The Edge Factor - Jan 2016

Human behavior tends to migrate to convenience whether it is a customer buying something or an operator on the shop floor. Is e-commerce more convenient than brick and mortar or is it the other way around? What role does ergonomics play in improving productivity at shop floor? Read the two articles below to get a perspective on these.

Contributions by: Chandresh Lachuriya, Ashutosh Kochhar, Neha Uttam, Mayank Kumar, Sahil Kapoor  

 

Why E-commerce companies
are eyeing Brick & Mortar
 

Amazon opened its first offline store last year in New York. Indian e-commerce players followed the hybrid strategy of Amazon. It started with small players and now native e-retailing giants like Snapdeal and Flipkart have also announced their plan to enter into the offline retail space.

As per PwC, Indian e-commerce industry has seen unprecedented growth in the past 5 years with a CAGR of 34%. But it still accounts for only 0.4% of total retail sales. Even with such growth numbers e-retailers have started talking about offline strategy, they believe that even if e-commerce grows with the current pace, brick and mortar would still constitute 80% of the total retail even after 5 years. The irony is, e-retailers are trying to set up physical stores, in other words to enter into the organized retail store industry that has not been profitable for last 10 years.

Why brick and mortar?

E-retailing strategists believe that integration of offline and online retail channels will provide a seamless and differentiated shopping experience. Customers will be able to enjoy the convenience of online discovery and ordering along with faster hyper-local fulfilment of brick and mortar stores. As online platform is poor on ‘trust, touch & feel’, offline stores can be used for demonstrations, pick-up and returns. Snapdeal has already collaborated with ‘The Mobile Store’, Michelin, Luminous & shoppers Stop for the omni-channel platform.

As mentioned by Snapdeal, 77% of consumers browse in stores before making a purchase online and 55% consumers conduct on-the-go mobile research before making a purchase in-store. These trends clearly indicates that integration of both the channels will create a delightful buying experience for the customer.

For companies like Flipkart whose customer acquisition cost is 1150 to 1200 rupees, which is already making losses with the current operations to serve given customer base. Very high return of 25-30% is further eroding their bottom line. Offline stores will bind the customers to check the product before buying, ultimately reducing the returns. It will also serve as pick-up & drop-off (PUDO) location for customers. For an e-retailer like Flipkart, 60% of whose total sales depends on mobiles and electronics, the offline strategy would serve as a blessing in disguise.

The future of retail is still grappling with online-offline fight. Every retailer is trying to test the water by roping itself into hybrid strategy. It is required to blur the lines between offline & online retail, so that both can act as a gateway to each other. It is only after some time the hazy picture will be cleared and winner would be visible.

REFERENCES:
http://www.pwc.in/assets/pdfs/publications/2015/ecommerce-in-india-accel...
http://www.bangaloremirror.com/bangalore/others/E-comm-sites-opt-for-bri...
http://indiatoday.intoday.in/technology/story/online-sellers-will-soon-g...
http://www.livemint.com/Companies/ZzOLs69WlVv7WMpvPRBa9O/After-Pantaloon... http://www.koganpage.com/article/challenges-of-the-last-mile-delivery-in...

Something we found interesting

"Pick-up and drop off (PUDO) locations will drive next stage of improvement in last mile
delivery for E-commerce companies"
 

Read full article at: https://www.dhl-discoverlogistics.com/cms/en/course/technologies/reinfor...

 

Ergonomics in Manufacturing:
Are you looking beyond labor
productivity improvement?
 

Have you ever thought how ergonomics on shopfloor may affect your productivity? Are you aware of health hazards to your fellow operators due to ill designed processes? As Indian manufacturing industry targets to move from a current 15% contribution in GDP to an ambitious 25% by 2025, it is estimated to create an additional 200+ million jobs. In such a scenario, emphasis on ergonomics becomes the crucial task for the managers to maintain the productivity levels.

In low-cost countries like India, S.E. Asian countries, managers find it easier to assign additional labor for a particular task owing to the availability of cheap labor. It becomes a daunting task for them to justify an investment for improving the workplace conditions and automating the tasks. Operators working on various assembly lines are pushed to work for long shift on hostile manual processes. This problem is compounded by lax regulations and lack of awareness regarding ergonomics among the assembly line workers and the management.

The LEAN way: Missed human element

In manufacturing companies, Lean management is typically a part of manufacturing philosophy for productivity improvement. Cellular Manufacturing Systems (CMS), Single Minute Exchange of Die (SMED), Just in Time (JIT) are some of the tools used in lean. Although these tools definitely help in productivity improvement, they tend to neglect the human factors, which in the long run play a vital role in sustaining productivity.

Ford Motors has reduced its assembly line injury rate by 70% by applying ergonomics research to assembly improvements and lift-assist technologies.

Managers are missing the point that the better designed processes will reduce the fatigue level of the operators, ultimately enhancing the productivity of the plant. A study performed by JNTU College of Engineering, Hyderabad on Industrial assembly operators that the operator’s performance was 29% higher on the ergonomically designed workstation. Process designers need to focus on the tools to analyze the ergonomic postures during the assembly processes. Ford Motors has reduced its assembly line injury rate by 70% by applying ergonomics research to assembly improvements and lift-assist technologies. Audi has introduced the high-tech, carbon fiber ‘Chairless Chair’ in assembly, which allows employees to sit without using a conventional chair and thus reduces the strain on the legs of employees. It helps in improving the posture of the employees. “The Chairless Chair combines ergonomics and productivity,” says Mathias Keil, head of industrial engineering methods, Audi.

CGN Global has partnered with a company ‘Virtusense’, which has developed a tool that can visualize & record the real time movement of the operators

CGN Global has partnered with a company ‘Virtusense’, which has developed a tool that can visualize & record the real time movement of the operators. The tool highlights the processes that are not ergonomically suitable by comparing them to the set standards. Companies can thus, improve the overall performance of their operators by designing the ergonomically robust processes.

Indian companies should take a leaf out of their global counterparts, and should start taking steps to drive the ergonomic program. They should adopt a more proactive approach to employee well-being, including improved ergonomics. In fact, companies should pull ergonomic activities into the lean manufacturing umbrella, as both activities are seen as a way to improve productivity, and enhance throughput. Decisions on investment in new tools and technology should be taken keeping the overall benefits in mind.

REFERENCES:
http://www.assemblymag.com/articles/92898-do-ergonomics-investments-pay-off
http://www.assemblymag.com/articles/89033-workstations-is-your-assembly-line-ergonomic
http://www.assemblymag.com/articles/84114-ergonomics-issues-trends
http://www.envirobiotechjournals.com/article_abstract.php?aid=6239&iid=197&jid=2
http://www.interscience.in/IJMIE_Vol3Iss2/41-46.pdf
http://www.academia.edu/9836584/Ergonomic_Design_Intervention_a_Critical_Step_for_the_MSMEs_in_India

Something we found interesting

"How ergonomics analysis of assembly stations not only helps to identify time and motion study but also helps to reduce the fatigue level of assembly workers."
 

Read full article at: http://www.enggjournals.com/ijet/docs/IJET12-04-04-047.pdf

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