Warehousing industry needs a makeover – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/opinion/warehousing-industry-needs-a-makeover/article34608162.ece?homepage=true

To stem the wastage of harvested crop, warehouses need to scale up capacity, modernise and be manned by skilled personnel

Foodgrains production in India has come a long way, from a consistent net deficit situation in pre-Green Revolution times to one of surplus in the last few years. However, this increase had brought along the greater challenge of efficient storage.

A look into the warehousing industry reveals that about 90 per cent of the capacity is with unorganised players who typically own/operate warehouses measuring less than 10,000 sq.ft., and who manage with limited knowledge of scientific practices and without much mechanisation.

The country needs to scale up its warehousing capacity to 300 mt, from the current 154 mt, if wastages in the value chain are to be avoided and, thereby, get better returns. While public storage capacities are driven by subsidy policy at the State level, strategic storage, price support programme and procurement drive capacity requirements at the Central level.

With diversified basket of crops produced in India, the need for storage has not only increased but also its scientific management. There is a dire need for private investment to drive up warehousing capacities. Cost-effective operations, connectivity to finance, and process-oriented operations are equally important to develop the commerce behind warehousing.

Dependence on labour

More than three-fourths of the warehousing facilities are not adequately mechanised and thus are highly dependent on costlier labour alternatives which at some places are scarce as well. Regional imbalances in the available capacities also calls for a well-balanced development of capacities.

While the supporting regulations such as quality standards have encouraged private investment flows into the warehousing sector, especially in commodity storages, they underline the need for well-trained warehouse managers who can ensure compliances in a regulated regime while winning the trust of the stakeholders in a cost-efficient manner with the given resources.

With warehouses deeply entwined into the growing logistics chain amidst growing phenomenon of value addition, skill requirements extend from knowledge of raw materials, processed products and packaged semi-processed materials to the value that storage creates to the players in a value chain.

In fact, appropriate skilling includes being able to identify right geography with right connectivity to the value chain — possessing all necessary infrastructure from power to better transportation — and knowing the right technology that may add value across storage functions and stored commodities.

Modern warehousing not only involves the physical warehouse infrastructure but may also involve tracking systems, mechanised handling, ICT-enabled record maintenance, etc. Thus, a better skilled warehouse manager who can adopt modern technology to its fullest advantage besides knowing what kind of human resource he would need to manage other functions more effectively, will prove to be an asset to the warehousing business. No doubt, he is also expected to know and manage the costs of warehousing so that he can help decide on the warehousing charges to meet the budgetary targets competitively and to have a clear understanding of the company’s policies and vision.

Also, a warehouse manager is also expected to coordinate the use of automated and computerised systems, deal with customers, engage in business development, identify talent and participate in recruitment, monitor staff performance and progress, and motivate, organise and encourage teamwork within the workforce. A well-trained warehouse manager can deliver on these more effectively than their unskilled counterparts.

Developments indicate that the agri-warehousing industry is expected undergo a paradigm shift with the Central Government planning to store all foodgrains in modern steel silos by 2024-25. This is likely to require a separate and advanced level of skillsets to manage storage operations. It will involve deeper understanding of the commodity chemistry, fumigation procedures, remote temperature and humidity control, integrated pest management, mold and mycotoxin management, etc. A skilled manager can do a better job in managing silos.

With the lack of skilled commodity warehousing personnel, owing to the absence of any specific skill-development programmes, the industry is seeking the services of people with little or minimal knowledge of warehouse management. In view of increasing foodgrains production and massive scale of modernisation in the field of warehousing, there is an urgent need for a pool of dedicated and specialised workforce of warehouse managers who can effectively handle the complex functions involved. A well-skilled workforce would contribute to the orderly growth and modernisation of the Indian warehousing industry.

The writers are consultant and professor, respectively, at National Institute of Securities Markets. Views are personal.

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