy will be the key differentiator.

Networks and transportation hubs & distribution centres footprints need to be calibrated to perform in a synchronised manner.

Development and calibration of Information technologies to drive competitiveness continues to remain a key & critical success factor in the Supply Chain operations and the overall eco-system.

Businesses have started recognising the importance of Optimum layouts, streamlining processes, identifying the right automation and mechanisation systems, aligning infrastructure to the processes and throughputs that need to pass through the infrastructure.

This will help in developing competencies and capabilities in operating complex SOP’s, understanding and use of technology by professionals and promote continuous measurement and improvement in all the links of the chain.

With growth in outsourcing warehousing operations and distribution management through 3PL’s the calibration process will help in transforming the 3PL’s from generalists to specialists and will open new avenues in industries.

Calibration will involve taking a holistic and comprehensive view to integrate and deliver optimum productivity, increased accuracy, enhanced efficiency and high impact effectiveness; which will create benchmarking standards in the distribution processes in particular and industry at large.

Together, lets create the New Wave.

Thank you.

Coign Consulting is a Supply Chain Infrastructure, Warehouse Masterplanners and Intra-Logistics layout design company with its offices in India and UAE.