The Warehouse Evolution
a complex transformation that improves your operations
Warehouses are static units of which role it is to match product availability to consumer demand. Hence, it focuses on facilitating the movement of goods in the supply chain from the supplier to the consumer while meeting the demand in timely and cost-effective manner. That’s why warehouses are primarily seen as trans-shipment points where all goods received are dispatched as quickly, effectively and efficiently as possible. They are not there to store goods ad infinitum, otherwise it might result in dead capital. Customer expectations require new technologies and distribution solutions which is why warehouses evolved to fulfillment centres in order to ensure the expectation of on-time, in-full, damage-free deliveries is met. That requires a great investment in technology and automation with companies building warehouses and fulfillment centres closer to the point of need. Technology and automation will play an increasing part in warehouse operations in the future; there is already a significant shift towards advanced technology such as vision systems, full automation and robotics.
Studies (2016) predict that by 2018, 30 % of all new robotic deployments will be collaborative robots, and that 45 % of the top 200 global e-commerce and omni-channel commerce companies will deploy robotics in their order fulfillment, warehousing, and delivery operations. This results in an increasing demand for chief robotics officers.
Nevertheless, basic warehousing processes have remained relatively the same over time – receiving goods into the warehouse, processing orders, replenishing, including some value-adding services, and dispatching products. Advances in warehousing grow accordingly to the increased use of technology and automation, speed and accuracy, improved performance measurement and the effective management of resources.
A report (2017) on global e-commerce logistics estimates that the global e-commerce market grew by 18.1 % in 2016 and forecasts a 15.6 % compound annual growth rate over the next five years. Further, it’s predicted that by 2019 e-commerce will account for nearly 20 % of UK retail sales, presently they are estimated at 15 – 16 %. Hence, warehouses play a major role within supply chains and will continue to do so for the foreseeable future, although these warehouses will appear in different guises.
Of course, growth in fulfillment centres for e-commerce, for example, is certainly changing the warehousing landscape as finished stock needs to be held as close to the point of consumption as possible to reduce ever-increasing transportation costs and to meet increasingly demanding customer delivery requirements. This results in a transformation of many warehouses into cross-dock and trans-shipment centres, fulfillment centres, sortation and consolidation points. In addition to that, some retailers are also utilizing their stores as fulfillment centres to further enable them to meet exacting delivery lead times.
Now, items can be dispatched from warehouses, to distribution centres or fulfillment centres, directly from suppliers or from the stores – whichever is the nearest point to the customer. That results in a demand on managers to have a greater understanding of the various roles that warehouses can fulfill and how these affect the business and the supply chain as a whole. These requirements put pressure on managers to increase productivity, reduce cost, improve customer service at least cost to the environment whilst ensuring the health and safety of staff employed in the warehouse.
Warehouses evolve, as technology has moved fast and as a result, opportunities to improve efficiency and effectiveness within the warehouse are constantly being introduced. This, together with increasing demands from customers and internal pressures to reduce costs yet improve service levels, can prove a significant challenge to warehouse and logistics managers everywhere. The introduction of automation, robotics and advanced software systems into warehouse operations have an effect on logistics operations. Needless to say that these advances in technology are likely to lead to a significant reduction in staff and improved efficiency.
Not all warehouse operations are likely to benefit from such advances or can afford large investments in technology but it’s important to manage a warehouse effectively. Before introducing new technologies, processes need to be improved as automating a bad process might make it quicker but certainly doesn’t make it more efficient.
Logistics is very much about trade-offs. Trade-offs affect how warehouse and logistics managers approach their jobs and the decisions they take.
Major trade-offs include:
• cost vs. service;
• storage capacity vs. speed of put-away and retrieval;
• speed vs. accuracy;
• lower inventory vs. stock availability;
• efficiency vs. responsiveness;
• volume purchases vs. storage cost and availability;
• transportation costs vs. storage costs.
These trade-offs appear both within the warehouse itself and also between the warehouse operation and other logistics services.
These include:
• improving efficiency and productivity whilst reducing costs;
• improving quality and accuracy;
• the challenge of reduced lead times from customers;
• technological advancements;
• workforce availability and management;
• health and safety;
• effects on the environment.