There are various reasons for the rise of the time-critical economy. One is the huge growth of ecommerce and its impact on consumer culture. Another is the increasing sophistication and efficiency of supply chains themselves.
These changes include the spread of the just in time (JIT) model of inventory management, where businesses hold little stock, and rely instead on the delivery of components exactly when they need them.
However, these aspects of the modern supply chain are also sensitive to disruption, as well as the pressures of time.
The shadow of Brexit looms large over the whole issue of modern supply chain management, and, even when it is resolved one way or another, this is likely to mean changes to how things currently work.
The just in time model has meant that warehousing remains central to the supply chain for a great many businesses. Whereas the emphasis was previously on storage of stock, now it is as much on its handling. But the sector faces certain pressures as supply chains and consumers have become more sophisticated, including:
- Keeping up with supply chain demands
- Managing capacity
- Looking after the wellbeing of employees.
Here, we look at the current state of warehousing in the UK, the pressures it faces, and how technology can improve it, just as it has improved other aspects of the supply chain, and the economy in general.
Retail is just a click away
In the modern British landscape, vast warehouses have become a familiar sight. These huge structures are meeting the demands of an economy that is more and more predicated on notions of convenience, through online ordering.
They represent the point at which the virtual world meets the real world.
The shift in people’s retail habits has made massive changes to logistics and distribution, while the rise of social media has helped fuel demand for goods purchased online.
Ordering online may seem like a one-click process, but in reality, it involves a highly efficient supply chain and sophisticated storage and distribution systems to ensure goods reach customers as expected.
UKWA, the United Kingdom Warehousing Association, states that the UK warehousing sector is at the heart of a profound shift in consumer habits.
However, changes affecting warehousing are not only down to online shopping.
Omni-channel retailing is putting an immense amount of pressure on warehousing, with food stores having more focus on convenience foods, and therefore requiring the replenishment of stock within tight timeframes.
There are also clusters of dynamic manufacturing across the UK, with their own demands of their own on warehousing.
Logistics and the challenge of tech
Changes in logistics operations and technology are continuing to affect warehousing.
One of these is vehicle efficiency and changes to delivery routes. Fleets are now much more attuned to making urban deliveries, and there is more mixed fleet investment to deal with consignments of any size.
Drivers have sophisticated route planning at their fingertips, and optimised routes mean faster, more efficient deliveries.
Greater fleet adaptability and efficiency then means more pressure on warehouses to ensure they can meet delivery demands.
Another change is in tracking technology, which has improved the accuracy of communications in the supply chain.
Businesses have greater visibility on distribution and stock data, which means they can fine-tune their requirements, and spend less time having to chase information. It also means that supply chains can be more complex, featuring multiple suppliers.
This has led to more integration of data across the entire supply chain, from third-party logistics providers right through to the customer at the end of the chain.
There is more real-time data access in logistics, leading to improvements in customer service and, consequently, customer satisfaction.
Overall, more transparency now exists in third-party logistics due to technological advances. But what also comes with this are increased expectations, which warehouse facilities must meet.
A key challenge here is capacity.
Strains on warehouse capacity
UKWA research, in association with Savills, suggests that currently their immense pressures on existing warehouse capacity in the UK.
Online retail accounts for some 8.5 million square feet of warehouse space; food retailers take up 62 million square feet; and nearly 85 million square feet goes to high street homeware retailers.
The research identifies 1,500 individual warehouse units, accounting for a total of 424 million square footage of warehouse space.
However, it also notes that the current market supply stands at just 21.9 million square feet, marking a sharp decrease. It cites figures from 2009 of 94 million square feet across the UK.
Meanwhile, Brexit uncertainty has meant many more companies looking to stockpile supplies in the event of supply chain disruption.
Reports from the start of 2019 have suggested that UK warehouse space is nearing capacity.
What began as a boom in warehouse demand is looking more like too much pressure?
The risk is that, in the context of advanced supply chain development, and if there is unpredictability in the supply chain, the warehouse sector will become the weakest link.
With capacity stretched to its limits, the modern warehouse must evolve its processes, and even its core functions, to keep up with the demands of time in the modern supply chain.
Making warehouses more flexible
The key differences between physical store retail and online retail are stock capacity and product range.
Because online stores have zero stock capacity, but may have an almost limited product range, the pressure is transferred from the store to the warehouse.
To meet the expectations of online customers, the online retailer depends on the warehouse for fulfilment.
The warehouse must therefore devise new ways to match these expectations.
Increasing capacity is likely to be very challenging but increasing flexibility and efficiency less so.
As a multi-functional space contributing to the supply chain, the warehouse can offer more than its services as a dedicated storage facility.
This adaptability can also extend to serving physical retailers.
Just as supply chains are becoming more and more tightly integrated and streamlines, so it makes sense for warehouses to be involved earlier in the retail process.
One aspect of this is to look at reducing the timescales between product design stage and production, using the warehouse space.
Involving the warehouse earlier on could mean more stock preparation for retail going on there. This could be anything from collating promotional material to printing it, and organising product photography.
The whole process of managing returns is a major aspect of successful online retailing in itself.
Many consumers’ buying habits have changed, and they will routinely order in bulk, expecting to return the items they do not wish to keep.
This is a whole additional processing stream for warehouses, but from a customer satisfaction viewpoint, it is as crucial as supplying ordered goods in the first place.
Modern warehouses must be able to process returned goods swiftly and efficiently.
For the retailers who are their customers, this then means they can get their stock back into their inventory systems and keep their customers happy.
It is another time-critical dimension of the digital economy.
So is personalisation.
Personalised Product fulfilment
The growth of smart technology and the internet of things means that many customers now order and expect personalised goods.
These can be anything from t-shirts, trainers and other wearable items to digital devices and boutique pet accessories.
For warehouses, the challenge is that the turnaround in fulfilling these items must meet similar expectations to other goods ordered online: fast.
Personalisation and customisation can involve different processes in varying locations, and therefore for the warehouse, precise co-ordination is key.
Some product differentiation that occurs late on may need to take place within the warehouse space, requiring new, additional technology, and spare capacity.
As we have already mentioned, modern logistics involves efficiencies to do with transport.
A need for speed, agility and adaptability has also meant that modes of transport are altogether more varied, depending on delivery demands, including distance and location.
The days when warehouses dealt solely with large, articulated lorries have passed.
Now they must expect to deal with delivery vehicles of different dimensions, including small vans making ecommerce runs.
The modern warehouse must not only have the kind of adaptable, physical layout to serve these needs, but also the right kind of administrative infrastructure that provides absolute clarity about the size and numbers of vehicles they will expect to receive in any given time period.
Looking After Big Data
With an increasing joined-up approach to retail, logistics and warehousing, big data plays a pivotal role in enabling this integration.
Both online and physical retailers require superior stock visibility, so that they can know at any time what they have in stock, and where it is located.
Naturally, this visibility should also include warehouse storage, so that when retailers need to call down or transfer stock, the warehouse is firmly in the loop from the very beginning.
Peaks in activity can also occur due to demand volatility, where social media drives big surges in demand, especially in the fashion retail sector.
With a need for rapid responses, using advanced technology to gather and process big data enables retailers and their logistics partners and suppliers to co-ordinate stock movement precisely. This kind of data-driven approach is fast becoming a fundamental requirement for modern warehouses.
Warehouse Workforce Issues
While crossing the frontiers of applied new technology suggests a new dynamism in warehouse distribution, the reality is that there can also be a corresponding increase in pressure on warehouse staff.
Picking orders for customers can be complex, and the time pressures involved in modern retail make the human aspect of this work demanding.
Furthermore, warehouses now require excellent co-ordination and information-sharing between their various operational aspects, and this is a people issue as much as it is an administrative one.
The Health and Safety Executive, HSE, advises on risks at work in the warehousing industry, and its figures indicate that the highest proportion of accidents are due to manual handling and slips or trips.
In a pressured environment, where time is a huge factor, helping ensure the safe working practices of warehouse staff is essential.
Research commissioned by the Director of Labour Market Enforcement (DLME) points out that labour relations are variable across this sector, due to the pressures it faces, with flexible working and zero-hours contracts being common.
The research’s findings suggest that the growth of just in time inventory management, longer supply chains and lean logistics have all contributed to some warehouse workers lacking clarity about who they are performing certain tasks for.
There are also drivers of non-compliance in the industry, including widespread use of agencies and non-standard contracts.
An App for Warehouse Professionals;
The warehousing sector needs to do more than simply keep up with technological advances in retail and logistics. It should be adopting its own, bespoke industry solutions to ensure its practices are proactive, dynamic and fit for the future.
Warehouses may not always be able to increase their physical capacity, but they can make clear gains in efficiency, which will help to put them in the best possible position for the future.
The Warehouse Auditor is an award-winning mobile device app ‘application’ which addresses the issue of paper-based reporting, removing the need to scan and print at a stroke, and instead replace with the click of a button on a device.
Using digital templates, simplifies the whole process of health and safety inspections and provides a standard and consistent reporting process for warehouse managers.
Streamline the way you conduct Health and Safety inspections, seamlessly integrating the data and photos into a pdf which can be instantly and
securely shared between colleagues and management within your organisation regardless of their location.
It is not a catch-all solution for modernising the warehouse industry, but it is the right solution to key aspects of warehouse efficiency and workforce wellbeing that form the bedrock of modern warehouse and distribution work practices.
In a time-critical industry, operating as a cornerstone in a time-critical economy, taking clear practical steps to modernise practices and streamline processes and make more efficient, is fundamental to the evolution of warehousing.
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