One of the main concerns for Agri businesses in India is the infrastructure for storage of perishable products and traceability of items. Speaking of warehousing, lets discuss the storage methods and processes that help the warehouse to not only save on wastage and spoilage but also by enabling process data capturing and analytics.
The context in discussion is of small warehouses that can be found in and around urban areas and fulfill the urban demand of Agri products. Typically these warehouses can range from 5000 sqft to 15000 sqft in size. The products could be around 50 SKUs of fruits and vegetables, 100 SKUs of staples.
As an example, let’s consider a warehouse of 1000 sqft dealing with vegetables only. This warehouse is not equipped with a cold storage, cleaning and packaging machines but has basic standard storage infrastructure comprising of standard size crates, pallets to arrange the crates, fork lift to move the pallets, standard weighting scale and grading tables. It is also has dedicated three docks for receiving, fresh item dispatch and waste dispatch. This warehouse aims to supply best grade products to retailers and has basic processes required to deliver services levels i.e. FIFO system, pest control, grading system, dedicated storage areas for each item etc.
Such a warehouse has many a problems to deal with; labor issues, spoilage, daily reconciliation etc. Now, let’s talk about traceability of the product which can enable a better FIFO system and shrink wastage thereby adding to the revenue margin. Take one of the SKUs, tomato, which has an average life of 3 days (at room temperature) as A grade after it is moved from farmers land (assuming only non-ripe tomatoes were bought). The fact that tomatoes have a short life and are very sensitive to temperature, storage and transportation conditions make it an interesting case for this exercise. The diagram below indicates the basic process for warehousing tomato:
The only thing that could go wrong in this process is at the stage of grading and storing. Grading of tomatoes is based on two aspects i.e. size (small, medium, large) and age (one day old: non ripe green colour, two day old: semi ripe pink-orange colour, three day old: ripe red colour, four days old: over ripe).
As simple as this matrix looks, the reality is quite complex. When the material is received, a tray can contain a mix of tomatoes from any of these grades; that’s the reason grading is followed by material receipt. Moreover a tomato will rarely belong completely to one of these grades i.e. a tomato can be half red half pink, or half pink half green or may be slightly rotten or damaged during handling and transportation. This situation demands that the worker should be trained enough to take a judgement call. This happens because even if the tomato is purchased as non-ripe green, it has to be transported and usually transportation happens via trucks or lorry. Tomatoes are very soft so they have to be loosely stuffed into the crates and transportation conditions are such that any products usually have to endure “higher than storage” temperature and constant vibrations due to lack of good roads and cold chain. This accelerates the aging of products. A four hour journey can result in an equivalent aging of one day. That’s about inward logistics but the same can also happen in outward secondary logistics, which could be around 2 hours and can convert a certain percentage of product from A to B or from B to C grade. So the safest section of the above matrix is the A grade i.e. two day old pink orange tomato. Aim should be to maximize the inventory of grade A and minimize any inventory of tomato more than two days old.
If we know the grade material, age and quantity stored specific crate, then we can make an informed decision about purchasing and moving the product to the market or to a different grade area (One rotten apple spoils the whole basket). It is also very important to move the best A grade within 32 hours of identification. This can be done by tagging passive RFID to the crates, as there are concerns with active RFID technology. Active RFID can be quite expensive and it requires a lot of expertise to implement and maintain. Secondly, the loss of single RFID crate chip can pinch your pocket badly.
The following process diagram indicates warehousing for tomatoes only:
Once stored correctly, the right quantity and quality can be extracted quickly from the storage area. This will increase efficiency and speed of order fulfillment. This process can be enabled by tagging crates with passive RFID labels. Passive RFID labels are easily available, cost effective and can be easily replaced.
We will need three RFID scanners, one each for receivable, grading, and indent/dispatch area, all connected to the system, labels with crate numbers and labels for product classification. The tomatoes can be stored in crates of different capacity i.e. small 10kg, medium 20kg, large 30 kg.
Assuming we have crates of medium size only, three products X, Y, Z, two vendors V1, V2 and two customers C1, C2, the following labels would be needed in separate sections of process:
The process of this RFID system is as follows:
1. Receive material at the receiving dock.
• Scan for which product you are receiving, type of product, location and crate number.
• Convert to your warehouse crates, weigh the crate.
2. After receiving, crate is moved to grading area.
• After grading material, it is moved to crates identified for storing.
• Scan the crate for type of product, size, grade and the storage area it is moved to.
3. For fulfilling the demand we pick the material.
• Scan for product, size, grade, location and then dispatch.
Additionally material can also be moved from one storage area to another and be accounted for. The reconciliation process at any point can be captured. Movement to wastage can be accounted for. It it important to note that there are two kinds of RFID labels. One is process related, that can label on a board in different areas as per the above scheme and the second are the labels tagged to the crates. Labels on board will never move out of the warehouse but crates will. A sample of the raw data generated through this process is shown below:
The information will be in the form of code, therefor the Master Data for area, product, customer, size, grade etc. will need to be maintained. This information can be utilized in the following ways:
- Process monitoring and improvement.
- Dashboard creation (Inventory Projected to Warehouse Layout)
- Inventory planning and management (e.g. ABC analysis, turns calculations)
- Purchase planning
- Reduction of spoilage, pilferage and theft.
- Reconciliation and accounting of crates material and other equipment’s.
- Vendor performance analysis.
Deviations from process like cross docking (i.e. moving material directly from receivables area to dispatch area) can be considered as a special case. Any adjustments should be recorded as remarks or entered manually. When followed properly, robust data for accounting and analysis can be maintained. This can be further enhanced for specific cases such as different size crates created, crates partially filled, packaged goods to be accounted for etc.
Watch out for the follow up blog, which will highlight how this infrastructure model can help with logistics management.
This blog is authored by Sekhar Rangam, Analytics Consultant at BRIDGEi2i Analytics
BRIDGEi2i provides Business Analytics Solutions to enterprises globally, enabling them to achieve accelerated business impact harnessing the power of data. These Analytics services and technology solutions enable business managers to consume more meaningful information from big data, generate actionable insights from complex business problems and make data driven decisions across pan-enterprise processes to create sustainable business impact. – To know more visit: http://www.bridgei2i.com
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