Anticipating a complex future

Not so long ago the warehouse or distribution centre was little more than a huge shed, where the warehouse manager’s role was that of a facilitator of the distribution process.

Now it sits at the hub of any retail operation. It’s where the battle for business is fought – rather than on the shop floor or website. Why? Because these days price, service and value are pointless without stock visibility and availability. Today, the warehouse manager is often key to the strategic planning process of the entire business.

Flexibility is paramount. So it means investing in light, agile and scalable forms of technology, but also investing in the workforce. Despite the move towards automation in some areas, many other businesses are discovering that people are still the strongest, and also the most adaptable resource ever.

Multi-channel buying patterns, high SKU churn and fluctuating business volumes mean that the one huge repository dedicated to single product lines is no longer adequate. Consequently, warehousing and distribution is becoming more complex and fragmented to mirror this.

Of course the exact template for this depends on the product and its life-cycle. Fresh produce needs to be housed close to its market, but for some non time-dependent products such as white goods, it’s a delicate balance between speed and costs. 

Dark stores and small satellite distribution centres are filling this gap to a certain point. However the landscape is changing. Click & Collect and indeed an increasing amount of on-line B2C business being fulfilled from a retail outlet (shop floor or back of store) as opposed to a distribution centre, which further emphasises the need for agility and enterprise visibility. It’s also increasing the pressure on the ‘back room staff’ to execute faster to shorten fulfilment times even further and promise a sub 24-hour service.

No wonder more and more retailers are turning to 3PLs to create innovative solutions to help address this challenge.

Increasingly 3PLs are expected to be centres of excellence, bringing game-changing solutions to  a contract. It’s true that the very nature and focus of their business means they are able to run a more dynamic operation, segmenting and sharing shelf space across multiple clients giving them the flexibility to utilise their capacity.

But, let’s not underestimate the planning and forecasting headaches involved here.

The level of innovation required to be successful takes both time and money. Yet, at the same time, contract lengths are getting shorter. Historically terms of up to ten years were common-place, this has shortened over the years to terms of 3-5 years but today they can be as brief as six months. 

Such a complex operations need optimised, yet standardised processes to manage all these scenarios (different customers, multiple products (with varying sales volumes) differing materials handling, various health and safety needs) and all in one concurrent workflow while offering real value-add services.

Further consolidation is likely as we, consumers, demand cheaper products, with higher quality and better faster service.

Realistically this can only be achieved with investment to redesign the supply chain or by utilising specialist 3PLs to provide more value add for many more customers. They will be driven to become even more flexible and take their place as the discreet expert that sits behind every brand.

Buying channels will continue to evolve as further electronic systems and the Internet of Things develops. For example, commuters may be able to scan a QR code with their smartphone at the station on leaving work and collect their goods as they arrive at the station near their home. The possibilities are almost endless, but the end result will need further innovation and, once again, flexibility.

Some brands may decide that a traditional warehouse will no longer work for them and instead they will concentrate on developing and expanding a network of back of store stock rooms. If a product is unavailable in a local store it can be sourced from the next nearest outlet. Even if it has to be shipped, say half the time, at least this means it’s immediately available the other half. This will all be part of the ongoing fragmentation of distribution and further underline the need for consistent and agile systems across the overall operation.

As retail operations continue to evolve, people using Voice technology will be seen as an increasingly important resource providing the adaptability needed for such a fluid and dynamic environment. A more fragmented distribution and storage network will demand a more mobile and multi-skilled workforce who are able to work wherever they are needed within the enterprise.