Rise of mega distribution centres and its impact on logistics

There have been some key triggers in the last five years which have changed India’s supply chain and manufacturing sector. The rise and popularity of ecommerce in the country after internet data revolution, the growth of organised retail in major towns and cities, the implementation of GST which led to the consolidation of small warehouses, have all contributed.

These warehouses being the last touch point before the product reaches the customers, play a crucial role in the entire value chain of the business. So, companies must plan their inbound, outbound, storage and picking activities in their distribution centers (DC) to stay nimble yet capable to respond to black swan events such as corona virus.

On one hand, companies have for too long focussed on Just in Time (JIT) principle of managing their inventory. But they will now, on the other hand, be forced to devise strategies to be able to bear short to medium term shocks that would impair their supply chain status quo.

Companies must be wiser after every calamity and should put robust infrastructure and processes in place to deal with shocks. As the legendary business leader Jack Welch said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

It is therefore important for businesses to be ahead of the curve when it comes to business strategies. mega distribution centers with commensurate logistics are a class that belongs to those businesses being ahead of the curve.

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Logistics and Infrastructure

While designing the best fit solution for mega distribution centers, logistics and its related infrastructure form a critical pillar in the structure. The task of distribution with matching logistics could be simplified to make product’s movement from point A to point B in the most efficient way, i.e., right product to the right location, at the right time, in the right condition, & for the right price. distribution centers should be designed with a focus to meet all those objectives.

What Goes into a mega distribution center

Mega distribution center, by its very nature is the mothership and should satisfy a variety of needs. Therefore, it is a multifaceted and multitasking entity that is designed to perform end-to-end logistics demand for any business.

Some of the attributes of a mega DC are:

It is a large facility typically with an area of around or greater than 400,000 sqft, designed to suit large inbound and outbound traffic at high throughput. Usually, they are situated at strategic locations with good connectivity to mini and mega markets to meet the demand.

Mega DCs normally operate 24*7 and so, the continuity of service and the high volume of operations demand automation solutions such as fully automated material handling systems like ASRS, dense racking systems using shuttles, mobile robots, and advanced warehouse software that track the operations on a real-time basis.

All the above attributes will essentially mean having multiple subsystems that handle material movement within the premises in a seamlessly integrated manner. Mega DCs serve as Mother DCs feeding cross-dock DCs to serve the needs of mini distribution centres.

Largely Mega DCs help in meeting the demand in terms of ease of operation, higher productivity per person deployed, unparalleled operational safety, high throughputs and accuracies. A carefully designed combination of infrastructure, automated material handling solutions and location will deliver a good value proposition to a business in smart supply chains.

Adoption of technology will result in operational improvements of a warehouse, but the key differentiator is in choosing technology wisely.