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Role of Central Warehousing Corporation in Warehousing and Logistics

By B.B. Pattanaik, MD, CWC and P.E. Prasad, RM, CWC, Jaipur

Prediction of its demise notwithstanding, the warehouse is alive and kicking.  But it is no longer simply a facility for storing product – at least not among organizations known for their supply chain leadership.  Now it is a flow – through, value adding distribution centre. Warehousing incorporates different aspects of logistics operations.
More importantly, today’s warehouses, distribution centres, consolidation terminals, break – bulk facilities and cross docks are the key to a seamless supply chain. They provide the critical link between the chain’s supply and demand sides. From the supply perspective, they focus on efficient handling, inventory management, product flow, transportation, and delivery. From the demand side, they meet all customers’ specific requirements, with maximum flexibility and responsiveness.

Today’s warehouse can be a potent competitive weapon – even a source of market differentiation.  It not only can increase sales and cut costs, but it also can solidify relationships by helping us consistently exceed customers’ expectations.

Today’s world – class warehouse / distribution centre is integral to the flow of products from supplier to manufacturer to the store – a key to getting the right products to the right place at the right time for the right cost.  In addition, the warehouse can bring about significant improvements in order - cycle time, customer – service lead time, shipment accuracy, inventory - record accuracy, and the cost of moving product.

In sum, while the traditional warehouse stores product, the integrated distribution centre moves it.  And does so in hours versus days or weeks.

Role of CWC in Warehousing Logistics
Consolidation warehouses:
The Central Warehousing Corporation (CWC), with its strategic warehousing services, enables both the inbound movement from origin and the outbound movement to destination to be consolidated into a larger size shipment, which generally results in lower transportation charges per unit and most often quicker delivery. 
Break - Bulk Warehouses
A Break – bulk operation receives a single large shipment and arranges for delivery to multiple destinations. Economy of scale is achieved by transporting the larger consolidated shipment. The break – bulk warehouse or terminal sorts or splits out individual orders and arrange local delivery.

Both consolidation and break – bulk arrangements use warehouse capacity to improve transportation efficiency.  Many logistical arrangements involve both consolidation and break – bulk.
At CFSs / ICDs operated by CWC, three types of assortment take place – cross - docking, mixing and assembly.  These are widely performed in logistical systems.

(i) Cross – docking   (Distribution Centre)
The objective of cross – docking is to combine inventory from multiple origins into a pre specified assortment for a specific customer.  The CFS / ICD facilities provide this logistics service.  Cross – docking requires precise on–time delivery from each manufacturer.  As product is received and unloaded at the warehouse, it is sorted by destination.  Once trucks are loaded with mixing product from multiple manufacturers, they are released for transport to destination. 

(ii) Mixing  (Transit mixing point)
An end result similar to cross – docking is achieved in mixing.  However, mixing is usually performed at an intermediate location between shipment origin and destination (Transit). 
Warehouses that performed in-transit mixing have the net effect of reducing overall product storage in a logistical system while achieving customer -  specific assortments and minimizing transportation cost. 

(iii) Order assembly (Lead Supplier Distribution Centre)
The objective of assembly is to support manufacturing operations.  Products and components are assembled from a variety of second – tire suppliers by a warehouse, often referred to as lead suppliers, located in close proximity to the manufacturing plants / production centres CFSs / ICDs / Dedicated Warehouses provide such logistics services.  Like cross – docking and mixing, assembly serves to achieve a process grouping of inventory at a precise time and location.
Business to Business logistics in CWC
(B 2 B logistics)
Considering the greater advantage of availing B2B logistics, the corporation has entered into MOUs with private container train operators to move container volumes generated from its CFSs based at Delhi, Noida, Loni (UP) to the gateway ports viz. JNPT and Mumbai and vice versa.  This logistics arrangement has helped to capture huge volumes of export import cargo from the hinter lands as well as ports. The corporation has been providing total logistics support under single point contract from the hinter land to ports at very competitive rates.

End to End solutions (E2E solutions)
The Corporation has imbibed the available IT solutions viz. Radio Frequency Identity (RFID) for storing and processing information about a product.  This technology has helped reduction in labour cost, simplification of business processes and reduction of inventory inaccuracies. 

It is also providing cross – docking, mixing, sorting and consolidation facilities at its ICDs / CFSs, on - time movement  of containers to rail side ICDs for onward movement to port stations at very cost effective rates.  This kind of E2E solutions to the customers is helping the corporation to take substantial share from the market.

The corporation is exploring the possibilities of running container trains from Delhi – Loni to Mundra, Loni – Chennai, Loni – Kalamboli as a part of E2E solutions to the valued customers.

Logistic solutions at Container Rail Terminal  - Kalamboli
On strategic alliance basis, the CWC has set up a mega container rail terminal at Kalamboli under PPP.  The alliance partners are providing single point contract services at very affordable rates.  The transportation and handling costs have been reported to be the lowest in this area when compared to the market rates.  Total logistic solutions - consolidation, cross – docking, transit facilities, mixing and assembling are being provided to the customers.

Logistics systems in Central Railside Warehouse
Company  (CRWC) operations
Through CRWC, the subsidiary company, CWC is meeting the total logistics requirements of the domestic trade and industry, especially cement and foodgrains from its 13 establishments which have already become operational across the country.  There has been substantial reduction in inventory received and issued out on the principle of just in time (JIT).  There has been huge savings in transportation cost and substantial reduction in handling charges at multiple points and saving in receipt and delivery time.

Logistics systems in Truck Terminals
The logistics systems are being implemented in operating integrated check post terminals, truck terminals on Indo – Bangladesh Border and truck terminals for customs clearance of exim container cargos in Tamil Nadu.  The multi – faceted and hassle free services being provided at affordable rates have reduced the congestion in ports and on time movement of containers to the ports for shipment. 

Encouraging multi – modal logistics parks
The corporation has already developed rail based inter – modal traffic – handling facility complexes,  comprising container terminals, bulk / break – bulk cargo terminals, warehouses, banking and office space and facilities for mechanized handling, inter – model transfers, sorting / grading, aggregation / desegregation, etc. to handle freight at Loni (UP), Kalamboli (Maharastra),  Under PPP model to facilitate providing total logistic support under single point contract to the customers.

The Corporation is also contemplating to provide such park near Kochi Port for which an MOU has already been signed. 

Value – added logistic services
The Corporation is undertaking value – added logistic service such as labeling, assembly, customizing, packing, bar – coding, order picking, reverse logistics, simple storage, distribution and order picking, quality control and testing of products, to add value to the logistic chain.

The Government’s policy to invite the private sector to build logistics parks and free trade warehousing zones (FTWZs) is one the most important drivers of growth in warehousing in India today. 

The CWC has developed state – of -  the – art warehousing facilities, multi modal connectivity and services pertaining to domestic and EXIM trade at Noida, Loni (UP), Kundli (Haryana), Kalamboli (Maharastra), Mundra (Gujrat), JNPT (Maharastra) and have reached new heights in providing total logistic support to the trade and industry.

Warehousing has changed dramatically over years in India with increased emphasis on infrastructure improvements and development of peripheral supporting mechanisms.  However, a significant amount of effort is still required to make it efficient and cost effective.   

Govt. intervention - Strategy for developing warehousing & logistics sector
The logistic sector is relatively under – researched in the country, and as a result, there is a knowledge gap in terms of sector competitiveness, service port folios and key market participants.

With the growing development of ports, postal services, railway and industrial corridor infrastructure, it is interesting to see the linkage of logistics and warehousing with these sectors.

Warehousing activities account for around 20% of the total Indian logistics industry and have tremendous growth potential.  This market segment is estimated to grow from USD 20 billion in FY08 to around USD 55 billion by FY11.

Demand is very strong in the sector, and requires large investments and expansion initiatives made by logistic service providers and warehousing organizations.

The market is estimated to grow at a rate of 40% per annum.  The government’s 11th Five year plan targets warehousing capacity of 110 million tones by 2012.
The competitive landscape is dominated by state – owned organizations, although private participation is also growing significantly.

Indian companies today are facing major challenges in competing globally due to high logistic and warehousing costs.  Getting the right amount of goods at the right time and at the right place is extremely vital in current market dynamics.  Indian companies need to be more aggressive towards implementing world – class technologies.

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