Disrupting Material Handling in India Through Digitalization
The crane and hoist industry in India is an extremely complex supply chain challenge. Communication is the driver to success and capitalizing on digitalization will help stay ahead of competition, along with helping to build vendor-to-customer efficiency and confidence.
The material handling industry in India is fragmented, with a large number of players from both the organized and unorganized sectors. Authenticity, quality and transparency, are often areas of concern to customers. Typically, customers tend to order material handling equipment last but require it to be delivered first. In a production environment, an issue with the equipment supplied to them would result in downtime and loss of production. Viewed in the context of a large number of SKUs and customer requirements for customized solutions, the situation is extremely challenging.
Having worked at the leading hoist manufacturer in India for the past 4 years, the question I kept asking myself was, what next? How can the Company leverage their existing capability and adapt itself to the new age manufacturing and customer expectations?
The key component is information. Today information flow from the customer to the OEM, thence to the vendors and back is demand based by emails or phone calls. There is no automatic visibility of the various stages of this process. The OEM requires information for production and delivery planning and the customer requires visibility on delivery to ensure efficient installation of the equipment in their factory. Also, customers may want to ascertain the genuineness of the equipment purchased and on the other hand, the OEM faces an issue of the legitimacy of the warranty claims (did the customer misuse the product or was a faulty product delivered?).
The answer is in digitalization to ensure clarity, trust, transparency and efficiency across the entire supply chain.
On the Supply Chain side, when the equipment is “sold” to the customer, the depletion of the equipment quantities sold from the inventory, triggers a “demand pull” to the manufacturing unit. The production system recognizes the “demand pull order” and proceeds to requisition the required assembly components from the factory stores.
When the factory stores issues the materials to the production line for assembly, the depletion of the components inventory in turn triggers a “demand pull” on the vendors who supply the parts that have been consumed. This “real time” signal to the vendor will help them plan procurement and production schedules. The parts are collected from the vendors in a milk-run system which makes for lower logistics costs and efficient use of resources.
Once the components are at the OEM’s factory, they will be tagged and transferred into their inventories.
When the Factory Stores issues the full kit of the components to production, it will be done with a RFID tag. This tag would be scanned at various stages of the production process to highlight the stage of production completion, until delivery to the finished goods stores or the channel partner or to authorized customers.
Once the equipment is ready, a physical RFID tracker and cellular / Wi Fi data transfer chip will be installed on the product will allow the equipment to be tracked in real time by the customer so they can plan their installation schedule accordingly.
Today’s and tomorrow’s generation electric hoists can have a Usage Data Recorder (UDR) “black box” also installed. The UDR records all operational parameters for a specific time frame. In the event of a malfunction/ breakdown, the UDR sends an alert to the OEM for immediate problem solving. This also helps them know the cause of the failure (misuse by the customer or genuine malfunction) and if possible conduct remote diagnostics.
To make the movement status transparent, the OEM can develop a portal / website / mobile phone app. With the QR code / RFID attached to the equipment and customers will be able to use the new digital platform to check the service requirements of the equipment and schedule maintenance visits and order spare parts. These requisitions will be communicated with the relevant sales channel partner / OEM for resolution. Such a portal / website / app will also enable authorized customers to track the status of their order. This has never been done in the material handling industry in India and is groundbreaking, pushing this customer engagement and information relay to the next level.
It is expected that with such a system to control the entire supply chain (Customer Order to Collection and Supply Order to Payment), there will be an optimization of cash flows (of all companies involved), savings in investments in inventory and improvement in RoI and control / track on time delivery. These new innovations are game changers for the material handling industry in the short and medium term and has the potential to enable the OEM to retain its market leadership.
The question in my mind is what next? Where is digitalization going next? Can the effective use of technology help the company in other areas of communication flow and process redesign? (Words: 795)
This is a really interesting topic. I wasn’t aware of the innovation in this field. I think that the digitization you pointed out in the analysis is circling around the problem, without solving it. To you question what’s next, I think the answer is data. I believe that the issue as pointed out is ordering this equipment last, and expecting it to arrive first. Given decades of data in the field, I would expect someone to predict when the equipment will be necessary based on the type and magnitude of the project, so it can be pre-ordered, or at least be in reach of the customer when needed – much like Amazon is doing now – predicting what you’ll want to order and putting it in a distribution center closest to you.
Interesting topic, Nirav! It really showcases how digitization is transforming every industry, from the glamorous to the more discrete industries like hoist and cranes.
Digitization like this really makes sense from the supply chain optimization side and you point out the ROIs that need to be measured for companies to put these systems in place. The one portion of this chain that I would push back on is the customer side. With the RFIDs and GPS tracking, it will add extra cost to the systems. When I think about how purchasing worked at my previous manufacturing company (I actually bought a hoist for one project!), it was almost completely driven by the lowest price. While you’re absolutely right in that having the equipment there is time critical for the project, price was the main driver. For this to really take on in the market (and thus incentivize companies to take on the investment of installing these systems), the customer must be educated on how much this could save them by increasing their ability to plan and track shipping or maintenance issues early. A problem caught early is almost always cheaper than a problem caught later and this part of the story will be key to it’s success in the marketplace. This article does a good job of showcasing how a potential economic argument could work: https://www.anodot.com/blog/predictive-maintenance-whats-the-economic-value/. Further, to your last question, the predictive analytics that you’ve integrated into the system could lead to power machine learning capabilities that continue to get better with supply chain optimization and maintenance predictions.