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Riding on IoT and smart analytics, the Indian MHE sector is sure to witness acceleration

Riding on IoT and smart analytics, the Indian MHE sector is sure to witness acceleration

by Anil Lingayat, Executive Vice President  and Business Head, Godrej Material Handling

The Covid-19 pandemic threw all industries and sectors in a tizzy but most sectors are well on their path to recovery. If one looks at the December 2020 Purchasing Managers’ Index (PMI), the manufacturing sector seems to be moving in the right direction as companies in the industry step up production and build up on inventories. The PMI for December was at 56.4, slightly higher than November numbers and above 50 for the fifth month in a row which is an optimistic sign.   

While recovery is imminent, the pandemic has brought forth the need for manufacturing players to rethink everything from their product portfolio mix to supply chain mechanisms, from sourcing to stocking and last mile delivery, to meet changing customer preferences.

This positive trend for manufacturing also signals good news for the Material Handling Equipment (MHE) industry which has a more or less directly proportional relationship with the sector.

However, much before the pandemic, the boom in the e-commerce segment, which is touted to grow into a USD 200 billion market by 2026, has given a significant boost to the MHE industry with growing demand for warehouses and therefore material handling equipment. Further, the Government of India has picked up pace on the Government e Marketplace (GeM) initiative that is already changing the procurement processes of government ministries and departments, and public sector undertakings - another shot in the arm for MHE.

In the post-Covid era, manufacturers will focus on core competencies

Given the amount of catching-up that manufacturers across the board need to do in the post-Covid era, it is likely that non-core activities such as logistics that are crucial nevertheless will witness a significant amount of outsourcing to specialized third-party logistics players (3PLs). The pandemic has further cemented the need for manufacturers, big and small, to resort to e-commerce as a key channel for distribution. All of this has resulted in a horizontal growth of warehouses and turned up demand for MHEs.

Indian MHE industry needs to catch up

The global MHE market is expected to grow at a CAGR of about 5.4% to rise to USD 320.90 billion by 2027. The Indian MHE industry is at least five times smaller than its China counterpart. Further, since China is an OEM market for several international MHE players, especially for forklifts and small warehouse trucks, Indian players find it challenging to stay competitive in the Indian market. Manufacturers on the other hand are demanding the same quality at competitive prices.

Paucity of specialized MHE part manufacturers as well as a fragmented ancillary and spare parts industry further compound challenges for the industry which already faces a dearth of trained labour for operating equipment.   

The hirer market, ie, companies that purchase MHE and lease them out to manufacturers, is highly fragmented as well, and requires consolidation. 

IoT and automation can be India’s differentiator 

The global MHE market is already witnessing a massive shift towards automation and optimization through adoption of cutting edge technologies. Manufacturers and warehouses in India still, to a considerable extent, continue to run on traditional technologies which needs to change, fast.

Indian MHE players need to come together to arrive at benchmarks that will set the standard for the industry, going forward. At Godrej Material Handling, for instance, safety of equipment and operators remains the most crucial parameter when designing and building equipment. We have been investing in IoT to create not just advanced equipment that optimize efficiencies but also vehicle monitoring and management systems that will help track and manage material handling fleets in real time right from equipment health and fleet utilization to evaluating safety and security parameters.

Globally, the MHE industry shows promising signs of growth and India can definitely reap the benefits of this by investing in automation and IoT to become preferred partners for manufacturers.  

 

 




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