The Role of Warehouses
the shift from buffers to vital links
In the past, warehouses have been considered as cost centres which rarely add any value. But that has changed, triggered by the movement of production to lower cost countries, the growth of e-commerce, and increasing demands from consumers. There is an ongoing process, the traditional role of warehouses has shifted and are now seen as a vital link within today’s supply chain. The shift from linear to complex, multi-mode supply chains is driven by volatility, constrained capacity, evolving regulations, changing customer demographics and buying patterns, and increasingly demanding customer and supplier requirements.
As mentioned, there is a shift of customer demographics and buying patterns, significantly effecting their behaviour and expectations on how retailers need to engage with customers. These days, retailers are challenged to become more innovative within their supply chain which results in putting pressure on managers to increase productivity and accuracy, reduce cost and inventory whilst improving customer service by tremendously reduced order lead times. This change, effecting also the supply chain, customer service orientated strategies emerge – the so called seven rights of customer service.
Within an evolved supply chain, customers expect delivery:
• of the right products,
• in the the correct quantity,
• to the right customer,
• at the right place,
• at the right time,
• in the right condition,
• at the right price.
An eighth right of customer service emerged:
• delivery at the right cost environmentally.
In fact, warehouses play a significant role in this evolving process as the delivery of the right goods in the right quantity relies on warehouses picking and dispatching products accurately. Furthermore, the delivery to the right customer at the right place, on time, requires the product to be labelled correctly and loaded onto the correct vehicle with sufficient time to meet delivery deadlines. In addition to that, warehouses ensure that the products leave clean and damage free. But in order to deliver at the right price, it requires a cost-efficient operation that provides value for money.
Referring to the eighth right of customer service, warehouses need to ensure that the supply chain is operated in an environmentally friendly way. That means companies need to have a close look on the use of alternative energies, improved efficiency, waste management and committed staff to meet this new standard.
Warehouses evolve, their role shifts. Traditional warehouses had served as buffer within the supply chain, expecting manufacturers to have vast inventory in stock. Nowadays warehouses have been in the focus of supply chain management playing a major role as vital links within the supply chain.